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CIT Bank High Yield Savings and Money Market Account Review

Posted on by yfpadmin

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When you consider inflation, money sitting in regular checking or savings accounts can lose a lot of purchasing power over time given most interest rates are essentially next to nothing.

Sure you avoid market risk or the risk of keeping cash in other investments but there are other options that are less risky and can yield at least some return. These include high yield savings accounts and money market accounts.

High yield savings accounts and money market accounts are great options to house your emergency fund or when saving for large purchases such as a home, vehicle, or an awesome vacation because you have the ability to keep your money safe while earning interest.

The interest you can earn varies and will fluctuate depending on the Federal Reserve but, generally, you can get somewhere around 1% right now.

I recently came across CIT bank when evaluating high yield savings and money market accounts as they offer some of the highest rates available right now with a couple of different options that get close to 1%.

About CIT Bank

CIT Bank has been in business since 2000. CIT Bank is the banking subsidiary of CIT Group and is one of the top 50 U.S. Banks (According to Monitor Daily). They have over 60 physical locations in California and also operate as an online bank. They offer solutions for personal and business banking with a focus on savings products in addition to home lending.

As an FDIC bank, they have received a lot of recognition for their savings products including the Ascent’s Best Online Savings Account for 2020 and GoBankingRates 10 Best Money Market Account for 2020.

They have a Better Business Bureau rating of B-. Of the complaints made in the past 12 months, they appear to be related to financing and lending and not their savings products. Their Trustpilot rating is a 4.6/5 out of 191 reviews.

CIT Bank Savings Builder

The CIT Bank Savings Builder is a high yield savings account that currently offers an APY (Annual Percentage Yield) of up to 0.85% and requires a minimum deposit of $100. There are no fees to open or maintain the account.

To get the maximum APY you have two options: Maintain a balance of $25,000 or more or make monthly contributions of $100 or more.

On each evaluation day (the fourth business day prior to the end of the month), accounts with an end-of-day balance of at least $25,000 on the Evaluation Day or with at least one deposit of $100 or more that posts to the account during the Evaluation Period will earn the Upper Tier interest rate of 0.85% during the next Evaluation Period.

Through the CIT Bank mobile app, you can deposit checks remotely and make transfers.

CIT Money Market Account

The CIT Money Market Account currently has an APY of 1.40%. Similar to the Savings Builder account, you need $100 to open an account and there are no fees to open the account or monthly service fees.

The major difference from the Savings Builder is that you don’t have any balance or contribution requirements to maintain the APY. In addition, since it’s a money market account, you can make payments from it like you would from a checking account. However, this is limited to $50 per day if you’re paying an individual or making a Paypal payment.

There is a limit on 6 transactions per month per the federal rule, known as Reg D, which comes from the Federal Reserve with a penalty fee of $10 per excessive transaction and $50 monthly cap.

There is also a bill pay feature you can use from the app or online account as well and unlike the person to person max, the limit is up to what you have in your account balance.

Similar to the Savings Builder, through the CIT Bank mobile app, you can also deposit checks remotely.

Comparison of CIT Accounts

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My Experience So Far

What I really liked about their savings account options is the low amount to get started. Some banks and credit unions require thousands either to get started and/or to receive their highest marketed interest rate.

I decided to go with their Money Market Account because it offers a little higher APY compared to the Savings Builder and gives me a little more flexibility on how I want to deposit funds given there is no contribution or balance requirement beyond the initial $100.

The application process was smooth and straightforward until I got to the final steps. For some reason, I received a message that they couldn’t verify my identity and that someone would contact me within 5 days to get more information. However, the next day I received an email that my account was successfully set up.

In addition to that slight delay, when attempting to make the initial deposit, my bank was not able to be instantly verified despite going through multiple steps to verify so I had to wait two days for micro-deposits to be made in order to confirm. This didn’t surprise me though as I had to do this multiple times in the past.

The overall process to get the account up and running and funded took about 3 days.

The mobile app has most of the features and functionality as their online portal, was easy to set up and is pretty user-friendly. CIT bank is connected to Zelle, so you can easily pay someone if needed. You can also deposit checks and make external transfers. However, only through the online portal can you make your transfers between banks on a recurring basis in addition to setting up bill pay.

Conclusion

CIT Bank offers one of the highest APY on their savings and money market accounts making it a great option for your emergency fund or a short or long-term savings goal. And you only need $100 to open an account. Although their Money Market Account and Savings Builder offer a similar APY, the money market account gives you more flexibility since there is no balance or contribution requirement and also allows you to pay bills or other people.

How to Save Half of Your Income

Posted on by yfpadmin

The following post contains affiliate links through which YFP may receive compensation.

Live on less than you make. The quintessential maxim when it comes to personal finance. It’s incredibly simple advice and touted by just about everyone. But as you know, it’s easier said than done.

Otherwise, couples 34 and younger would have more than $4,727 in savings and those in their 30s would have more than $45,000 in retirement accounts.

While student loans are one of the biggest culprits for these staggering statistics, it’s certainly not the only factor.

You’ve likely heard the rule of thumb to save and invest 10-15% of your income in order to retire at a reasonable age. While that may work for many, it’s way below the typical amount needed for those pursuing FIRE. In fact, it’s not even close!

FIRE stands for Financial Independence, Retire Early where people pursue having enough money so that they are able to, you guessed it, retire early. Those on the path to FIRE usually have the intention of achieving it in their 30s, 40s, or even 50s. You can get a nice overview of FIRE from this post.

To attain FIRE, most people target saving 50-70% of their income and investing it in index funds and or real estate.

Crazy right?

“How is that even possible!?” you may be thinking.

Cue people living in tiny homes, growing their own food and making bicycles their primary means of transportation.

While there are definitely some taking this movement to that extreme, most pharmacists don’t need to do that to make it work. But it may require A LOT of sacrifices depending on how fast you want to achieve FI!

Assuming you’re single and make the median pharmacist salary of $126,000, after an effective tax rate of 30% (federal/state/local/FICA), you are looking at a net income of $88,200.

So in order to save $44,100 a year, you’re looking at $3,675 a month.

Impossible?

No, but certainly not easy!

If you have a non-working spouse or significant other and kids, that can certainly make things even more challenging but there are many people out there who have achieved FIRE making much less than a pharmacist.

So if you’re not quite at the point of saving half your income, here are some key moves to help get you there.

Eliminate credit card debt ASAP

No one ever plans to go into credit card debt. It’s often the result of either overspending or unexpected medical events or emergencies.

Having credit card debt is really a financial emergency in and of itself given the typical ridiculously high-interest rates. If you’re in this situation, you should make it a priority to get rid of it as soon as possible. Remember, you want compound interest working in your favor!.

Pay off student loans or optimize forgiveness

For most pharmacists, this is going to be the biggest barrier to saving at least half of your income. Assuming you were in the 10-year standard repayment plan with an average student loan balance of $170,000 and a 7% average interest rate, your monthly payment would be $1,973.

Talk about a major FIRE hazard!

There’s no single prescription for taking down student loans when pursuing FI but there are some key considerations.

First, if you have a small student loan balance relative to your income and can knock it out fast such as 1-2 years or less, then, by all means, destroy it ASAP.

However, if that’s not the case and assuming you have exhausted the options of any federal, state, or employer tuition reimbursement programs then you have a couple of options.

First, if you’re eligible for the Public Service Loan Forgiveness (PSLF) program that’s great news because it’s very conducive for those on the early retirement path. Since any amount remaining on your loans after 120 monthly payments is forgiven tax-free, your goal should be to pay the least amount as possible in order to maximize the benefit.

Plus, by contributing and maxing out a traditional 401(k), 403(b), or TSP, you can actually lower your adjusted gross income and subsequently your payments since they are income-driven.

If PSLF is off the table, then refinancing can be a great move. The lower the interest rate, then a greater percentage of your payment will go toward principal and can help to accelerate the payoff. And you can do this multiple times if you can continue to get a better rate. Plus, you also get paid to refinance as companies often offer a cash bonus or as an incentive. We have partnered with several companies that have bonuses up to $800.

Even if you refinance student loans and are making extra payments, you are still going to want to be simultaneously contributing to tax-favored retirement accounts if it’s going to take you a number of years to pay off the loans. Remember, time is the most important component when it comes to compound interest and you can’t go back and contribute to the years you missed out on beyond what’s available when you reach 50.

Lastly, if you happen to be in the unfortunate situation where you have a very high debt to income ratio such as 2:1 or greater, then you may actually consider opting for non-PSLF forgiveness. This is where you can have your balance wiped out after making income-driven payments for 20-25 years through the federal loan program.

refinance student loans

However, the caveat is that any balance forgiven will be treated as taxable income, therefore you have to prepare for that extra bill along the way. Even with this, it still may make sense financially, especially if it allows you to maximize your retirement accounts.

If you need help figuring out the best student loan strategy for your situation, you can reach out to one of our financial planners for a customized plan.

Work on reducing housing and transportation costs

You’ve probably heard multiple financial experts say you need to stop getting lattes every day because of the significant opportunity cost. While that may be partially true, focusing on bigger wins like reducing the cost of living and transportation can move the needle significantly more and get you closer to your savings goal. That is unless you are frequenting Morton’s Steakhouse.

Beyond downsizing to lower mortgage or rent payments, many people in the FIRE movement have opted to move to places where there is a lower cost of living, sometimes referred to as Geo-Arbitrage. This can be a really tough decision especially if it requires moving away from family and close friends and means leaving a job you really enjoy. However, out of everything you can do save more money, this could be the one that has the greatest impact.

Another thing to consider is refinancing your mortgage. If you are in an adjustable rate mortgage or have a really high fixed rate, getting better terms could save you a couple hundred bucks per month.

Car payments are another big barrier for many to achieve significant savings. Plus, if you’ve got a gas guzzler, your annual operation costs are not going to be cheap. Beyond that cars depreciate and your goal should be to build assets. Many times, it takes a lot of self-reflection about how you view your car. Most people pursuing FIRE think of it as a means from point A to point B and don’t care what anyone else thinks about it.

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You can pay off your cars to eliminate any payment but, depending on your situation, you could also sell or trade in your car and downgrade. If you have more than one vehicle, you could consider eliminating one. Depending on where you live, you may be able to get around on a bicycle, e-scooter, or public transportation.

Review recurring monthly expenses

Are there any subscriptions or monthly services you could nix? Be honest with yourself. Are there some that you don’t use anymore but just haven’t sent the email or made the call to cancel? I’m definitely guilty of that.

While some of these expenses can be pretty small, the sum can add up quickly. These include TV (whether cable or streaming services), internet, gym memberships, Amazon Prime, audio streaming (such as Audible or Spotify), your mobile plan, wholesale club memberships, cloud storage, etc.

I really like the apps Clarity Money and Trim as they can connect to your bank account and identify these expenses and even give you the option to cancel right from the interface.

Eat more at home

Going out to eat can one of the biggest budget busters. One dinner for two could cover a week or more of groceries. Consider meal prepping and packing your lunch.

If my wife and I go out to eat, we try to look for a Groupon or go somewhere during happy hour when the food is cheaper or just get appetizers.

Keep entertainment free or low cost

One of my favorite things to do on the weekends is spearfishing off the beach. It’s an incredible workout, a great way to spend time with friends, and the best part is that it’s free, that is once I bought all the gear. Plus, if I’m successful with harvesting some snapper, my grocery bill goes down.

I also check out free concerts in the area such as the Petty Hearts, which is a Tom Petty and the Heartbreakers cover band. For those of you who don’t know, Tom Petty was a rock icon known for songs such as Freefallin’, The Waiting, and American Girl.

There are a lot of activities you can do for free or that are relatively inexpensive. If you really focus on the things that bring you the most happiness, you’ll probably discover that you don’t have to shell out much cash to do them.

Now if you’re someone who loves to travel you may have to scale back or get creative on how your trips are financed. There is a whole other movement of travel hacking, where people use different credit card points and offers to fund vacations.

Pursue additional income streams

If you’ve made all the moves above and are still struggling to hit your savings goal, you have another lever to pull. Even though your salary may be fixed, your income is not.

Many pharmacists have been featured on our podcast who have one or more side hustles in addition to their full-time position to help fund their financial goals. Some have used their pharmacy skills and knowledge in their side hustles, whereas others have other passions and hobbies they have been able to monetize.

If you need some ideas on how to make additional money, check out the post 19 Ways to Make Extra Money as a Pharmacist in 2020.

Conclusion

Whether or not you’re part of the FIRE movement, you can use many of these tactics to improve your savings rate. While I know there was nothing presented that was particularly profound, hopefully, it made you take a look at your current savings percentage and analyze the actions you need to take.

What I have found after about 5 years of putting 50-60% of my income toward a combination of student loans and savings, it’s all about contentment. Initially, I was concerned that a dramatic shift in my spending would cause my happiness to go down, but in reality, the opposite occurred and made me focus on what’s most important.

What is the one thing you could do that would immediately get you closer to saving half your income?

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

Posted on by yfpadmin

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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How to be Fashionable on a Budget

Posted on by yfpadmin

How to be Fashionable on a Budget

The following is a guest post from Dr. Jessica Louie, PharmD, APh, BCCCP, CEO of Clarify Simplify Align and Petite Style Script, Burnout Coach, and Certified KonMari Consultant.

I have nothing to wear… I thought this nearly every day as I stood at my closet door looking at a full closet of clothing. We’ve all been there, right? But, why? When we have a full closet and full dresser of clothes, why can’t we put together an outfit that sparks joy?

This was me 5 years ago. I had accumulated all of these clothes with no intention. The new trend. The new dress for each event. The new handbag everyone was talking about. The new piece of jewelry to accessorize an outfit. I was literally wasting money on clothing I didn’t love. And, I was suffering from decision fatigue – too many options (aka too many pieces of clothing) to make one outfit.

My closet was just one of many areas of my life that was becoming too cluttered. Too stressful. Too chaotic.

It was time to take back control of my life AND my wardrobe. How did I do it? And stick to a budget while purchasing quality items?

I bought less. I applied the KonMari Method to my clothing AND my life.

And you can do it, too! I’ve put together a bonus resource at the end of this post that will give you a complete wardrobe for each season or a year-round guide that you can copy!

I now have a capsule wardrobe for each season. I broke my shopaholic addiction. Are you ready to break yours?

How did I do it? The C.U.R.A.T.E. system. C.U.R.A.T.E. is the same strategy and system I apply to resetting and preventing burnout and setting goals! It’s a useful tool for so many aspects of my life. Hopefully, you’ll also find it useful!

STEP 1: Clarify

STEP 2: Unpack

STEP 3: Reduce & Simplify

STEP 4: Align

STEP 5: Take Action

STEP 6: Evaluate & Enjoy

how to look fashionable on a budget, how to be fashionable without breaking the bank, how to look fashionable on a limited budget

Step 1:

Clarify your why and purpose. Set the vision for how you would like to feel in your clothing. Would you like to feel confident? Comfortable? Professional?

Step 2:

Unpack what you have. Take out all the clothing you currently own. Yes, ALL of it! From every area of your home. Figure out what you own by separating clothing into subcategories.

Step 3:

Reduce and simplify what you have unpacked. Make it easy. How?

1. Pick up each clothing item in your hand and ask yourself 3 questions: Does this spark joy? (also known as Does it speak to my heart? or Do I love it?), Does it fit?, Do I wear it?

2. If yes, keep it with confidence.

3. If no, thank it for what it taught you and let it go with gratitude.

Step 4:

Align your why and purpose from Step 1 with your wardrobe. What is missing from your wardrobe to create the feeling you are after? Write down what pieces you would like to purchase intentionally to complete your wardrobe.

Consider creating a capsule wardrobe – a list of essential clothing items that do not go out of style and that you can wear 7 days a week. You may need a work list and a casual list depending on your work environment and uniform requirements.

Step 5:

Take action to create your capsule wardrobe. Think Quality > Quantity. Intentionally put together a plan to purchase missing items to complete your wardrobe. Take time to find items that truly spark joy, fit, are classic styles and aligned with your vision for an ideal wardrobe.

It may sound counter-intuitive to invest in quality items but purchasing a $100 pair of dress pants once over 5 years is less expensive than purchasing one $25 pair of dress pants every year over 5 years because they wore out, faded, ripped or went out of style.

Another option is to borrow or rent clothing you are unsure about before purchasing it for yourself. For example, I can rent a special occasion dress for a wedding or celebration instead of purchasing one that I’ll wear once or twice. I have also borrowed handbags before deciding if I’ll purchase one myself based on usability, shoulder strain and durability.

I also shop secondhand for high-quality clothing that are new with tags or nearly new from stores like ThredUP by investing in quality items at a lower price point.

Stores I Recommend:

  • ThredUP, TheRealReal or MaterialWorld for high-quality secondhand
  • Banana Republic for men or women
  • Nordstrom for men or women
  • Express for men
  • FIGS scrubs for scrubs and athleisure wear for men or women
  • Costco for men or women

Step 6:

Enjoy and evaluate your outfits! How are you feeling in your clothing?

When you are eyeing an expensive clothing piece, take time to pause, don’t purchase it for at least 7 days, then come back and re-evaluate if this item will add value to your life and your wardrobe.

Too many times I was caught up in purchasing because it was on sale. A sale still costs money. So, take time to pause. Go back to your Alignment stage and check if you were already looking for this item. If you wouldn’t purchase it at full price, you shouldn’t purchase it on sale.

Shop intentionally my friends! Simplify your wardrobe. Lead with confidence. Curate a life you love!

Need more help? Here is a FREE guide!

Download a Seasonal Capsule Wardrobe for your 5-weeks of outfit ideas and step-by-step guide today.

To get this FREE bonus resource, visit Petite Style Script Style Help.

Dr. Jessica Louie, PharmD, APh, BCCCP is CEO of Clarify Simplify Align and Petite Style Script, Burnout Coach, and Certified KonMari Consultant who helps women gain clarity of their purpose, simplify and declutter their home, wardrobes and minds, and align their work into their lives with simple processes to avoid overwhelm, lead with confidence and curate lives they love. Jessica offers Declutter Coaching and Burnout Coaching in-person or virtually to transform people’s lives.

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Debt Free Story Q&A with Jeff and Alex Keimer

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Debt Free Story Q&A

Jeff and Alex Keimer share their debt free story in this special Q&A format.

Jeff received his PharmD from Albany College of Pharmacy in 2011 and moved to Vermont to pursue a career in retail pharmacy. There, he met Alex, his future wife, who graduated from Cornell with a Master’s in Food Science in 2012. Jeff racked up about $150,000 in student loans and also purchased many items after graduating on his credit card, including the down payment for a brand new Subaru WRX. Alex managed to pay for grad school and accumulated only $50,000 in debt. The couple shares their journey of paying off their student loans, car loan and credit card balance while working toward financial independence.

Jeff, tell us a bit about your background and education and how much you accumulated in debt upon graduating with your PharmD.

I’m originally from the town of Guilderland, NY (a suburb of Albany) and got my PharmD from Albany College of Pharmacy and Health Sciences in 2011. In terms of career, my path has always centered around retail pharmacy. I’ve worked in a retail pharmacy ever since I was in high school and love it. No joke.

During school, I didn’t think about my loans. I knew they were there, but like many of my classmates at the time, I never thought they’d cause a problem since I was “guaranteed” to make the big bucks after graduation. Understand that this was a time where P3’s were getting 5 figure sign on bonuses, so most pharmacy students weren’t worrying about their loans.

All in all, I came out of school with a little over $150,000, which I believe it or not, thought was low. I distinctly remember someone in my class said they were in the $300k club, so I felt like I got out cheap.

Alex, what about you? What type of education do you have and how much debt did you accumulate while in school?

I have a Bachelor’s in Food Science from the University of Delaware and Master’s in Food Science from Cornell. A small portion of my undergrad was paid for by a scholarship and the majority of it was paid for by my parents. I paid for grad school myself and accumulated around $50,000 of debt from it.

Jeff, what was your parents’ or family influence on your money habits?

Growing up, both of my parents started their own businesses and worked from home so they could be there for my sister and I when we got home from school. We were taught a respect for how money was earned but not much was said about how it was managed. When money was tight, I remember my dad saying that we were going on the “austerity budget” and when money was good, we bought things and went on vacation. But, that’s really about it.

Alex, what about you?

I remember both of my parents working a lot. My mother was an accountant and my father was an administrator for a community college in Long Island City. We were always buying things on sale and using coupons. When I would ask my mom why we couldn’t have fancy clothes or why we couldn’t buy a boat like my best friend’s parents, she would say that we save our money so that we can go on vacation. She always stressed the value of experiences over material things. To be fair, we did travel a lot. While most of my friends were having Sweet 16s, my family and I were going to Hawaii. We travelled to California, Europe, and the Dominican Republic, just to name a few.

My mother would always talk about how important it was to save money. She would tell me that you never know what is going to happen in life, so it is important to have a healthy savings. When we were younger, she helped us set up CD’s and savings accounts and we would watch our money grow. This rubbed off on my because when I was in college, I remember her sending me money in the mail with a note saying “use this for something FUN, do not put this in the bank.” She knew that all of the extra cash I had was going in the bank and I was sacrificing time out with my friends.

Jeff, you mentioned to us before that you spent your money on a lot of nonsense as a new practitioner.

Where to start? Well, first I had to deck out my new apartment so I spent several thousand on new furniture. OK, that sounds mildly sensible. How about another grand on a new 3D TV? Another couple thousand on some new firearms? Or, my personal favorite, >$5,000 in a year spent on craft beer? All of it on a credit card that had been carrying a balance since I graduated. Just for good measure, I also bought a brand new Subaru WRX in 2013 that cost around $32k which I financed for the next 5 years. Oh, and lest I forget, I also put the $2,500 down payment for that car on that same credit card since I didn’t actually have any money.

I may not have been great at saving money, but I was a savant when it came to building negative net worth.

With all this debt getting piled on, you would’ve hoped I had a plan to get rid of it. But I didn’t. Even though I was starting to feel the pinch from my student loans, I didn’t have much motivation to get rid of them. I just assumed that they were there and I would have them kicking around for the full 15 years of my payment plan. The credit card was more egregious anyway. But, I managed to give myself a false sense of security about that. I figured that if I was paying more than the minimum on it every month, I was good. Never mind the fact that the balance was growing.

debt free story

Alex, when you and Jeff started to get into a more serious relationship and talked deeper about your financial burdens, what were your feelings about his indebtedness?

I have never held a balance on my credit card and I have never paid a cent of credit card interest. When Jeff told me what kind of balance he was carrying on his credit card, I think the look on my face made it clear that we would not be combining our finances until he got serious about getting rid of that enormous debt. At this point I wasn’t really interested in helping Jeff out. I was pretty much like, “You get your house in order and let me know when you’re good.” It definitely didn’t take him as long as I thought it was going to. Turns out when you have a 6-figure salary and aren’t buying a ton of crap, it’s pretty easy to pay down your debts.

When did you start getting serious about paying this debt off?

I can’t remember the exact time I decided it was time to clean up my act, but I do remember it was as Alex and I were starting to take our relationship to the next level. We were starting to plan a life together and I while I knew she loved me despite my faults, I didn’t want her to have to live with all of them. And, like Alex said before, she really wanted me to get my house in order.

My debts at the time were three-fold: credit card, car loan, and student loans. Since we both knew the credit card represented both the highest interest rate and a monument to my stupidity, I decided that needed to go first. And, I needed to do that on my own.

Jeff, how did you decide that creating a budget was what was needed to pay down your debt?

Just like it’s common sense that getting on a diet and exercise plan is what you need to do to lose weight, I’ve always known that I needed a budget to control my finances. But like many people with wanting to diet or exercise, I chose not to do it since I thought it would be hard. The idea of having to plan out all my spending ahead of time and restricting myself to what I’d planned for just never sounded appealing.

But, I had to do it. At first, I decided to make a traditional type of budget. I made categories and used the Mint app to help me track my spending. This worked to a degree, but I still couldn’t see myself adhering to this type of budget long term. It just felt so foreign to me.

What I was used to was living paycheck to paycheck. So I decided one day to try and make a budget that took that lifestyle and would make it work for me instead of against me. Like all great ideas, I think it came to me in the bathroom. Instead of figuring out how much I have leftover at the end of every month to throw at the debt, why don’t I just send money there first and give myself a smaller paycheck to live off? In the end, I created a budget that’s sometimes referred to as a “reverse” or “pay yourself first” style of budget.

In the months that followed, I was able to get rid of the credit card debt and use the same budget to start saving money for an engagement ring. With Alex’s help (she started packing me lunches) and forgoing the things that I knew were nonsense, adhering to my new budget was relatively painless.

You mentioned to us before that in the marriage process, you and Alex read The 5 Love Languages by Gary Chapman.

Yes, before we got married, the priest we worked with had us read it as part of a premarital course. We ended up reading it to each other rather than on our own which I think was a great way to do it. What we learned was that we shared a lot of common ground when it came to what our love languages are. Quality time, for one, topped both of our lists, and gift-giving was at the bottom. Looking back, I think this realization was what set the stage for the next chapter in our financial journey.

You mentioned that you are pursuing financial independence (FI).

Yes! Shortly after we got married in late 2016, I stumbled on the blog Mr. Money Mustache while doing some internet research on investing. The name sounded ridiculous so I had to check it out. What I found there was pure gold. In that blog, Pete Adeney (aka Mr. Money Mustache), describes how a combination of frugality, hard work, and unconventional retirement planning allowed him to “retire” at the ripe old age of 30 and that early retirement is something anyone living in this country has a shot at. This was my introduction to the financial independence/retire early (FIRE) movement.

While I love being a pharmacist, I love being able to spend more time with Alex. What I read in his blog and others was that making more of that time was entirely possible through financial independence. So for me, I was sold. If this was a way for us to get more out of the finite amount of time we have on this planet, then that’s what I wanted to do.

I plugged our numbers into some of the calculators online and found that if we were able to start maxing out our retirement accounts and tweak our budget a bit, we had a decent shot at financial independence in the next 15 years. Needless to say, Alex was skeptical at first. I clearly remember her saying in a thick Long Island accent, “You don’t know this man on the internet,” and that this all sounded a little far-fetched. But, to her credit, she said that if I wanted to give it a try she would support me.

So I got to work adjusting our budget and adapting it to a higher retirement contribution rate. Thanks to the tax deduction, it wasn’t that hard. Once that was in place, I set our debts in the cross-hairs.

How did you pay off the rest of your non-mortgage debt? What was the total you paid off and how long did it take you to pay it off?

When we decided to get out of debt, we had 3 different debts: my car, the student loans, and a loan we took out to finance a solar array we put on the house. In order to tackle them, I thought it best to go after the highest interest debts first. But before that, let me tell you what went down on November 28th, 2016.

I had been reading Mr. Money Mustache now for a few months and had been coming around to his way of thinking, particularly around cars. The dude hates them but realizes they have a place. That said, the supercharged rally car I was using as a daily driver on paved roads didn’t fit with the overall FIRE mindset I was getting into. It had to go.

So, the morning of November 28th, I got up and started looking online at replacements that were more sensible, but still had a stick shift (not giving that up). I texted Alex that morning telling her that I found a Toyota Corolla for sale across the state that looked like a good deal and wanted to check it out. She said OK and I drove over to the dealership. While there, I did a test drive, negotiated a trade, and signed over my WRX for the Corolla. I got rid of the car debt in a day and felt awesome. Did I forget to talk to Alex before getting a new car? Absolutely. I learned some things about marriage that day.

So with the car debt gone, we decided to go after the student loans. Alex’s loans at this point were a little under $7,000 total, so we used the money saved from our budget over the past year to kill those in one shot. Now, it was time to fight the good fight and get rid of my loans. Using our budget we put money toward the debt with every paycheck.

Over the next 19 months, we got rid of the student debt totaling $105,560.86. Most of it came from those incremental payments with every paycheck. Also, a little over $10k came from cashing out a variable universal life insurance policy that I took out in 2012. Finally, since our budget has us saving money simultaneously, I was able to take money that we had been saving for a new car for Alex to finish them off in June 2018. We bought the car though, so there’s more debt.

After the student loans, our other debts didn’t seem so big. The solar loan only had around $11k and the car loan started out at around $20k. Whatever, they needed to go. So for the rest of the year, we focused on those two debts, clearing them out finally on 12/22/18.

Overall, from the day I sold the car our payoff looked like this:

In the end, with interest payments (not reflected above), the total amount paid toward debt was $138,017.37 from November 28, 2016, to December 22, 2018.

Amazingly, we didn’t really feel deprived throughout the whole process. We still went out to eat and still went on vacations. Even though we were putting a huge amount toward debt, we didn’t feel it much since we did everything we could to optimize our expenses. Not having my car payment and replacing the life insurance policy were huge (~$800/month), but so were little things like getting rid of cable (~$75/month), sharing streaming services with family, and preparing meals ahead of time. We also tried our hand out at travel hacking which has been quite lucrative.

Now that you are debt-free, how do you feel?

When people say that getting rid of debt is like having a giant weight lifted, they’re not kidding. Getting rid of our debts, particularly the student loans, has been incredible. It’s even me more joy at work knowing that I’m not chained to my paycheck and has given us the ability to be more flexible in our career paths.

As far as near-future financial goals are concerned, we would like to get rid of the PMI on our mortgage this year, continue to maximize contributions to our retirement accounts, and possibly buy a rental property. In the end, we’re going for financial independence, so keeping our savings rate high is what we plan to do for the long haul.

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5 Key Financial Moves To Make With A New Baby

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5 Key Financial Moves to Make with a New Baby

The following is a guest post by Karen Berger, PharmD. Karen is a pharmacist and medical writer in Fair Lawn, NJ. Her husband has been trying unsuccessfully to put her on a budget for many years.

This post contains affiliate links through which Your Financial Pharmacist may receive compensation

In an earlier post, we talked about how to prepare financially when expecting. Once your little one makes his or her big appearance, though, the financial planning is not over – it has just begun. Continue to work on those important financial moves we talked about earlier, and start to incorporate these additional tips.

Nothing can prepare you for life with a baby. Whether this is your first or fifth baby, the first few months are exhausting. You walk around on a few hours of sleep every night – getting more than four hours of sleep in a row is cause for celebration. You might not remember the last time you showered or sat down for an uninterrupted meal. Although it is the last thing on your mind, financial planning for new parents is key to ensuring a strong financial position for the upcoming years.

1. Start Saving For College

With the average cost of college for 2017-2018 at $20,770 for in-state public schools and $46,950 for nonprofit private schools (including tuition, fees, and room and board), and prices increasing every year, it is never too early to start saving for college. Don’t forget to multiply these numbers by six (years), the average length of time students take to earn a bachelor’s degree, and also by the number of children you have.

Having a monthly savings goal is a fantastic way to help your children pay for college. NerdWallet estimates that saving $500 a month, per child, earning 5%, should be adequate for you to cover $50,000 of college costs per year for four years once your child turns 18. Obviously if you’re planning to pick up the tab for potential graduate or professional school, you’re going to need to save a lot more. You can find calculator tools online to tweak the numbers to your personal situation. Often, saving for college will involve a combination of several of the strategies below:

529 College savings plan: The 529 is the most popular savings plan geared toward education; there are two types. The first type is the 529 investment savings account. With this plan, you invest with the same risk/return profile of other stock investments. Check your own state for tax breaks or matching funding before looking into 529 plans offered by other states.

The second type is the 529 prepaid tuition plan. This method locks in tuition costs and avoids the yearly increase in tuition. Paying for 6 semesters now, at today’s cost, will pay for 6 semesters in the future, even if the costs are higher at that time. These plans are starting to have more restrictions.

Pros of the 529 include: high contribution rates (plans typically allow up to $300,000 in lifetime total contribution), the ability to change beneficiaries, and the benefit of tax-free growth. Also, if the parent is the account holder, the 529 is considered a parental asset and it will have a minimal impact on financial aid as compared to other education savings options.

On the other hand, there are a few cons of the 529. It is strictly to be used for education, so if your child does not go to college, the money may be unavailable for other purposes. However, depending on the plan, you may be able to change the beneficiary or pay tax and a 10% penalty on the growth of assets. There is also the inherent stock market risk.

Savings Accounts & Other Low-Yield Options: Savings accounts are flexible, but provide little in the way of interest. Using a regular checking/savings account with the intent to save for college may backfire, as money may be tapped into and not replaced. Not only that, but because of inflation which is typically around 2-3% per year, you may actually be losing money keeping it parked here. Certificates of Deposit (CD) and US Savings Bonds are other options, but these are mostly out of favor due to low interest rates. Sometimes, a very conservative contributor may favor this option.

Roth IRA: A Roth IRA can be used as a combination retirement account and educational savings account. It allows you to invest with after-tax dollars while the earnings grow tax-free. Although this is typically used as a retirement account with a penalty for early withdrawals on any growth before 59 ½, if used for higher education, distributions can be taken tax- free and penalty-free. The biggest downside to this is that it could significantly reduce your overall retirement projections. In addition, the distribution must be made in the same year that the qualified expenses are paid. Another item to note is this distribution is considered to be income to the student and could reduce eligibility for need-based financial aid.

Coverdell Education Savings Account (ESA): This is like a smaller version of a 529: it offers tax-free withdrawals, and you can invest in the market. However, one of the biggest advantages is that you will have a lot more investment options to choose from, since you won’t be limited to what’s available to what a specific 529 plan offers. Contributions are limited to $2,000 per year, and until the beneficiary turns 18. ESA’s may offer more flexibility, and qualified expenses may include educational expenses from Kindergarten all the way through graduate school (529 plans also now allow up to $10,000 per year to pay for private elementary and post secondary school tuition).

Important to note with a Education Savings Account is that income limits apply, and depending on your salary/combined salary, you may not be able to participate. Currently, the income limit for a maximum contribution is $190,000 for a married couple filing joint returns, and contributions phase out at $220,000 in 2018/2019. The limit is $110,000 for those not filing a joint return.

If you are indeed eligible to contribute to an ESA, the cool thing is that you don’t have to choose between an ESA and a 529 – you can do both!

Trusts: These are structured as UTMA or UGMA. Assets are transferred to the child’s account and invested on his/her behalf until the child reaches the “age of trust determination,” which is between 18-21, depending on the state. As soon as the beneficiary becomes an adult, he/she can use the money however he/she wishes. As a custodial account, these assets are considered to be assets of the child/student and are included in calculating financial aid. These funds will stay in the custodian’s taxable estate until the child reaches the age of trust determination.

2. Make A Will

This is the happiest time of your life – who wants to think about something depressing like a will? Although it seems sad, a will is a very necessary part of life. Just think about the recent, unexpected passing of 90210 and Riverdale star Luke Perry from a stroke at the young age of 52. That was a major wake-up call for many people to get their affairs in order.

In your will, you will clearly and concisely state your wishes for the distribution of your assets after death, and appoint guardians for your children if both parents pass away. You will designate an executor, who will ensure the provisions of the will are carried out.

You can either hire an attorney to create your will or do it yourself. I would recommend hiring an attorney if you can afford to do so. The attorney handles all of the intricate details, making sure nothing is left out and can keep a copy on file. Attorneys may charge a flat fee or hourly rate, with an average cost of $300-$1000 for an uncomplicated will, or up to $10,000 if you have complex assets and an estate, or the need to establish a trust.

Many companies offer a very affordable legal plan for employees, where you contribute a small amount per paycheck for legal representation by participating attorneys. At the time, my husband and I were able to do both our will and closing on our house, and we did not have to pay anything above the regular paycheck contribution.

If you would rather create a will yourself, you can use an online program or software to make a will for less than $100. Requirements for witnesses or other specifications vary by state.

Another thing you need to do that falls under the “no fun, but necessary” category, that goes along with your will, is to create a living will, or advanced directive. This lets you set the terms for healthcare providers about the kind of health care you want or do not want to receive, in the event that you are unable to speak or make decisions for yourself. The living will sets forth your wishes on resuscitation, quality of life, and end of life treatment. The Durable Power of Attorney for Healthcare is a designated, trusted person who will make medical decisions for you in an emergency situation, in cases where the living will may not provide a clear answer. This person is there to fill in gaps that are not clarified by your living will, and cannot contradict your living will.

term life insurance, term life insurance for pharmacists

3. Obtain or Update Life Insurance

Now is the time to get a life insurance policy, if you do not have one already. Life insurance ensures that your beneficiaries (spouse, children) are financially taken care of if you die.

There are two types of life insurance:

  • Term Life Insurance: This type of life insurance offers coverage for a specified period of time. It is less expensive than whole life insurance and has a predetermined guaranteed death benefit. Your premiums will increase at preset time intervals, such as every 10 years.
  • Permanent Life Insurance: A number of policies such as whole life, cash value, and universal life, fall under this umbrella. This type of insurance has a death benefit that never expires as long as you pay your premium. In addition, there is typically a saving/investing plan baked in, which is one of the benefits that agents use frequently as a marketing tactic. The rates of return vary, depending on the policy, and they are generally filled with many different kinds of fees. Plus, these policies are often much more expensive than term policies. Because of these issues, the YFP team recommends that most people should keep their savings and investments separate and go for a term life insurance policy.

Once you determine the term (usually 10-30 years) that works best for you, you need to decide the amount of coverage. Financial experts often recommend that your death benefit be 6 to 12 times your annual salary. However, this may not be enough and a number of factors will come into play, including what you can afford, homeownership, and number of dependents. For a more tactical approach, you can check out this calculator.

long term disability insurance

4. Obtain or Update Disability Insurance

Would you be able to support yourself and your family, pay bills, and achieve your financial goals if you became disabled and couldn’t work anymore? If your answer is no, then you need disability insurance.

Do you know your most valuable asset? Surprisingly, it is not a material possession such as your house, but it is the ability to earn a living. Disability insurance pays a portion of your regular income if you are unable to work for an extended period of time due to illness or injury.

Although it seems unlikely, more than 1 in 4 20-year olds will have a disability for 90 days or more by age 67. Often, people think of worst-case scenarios and assume that they are immune, but something as “minor” as a back injury can put an otherwise healthy person on disability.

There are two types of disability insurance – short-term and long-term coverage. Both replace part of your monthly salary up to a certain amount, such as $10,000, during a disability. Some long-term policies also may pay for additional services, such as training to return to work.

Short-term disability replaces 60-70% of your salary, and pays out for several months up to one year, depending on the policy. It has a shorter waiting period, about 2 weeks, between the time of disability and the time when payments are made to you.

Long-term disability policies typically can replace up to 40-60% of your salary. With long-term disability insurance, benefits end when the disability ends. If the disability continues, benefits end either after a certain number of years or at age of retirement. There is a longer waiting period, usually 90 days, between the time of disability and the time when payments are made

Disability insurance can get pretty complex as there are a number of riders and definitions that vary between companies. Besides your age, occupation, term, benefit amount, and waiting period, these riders will play a huge part in the cost of your policy. To get a better understanding of these and what to expect, you can check out this free guide.

How do you sign up for disability insurance? First, look at your workplace. Often, employers include coverage and contribute towards the premium. Even if your employer does not pay towards your coverage, you can often buy your own coverage through the employer’s insurance broker at a discounted group rate. You can also check with professional pharmacist associations. Another way is to buy an individual plan through a broker or directly through an insurance company. Your Financial Pharmacist offers a helpful service through Policygenius that shops multiple companies to find you the best disability insurance policy.

disability insurance, disability insurance for pharmacists

5. Start or Continue Contributing Toward Retirement

Although retirement may seem far away, and college savings for your children may be at the front of your mind, it is an inevitable event that requires planning. I always remember Suze Orman telling callers on her radio show, “You can take out loans for college but you can’t take out loans for retirement.” The sooner you start saving, the longer your money has to grow. Be sure to contribute to your company’s 401(k) plan, and if your company has a match, try to at least contribute that much since it’s basically free money. The maximum 401(k) contribution limit for 2019 is $19,000 unless you’re over 50 in which you can add an additional $6,000.

Even If your company does not offer a 401(k), or you are self-employed, you can open up an IRA (individual retirement account). For 2019, your total contributions to all of your IRA’s cannot exceed $6,000 if you are under 50 years old, or $7,000 if you are age 50 or older.

Besides an IRA or 401(k), a Health Savings Account (HSA) is another great way to save for retirement as it has triple tax benefits. It lowers your taxable income, grows tax-free, and can be distributed tax-free if used for qualified medical expenses. Despite its name, your contributions do not have to sit in a simple savings account, but can actually be invested aggressively. In order to get access to an HSA, you have to have a high deductible health plan (HDHP).

These financial moves to make with a new baby may not be the most exciting things to do and they can come with a high cost, but they will help you sleep better at night, knowing that you are taking care of your family. Now, here’s to hoping your new bundle of joy sleeps through the night!

Financial planning for a baby, and in general, life events, can be overwhelming. Often it is best to bring in an experienced financial planner to help you plan and prepare. If you are looking for some extra help, you can click here to book a free call with the YFP Planning financial planning team.

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How To Prepare Financially When Expecting

Posted on by yfpadmin

How To Prepare Financially When Expecting

The following is a guest post by Karen Berger, PharmD. Karen is a pharmacist and medical writer in Fair Lawn, NJ. Her husband has been trying unsuccessfully to put her on a budget for many years.

Congratulations – you’re expecting! In just a few short months, your life will change in a way you could never imagine. A precious baby will smile and coo at you all day, as you feel a powerful love like you never imagined. You will also never sleep, you will be up to your elbows in diapers, and you will have tons of new expenses.

If you are like me, you will also use one-click ordering to have Amazon packages delivered to your door daily, and you will have your credit card number memorized for all other websites. Having a baby can be a major life change and a financial wake-up call. Learning how to prepare financially when expecting is essential.

My husband and I had our kids pretty much back to back – 3 kids in 4 years. It all feels like a blur. Having a baby is like having your entire life as you know it turned upside down. At many times, you will feel that you have no control over this baby, who basically rules your life for the next 18 years. Although you cannot control your newborn, you can control your finances and take the steps of getting your finances in order when expecting.

According to Nerdwallet, raising a child costs at a minimum $260,000 from ages 0-18. This price includes basic (less expensive clothes and groceries) needs and does not include extras such as electronics, birthday parties, and vacations. Taking into account more expensive essentials plus all the extras, you are now looking at over $745,000 from birth to 18, and that is per child, and all before college.

When I was in high school, anytime I was asked what I wanted to be when I “grew up,” my answer of “a pharmacist” was frequently met with the same reply. “What a great career for a woman,” people would nod approvingly. At the age of 17, this made absolutely no sense to me. However, it makes a lot of sense now. A stable income with flexible options is a perfect job for a parent. A pharmacist salary puts you in a great place as you take on the task of financial planning for a baby.

Getting Your Finances in Order

When planning for a baby, there is a lot to do – you have to decorate the nursery, pick the perfect stroller – the list is endless. However, the biggest favor you can do for your family is to get your finances in order while expecting.

Knowledge and clarity about your current financial situation are of utmost importance. That means knowing exactly what it costs to run your household and your spending habits on nonessential items.

While the idea of having a monthly budget is not sexy or fun for most people, it’s a great way to help you organize your spending, eliminate or cut unnecessary expenses, and make adjustments to help you pay off debt and reach your other financial goals. You can learn more about budgeting by checking out this post.

Besides budgeting, knowing and tracking your net worth is a great way to get clarity on your current financial status. In short, your net worth is your total assets minus any outstanding debt. Many pharmacists, especially those starting out, will begin pretty far in the negative considering student loans. However, your progress and trajectory of your net worth is what’s really important.

Hopefully, you are making decisions to help grow your net worth in order to secure your financial future and achieve freedom from debt. But if that’s something you are struggling with, going back to the budget and optimizing is a great idea. If you want to determine and track your net worth we have a great tool through Right Capital you can use.

Besides getting clarity on your finances, it is really important to be on the same page as your spouse when it comes to budgeting and spending. There will be enough to argue about, such as who gets up with the baby and who does the laundry and cleaning (spoiler alert: it’s usually mom). If you can figure out money ahead of time, you are winning the game.

Insurance and Benefits

Now is the time to really understand your insurance benefits for your prenatal care, labor, and delivery. What is covered? Is there a maximum? Do you have a deductible or copays? What if your baby ends up in the NICU – how much will you have to pay? One of our children was in the NICU and the hospital billed over $100,000 – fortunately, we only had to pay a few hundred dollars.

It is also important to plan your leave; check with your company’s HR about sick pay and understand your state laws with disability/FMLA. You will want to predict how much money will be coming in while you (and possibly your spouse) are out of work.

Now is a great time to start an emergency fund, if you do not have one yet. You will want to save 3 to 6 months of expenses (not income), in a separate, accessible account such as a money market or savings account.

Once you establish your budget, taking into account newborn expenses, you want to ensure you have enough savings to cover any missing wages, in addition to the emergency fund. Depending on how tight your budget is, you may have to temporarily scale back on making extra debt payments or contributions to savings/investing accounts to build this up.

Take the time to research your benefits online, or call your insurance for more personalized service, and ask all your questions and write down the information because when you have a baby, you won’t even remember your own name.

Trust me. While on the topic of insurance, research pediatricians (and interview them!) and pick one that is in network, if possible. After the baby is born, be sure to call your insurance to notify them of your newest addition, so he/she can be added to your plan as quickly as possible.

Newborn Expenses

Last but certainly not least, you’ll want to have an idea of monthly costs after the baby is born. Diapers, diapers, and more diapers add up quickly. Also: pediatrician copays, formula if you choose to bottle feed, clothing, diaper bags, carriers, carseats, baby monitor, crib, strollers, baby swings, toys, books, and all of the adorable accessories at the baby store that you absolutely must have such as a squeaky giraffe, a pacifier attached to a stuffed animal, and those soft Muslin blankets. You may do a lot more take-out than cooking those first few months, which can really add up.

how to prepare financially when expecting, getting your finances in order when expecting, financial planning for a baby

*These costs do not include insurance or medical expenses.

**Expect to need a new convertible car seat when baby is around one year old at an average cost of $80-$250 per carseat.

Pro Tip: Create a registry so that your friends and family can buy things that you need, rather than guessing what you want!

Childcare is another big cost. How long do you plan to take off? Are you going back to work part-time, full-time, or not quite yet? If you are going to work, do you have family to watch your little one or will you use daycare or a nanny? All have varying costs and they all have their own positives and negatives to explore, and now is a good time to interview possible candidates to care for your little one.

In our next segment, we will tackle some more must-do’s for after baby arrives, such as life and disability insurance, retirement planning, wills, and saving for college.

Financial planning for a baby, and in general, life events, can be overwhelming. Often it is best to bring in an experienced financial planner to help you plan and prepare. If you are looking for some extra help, you can book a free call with the YFP financial planning team.

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Money Talks: The Price of the Pharmacy Residency Quest

Posted on by yfpadmin

 

The following is a guest post from Brandon Dyson, PharmD, Co-founder tl;dr pharmacy

Note: The following is a sample chapter from tl;dr pharmacy’s guide: Mastering the Match. If you are looking to get a residency, Mastering the Match is the best place to start. It walks you through every step of the process; from how to make yourself a competitive candidate to how to nail the interview. In this post, I’ll talk about how (shockingly) expensive it is to get a residency and some ways that you can help lower that cost. If you want to give yourself the best possible chance to win the residency of your dreams, check out Mastering the Match here.

Money Talks: The Price of the Pharmacy Residency Quest

So you’ve decided you want to apply for a PGY1 residency. You, like so many others before you, have felt the rising pressure of holding patients’ lives in your hands and are not quite ready to take the reins all by yourself.

Or you’ve realized during your fourth-year rotations how much pharmacy school ISN’T teaching you, and you’re having an “oh-crap-there’s-so-much-I-have-left-to-learn” moment. I’ve so been there. (Sometimes still there, tbh). Which brings us back to your decision to apply for residency.

While the rest of Mastering the Match will prepare you for the residency process, this chapter is about the math. We’re pharmacists, we like math.

And no, this section is not about numbers in increments of 5s (#shoutouttomyretailphriends!). Nor will it have first-order decay equations a la vancomycin dosing.

WAY more complex then we are about to get into

This is simple arithmetic, but it is so necessary to know ahead of time what you’re getting into financially with the residency application process. Money is all about planning.

So let’s get started.

The residency search process can be broken down in 3 major phases:

Phase 1: The application

Phase 2: The Midyear trip

Phase 3: The interview trips

Now let’s take that exact same list and attach estimated costs to each piece to get a rough budget.

Grand Total for Residency Application Process

(with 4 applications and interviews): ~$4600

 

Phew! That’s a lot of money! Granted, it’s just an estimate, and there are certainly tweaks that can save money. Let’s break this down a little further and talk about where the plusses and minuses might be on this estimate. And we’ll also discuss a few tips to do this in a more thrifty manner.

The Application

There, unfortunately, isn’t much wiggle room to be had here. The only thing I’ll say is to be realistic and thoughtful in your decision to apply to a program. Don’t just apply to 25 programs willy-nilly because you heard so-and-so was going to apply to that many and you feel you have to in order to increase your match chances. That can quickly add up at $43 extra per program application!

pharmacy residency

This will be you if you apply to 25 pharmacy residency programs

scattered across the country

This is YOUR job search, and if a program isn’t really on the table for you (whether due to interest, distance from home, etc.), it’s ok to NOT apply! That being said, if you have the residency-or-bust attitude and the money to back it up, by all means, go for the gold.

Just remember, all it takes is one program to match. Refer to the many other sections of this guide for more advice on researching programs and the match process.

The Midyear Trip

Travel and Accommodations

There are many ways to save money here! There isn’t much leeway with flights unless you’ve saved up airline points on a travel credit card. You can also book WAY in advance when prices are generally lower.

Where you can really make an impact on your budget is with ground travel and hotel costs.

For ground travel, try to share airport shuttles with other classmates. There will likely be several of you getting into the same airport at similar times, so coordinate ahead of time to book shuttle transportation to and from the airport.

Even if you have to wait 30 min (or more) for other people’s flights to arrive; trust me, you have plenty to do to prepare for the Midyear. So grab a coffee and kill some time in baggage claim. It’s worth it to be able to divide the shuttle cost between up to 8 people for a van instead of just you in a taxi (because, math).

It’s a similar story for the hotel. This may surprise you, but you do not need to stay at the Ritz and drink Dom from fine crystal glasses. You don’t need to buy scotch that’s old enough to legally vote from the hotel bar. Be conservative here. A decent hotel one more block away from the convention center will serve you well.

That being said, I also wouldn’t book too far away from the convention center because you will be going back and forth A LOT. And those cute dress shoes are pretty much awful to walk in. Plus carrying your poster tube and your purse (or your European carry-all for the guys reading this). You don’t want to be a hot mess when you do finally arrive at the showcase.

Another thought on the hotel. Just like with ground transportation, sharing is caring. You don’t have to be besties with a person to share a room for a few days. More than likely, if it’s a classmate, they aren’t a serial killer. So you should be ok to bunk in together for the convention. At least figure 2 to a room so you can each have your own bed. But if you have good friends going and can be comfortable 4 to a room, go for it! (#sleepover!)

pharmacy residency

Another caveat here…

You do actually have to get some sleep during this convention so you don’t look like the walking dead when you’re telling the RPD why you want their program. So don’t just room with anybody for the sake of saving money. Especially if that somebody is only attending Midyear to hit up Bourbon Street or The Strip. Know what I’m sayin’?

Professional Attire

There are plenty of other places on the internet that can give you much better fashion advice than I can. This section is about how to find something without spending an arm and a leg. You don’t need to be all Armani for this event. Pharmacy residency programs are just looking for conservative, clean-cut, professional attire.

So if that suit happens to be off the rack at TJ Maxx, go for it! If you’re like me and have a hard time finding well-fitted business attire at discount stores, then it’s ok to invest in a nice suit (still doesn’t have to be Armani…a department store works just fine). THEN use the discount store for your dress shirt, business bag, belt, shoes, etc.

If you have a suit already, use this section of the budget to account for dry cleaning. Use a dry cleaner you trust but that isn’t too expensive. You want your suit to come back to you in good shape (viva la suit!). Then, if you’re a careful packer and you hang that suit up in your hotel bathroom right when you get checked in, it shouldn’t be too wrinkly. (And the shower steam can help diffuse minor wrinkles so you don’t have to mess with finicky hotel irons). Online reviews will often point you in the right direction for which dry cleaner does good work for the right price in your area.

Meeting Registration

There’s no getting around the meeting registration. The only tip here is that if you’re not already an ASHP member by the time of registering, it’s worth the $51 for a student membership to go ahead and join. You still come out ahead rather than paying a non-member meeting registration fee ($340 + $51 vs $480 for non-members).

Business Cards and CV Copies

Not every program at Midyear is going to accept these, it’s true. But you’d really hate to have an RPD ask for your CV or contact information, and you don’t have anything to give them. In this case, it’s better to have and not need than to need and not have. Have some copies of both on hand.

Luckily, business cards are cheap to design and print at most big box office stores. There are also online options like www.vistaprint.com. Maybe one of the student chapters of APhA or ASHP at your school is providing business cards through a fundraiser. Just go with the basic package (no glossy finish needed here, peeps), and monochromatic tones will be just dandy.

pharmacy residency

Don’t go overboard on your student pharmacist business cards…

Same with your CV copies. This is Midyear, your CV is likely going to end up in a box with hundreds of others for reference if needed. Don’t print it on vellum and douse it with the scent of sexy professionalism. It will not make you stand out (at least not in a good way). Just basic white paper copies will be fine. You don’t need to splurge on the thicker stock resume paper. The content of your CV is more important than the material it’s printed on.

Thank You Notes and Postage

There are mixed thoughts about this whole thank you note ordeal with Midyear. Some advise to always send a handwritten thank you note. Others say an email will suffice. In the end, it’s up to you to decide.

But for those of you who choose to walk the path of handwritten, mailed thank you notes for Midyear, you should know something…

The USPS doesn’t mess around. Forever stamps may be good forever, but that doesn’t mean their price stays the same forever. Hot damn, they’re expensive little buggers! So if you’re planning on sending a thank you note to every soul you meet at each program, just know a book of 20 stamps is currently sitting at $10.

Oh and don’t go out and buy Hallmark thank you cards. The dollar store sells some classy, simple multi-packs. It’s ok to send similar-looking cards to people within the same department. Pharmacists won’t be offended by getting the same card – it’s what’s on the inside that really matters! (#awww)

The Interview Trips

Scheduling

While many of the same concepts as the Midyear trip apply here, there are some additional tips to remember. If you have programs in a similar geographic area, see if you can arrange interview dates around the same time. Perhaps you interview with one program on a Friday and another the following Monday. (That’s what we southerners like to call a twofer – two programs for one flight!)

Plus, you’ll have the weekend to check out the area and see if it’s somewhere you’d really like to live for a year. If you’re a Planner Level: Expert, you can even use that time to check out some housing options you’ve researched beforehand.

Travel and Accommodations

Try to use what I’d call the family and friends discount. You know a person you can crash with for a few days? Call ‘em! An extra bonus is the built-in tour guide and transportation for the area.

Oh, but even with all this talk of being frugal, don’t be a total Scrooge – dinner, and drinks on you, of course. They’re saving you a lot of money, you can spend a little of that as thanks. It’s called common courtesy, people.

Professional Attire

Use what you have. There’s absolutely no need to worry about getting a different suit because, gasp, the programs already saw me in this suit with this shirt! This isn’t Fashion Week in NYC, and you’re not interviewing with Tim Gunn. Trust me, programs don’t remember or care (remember, they saw 10,000 other people in suits that day). Unless of course, your suit is purple. (Don’t do it. Just don’t. And I only say that because someone will. Every year. Long story short, please don’t buy or wear a purple suit.)

pharmacy residency

NOT you at Midyear…

Bonus Tip!

We have to talk about taxes. You know what you’re doing with all of these interview trips, right? Yes, you’re looking for a residency program… but you know what that really is? A JOB! Save ALL of your receipts because, in a rare stroke of governmental goodwill, you can write off job search expenses when you do your taxes! Woot woot #adultwin.

Final Thoughts (tl;dr)

So there you have it, a rough estimate of what costs you can expect from the pharmacy residency search process. Of course, it is just that – an ESTIMATE. There are certainly people who will spend more, but there are also people who will shell out less during the entire cycle.

Remember too, that during this time of interviews, you will also begin the process of applying for licensure in one or more states and registering for the NAPLEX and MPJE. There are (heavy) costs here as well, and you have to factor these in when you’re budgeting for residency interviews.

Generally, licensing costs can be about $1000 for your first state, which includes the NAPLEX ($575), the MPJE law exam ($250 per state, non-MPJE state law exams are similar), state licensure fees (variable, ~$150-300 per state), and background checks (~$50/state).

Additional states can run you ~$500 each (MPJE, state licensure, and background check fees). You can see how graduation is not exactly cheap (there’s also a cap and gown and matriculation fee associated with graduating most pharmacy schools…it’s usually about $100). You either need to be loaded or disciplined with your money to make this work without having the heat turned off in your apartment.

With all of this being said, please Please PLEASE (and I can’t say it enough!) do not let the numbers scare you away from pursuing residency if that is truly what you want to do! It really CAN work (as evidenced by thousands of people every single year)!

There are fantastic residency programs all over this country, and you may not have to go far from your current location to find one that fits what you’re looking for. So your travel budget may be very different than the sample person above who flew all over the country interviewing.

Remember, it just takes one program, and it doesn’t have to be the famous one on the other side of the country. It may be the solid program a 3-hour drive away. Use this as a guide and an awareness tool, and apply it as you see fit.

Happy budgeting, and best of luck!

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21 Financial Moves Every Pharmacy Graduate Should Make

Posted on by yfpadmin

The following post contains affiliate links through which YFP receives compensation.

It took me about a year and a half after graduating from pharmacy school to finally start making good decisions to improve my financial situation. I had some bad spending habits, very little personal finance knowledge, and wasn’t taught good financial principles growing up. This resulted in some unfortunate financial mistakes early in my career.

Most pharmacy schools don’t have mandatory personal finance education, some offer elective courses, and some provide some basic information before you graduate. Therefore, it will largely be up to you to be proactive in making sure have a financial game plan.

Check out these 20 moves that every pharmacy graduate should make to get a good start.

Depending on your personal situation, you may not be able to work on all of these at once. The key is to get them on your radar so you can develop a good foundation.

1. Create Solid Financial Goals

When I graduated from pharmacy school, my main goal was to survive an intense residency program. I fully admit, I wasn’t thinking very much about my finances and I hadn’t set any goals. Looking back, this should have been a priority.

Consider having specific, measurable, and timely goals that have a strong purpose behind them and lay out the steps you are going to take to accomplish. I recommend that you actually write your goals down and tell your friends as research shows these additional steps can increase your rate of success. Here is the basic framework you can use:

By <date to achieve goal>, I want to <financial goal you want to achieve> so that <why you want to achieve the goal>. To accomplish this, I will <steps you will take to make the goal become a reality>.

Example

By December 31st, 2018, I will save $5,000 for an emergency fund so that I can avoid the stress and anxiety when an unexpected expense occurs.

Consider having goals around these areas: savings, net worth, debt payoff, and giving.

2. Develop a Budget

Many people associate a budget with living frugally, eating ramen, and shopping at thrift stores. The truth is that a budget is just a game plan on how you will spend your money and execute your goals. You plan for your expenses in advance and then direct your disposable income (or money left over after expenses) toward your financial goals.

Personally, having created and stuck to a unique budget every month for the past several years has helped prevent overspending, given me a sense of peace, and also kept me on track to achieve my goals. If you want an easy four-step process, check out our free budgeting template to get started. After getting your budget set up, consider using one of the budgeting software/apps to track your progress each month. Some of the popular ones out there include Mint, YNAB, Mvelopes, and Everydollar.

3. Set up an Emergency Fund

If you’ve never had an unexpected car, medical expense, or another emergency, it’s only a matter of time. Life happens and you better be prepared. Having a good chunk of cash on hand can mitigate emergencies that have the potential to derail your financial plan.

The textbook answer is to have 3-6 months of expenses saved in a liquid account like a simple savings account or money market account. Ally bank has a great rate of up to 1.00% APY (Annual Percentage Yield) for their savings account which is significantly higher than what most banks offer. The CIT Bank Savings Builder is another option for a high yield savings account that currently offers an APY of up to 0.75% and requires a minimum deposit of $100. There are no fees to open or maintain the account, however, to get the maximum APY you have to either maintain a balance of $25,000 or more or make monthly contributions of $100 or more.

Some argue that this is too much money to be earning interest rates that can’t even beat inflation. Find an amount you are comfortable with and one that allows you to reduce your dependency on a credit card to bail you out.

4. Eliminate Your Credit Card Debt

No one ever plans to go into credit card debt. It’s often the result of either overspending or unexpected medical events or emergencies. Having credit card debt is really a financial emergency in and of itself given the typical ridiculously high interest rates.

If you’re in this situation, you should make it a priority to get rid of it as soon as possible. You want to take advantage of compound interest and not have it work against you. Do you need an emergency fund in place? Would a budget help prevent you from overspending? Find a strategy that will help prevent it from recurring in the future.

5. Calculate and Track Your Net Worth

This is a quick way to analyze your financial health. Your net worth is your assets (things you own) minus your liabilities (debt you owe). As a new pharmacy graduate, this is likely going to be a large negative number thanks to student loans. However, don’t let that discourage you!

The goal is to make strides to increase your net worth by building your assets and paying off debt. The trajectory is more important than the actual current number. With apps like Mint or Personal Capital, you can quickly check your net worth if you have all of your accounts synced. Tim Baker CERTIFIED FINANCIAL PLANNER™ on the YFP team also has a great net worth tool that’s easy to use.

6. Get Long Term Disability Insurance

You put in a lot of time, energy, and effort to be able to become a pharmacist and make a good income. That’s why it’s so important to protect it. Disability insurance for pharmacists is really income insurance. It provides you with money in the event that you become disabled and are unable to work. Personally, I have known pharmacists that have been unfortunately out of work for months to years because of head trauma and autoimmune diseases. What would happen if you were suddenly unable to work because of an accident or illness? How would you support yourself or your family?

Compared to other types of insurance, long-term disability insurance for pharmacists can be more expensive depending on your health status and coverage options. But can you afford not to have it? You may have a policy through your employer but many times they are not as robust a private policy and may not offer own occupation coverage.

You can learn more by checking out our disability insurance page. When you are ready to shop around for a policy, check out Policygenius, an online broker we recommend where you can quickly shop multiple reputable companies to find coverage that’s right for you. They have a very user-friendly interface and offer incredible service.

disability insurance for pharmacists, long term disability insurance

7. Develop a Student Loan Payoff Strategy

86% of pharmacy graduates borrowed money to pay for school and the average student loan debt is now over $160,000. With debt loads continuing to rise and salaries being somewhat stagnant compared to inflation, you need a solid strategy to tackle your student loans.

If you’re lucky enough to work for a company or institution that offers a tuition reimbursement/repayment program, this should be your first strategy to consider. There are some well-known federal programs offered by the government and military and some state programs, too. Beyond these, your options are to pursue loan forgiveness through the Public Service Loan Forgiveness Program or forgiveness after 20-25 years or to pay them off in full.

If you’re not pursuing forgiveness and don’t need an income-driven repayment plan, a great option can be to refinance student loans. Reducing your overall interest rate by 1% could result in thousands in savings. You can even get a nice bonus up to $800 through one of our partner companies. If you need help finding the best strategy, you can take our free student loan quiz or download our Quick Start Guide.

8. Start investing in your company’s 401(k), 403(b), or TSP

When you’re flooded with student loans and other debt, it can be hard to balance other goals such as investing. While you may feel you can put off retirement savings for a few years, the reality is that you want to take advantage of compound interest, and the earlier you start contributing, the better.

Many companies offer a match program where they will put in a dollar amount equal to your contribution up to a certain percentage, such as 5%. This is essentially “free” money. For most people, taking the match is going to be the best play, even while paying off student loans. Beyond the match, how much you contribute to your retirement savings plan depends on your financial goals.

refinance student loans

9. Get Liability Insurance

Even as a highly trained professional, mistakes can happen which could jeopardize your license and even your career. If you work for an employer, they likely offer some protection if you’re functioning within your scope of practice. However, their main concern is protecting the organization, not you.

Besides actual damages, liability or malpractice insurance can help cover litigation costs, costs for representation for the board of pharmacy hearings, and lost wages. Coverage is relatively inexpensive (~$12-$20/month). Proliability, Pharmacist Mutual, and HPSO offer policies for pharmacists up to $1 million in liability coverage per incident and a $3 million aggregate limit.

10. Get Term Life Insurance

Not everyone needs life insurance, but, if you have a family that depends on your income or someone would be responsible for your debt if you pass, you should have a policy in place. There are two major types of life insurance: term life insurance and permanent. Term is the way to go for most people because it’s less expensive and not flooded with fees.

The amount of coverage required will depend on your needs including existing debt, income support, and future expenses. Future expenses include things like funeral costs, childcare, and college tuition. Check out Episode 44 of the YFP podcast for more information on figuring out your life insurance needs. You can get a free quote in two minutes through Policygenius without putting in your personal information.

11. Set up a Health Savings Account (HSA)

If your employer offers a high deductible health plan (HDHP), then you’re eligible to contribute to an HSA. This can be a good option, especially if you’re relatively healthy and rarely use health insurance because your premiums will generally be lower than traditional plans.

An HSA allows you to save money pre-tax into an account designated for health expenses. But, here is the best part, it doesn’t have to stay in a savings account. The money can be invested aggressively just like an IRA. Furthermore, these accounts grow tax-free and distributions can be taken tax-free if used for qualified medical expenses.

However, you don’t have to use the money for medical expenses that occurred in the same year. You can reimburse yourself for medical expenses that you paid out of pocket in previous years. For 2019, you can contribute up to $3,500 per year if single and $7,000 if married or have dependents.

12. Start Contributing to an IRA

Like a 401(k) or 403(b), an IRA or Individual Retirement Arrangement is another great way to save for retirement in a tax-efficient manner. This is something you set up on your own outside of your employer through a mutual fund company or brokerage firms such as Vanguard or iShare.

While your investment selection will vary based on your personal situation, consider using low-cost index funds or exchange-traded funds (ETFs). You can do this completely on your own or use a robo advisor where portfolio options are already established and your asset allocation is automatically rebalanced.

Meeting with a financial planner to help you choose investments and your overall portfolio is another great option. You can set up a free discovery call with YFP Director of Business Development, Justin Woods, PharmD, MBA to learn about how YFP Planning can support your investment strategy.

You have the option to contribute to a traditional IRA, Roth IRA, or a combination of both. Contributions to a traditional IRA can lower your taxable income, but you likely won’t be able to take advantage of that benefit if your adjusted gross income is $63,000 if single and $101,000 if married filing jointly.

Although you may not be able to contribute to a Roth IRA directly because of income limits, you can contribute to a traditional IRA and convert to a Roth (known as backdoor Roth IRA). Any gains prior to the conversion will be taxed. For 2020, the contribution limit is $6,000 per year.

term life insurance, term life insurance for pharmacists

13. Get a Will in Place

This is probably one of the last things on most people’s financial to-do lists but it’s something you don’t want to overlook. Having a will in place will ensure your property goes to whoever you decide, give you the ability to name an executor who will enforce your will, and to name a guardian for your children if this applies. If you die without a will in place, this will be decided by probate court according to your state’s laws and regulations.

Along with a will, you want to have a living will which is also called a health care declaration or an advanced directive. This outlines how you would receive medical care and who you want to make decisions in the event that you are incapacitated. Depending on how complex your estate is, you may want to hire an attorney to help. Otherwise, you can download state-specific estate documents for free or at a very low cost from many sites.

14. Get Clarity on How to Get Raises or Promotions

Your raises will typically be based on time worked, merit, or a combination of both. If you can increase your salary through achievements, do you know exactly what those are? Some organizations will give raises if you obtain board certifications or other medical credentials.

What about publications, presentations, or positions within state and national pharmacy organizations? If you are already doing things to promote and advance your career, knowledge, and experience, you should definitely take advantage of the financial benefits if available.

15. Set Your Withholdings to Break Even

When you first start working for an organization, you will fill out an IRS W-4 form. This tells your employer how much in federal taxes to withhold on your paycheck and is designated by a number.

The lower the number, the more money they withhold. To maximize your net pay every month without owing a tax bill, you will need to determine the optimal withholding based on your projected income and deductions. If your taxes are relatively easy, you can figure this out using the IRS Withholding Calculator. Otherwise, consider seeking the help of an accountant. You can adjust your withholdings multiple times throughout the year if needed.

16. Consider Hiring a Financial Planner

Having a good financial planner on your team can help you achieve your goals, manage your investments, and put together a comprehensive plan. Beyond the financial benefits, a planner can give you peace of mind knowing someone is looking out for you. The key is finding someone you can trust that has your best interest in mind.

While there are many types of financial planners and advisors out there, consider a Certified Financial Planner (CFP®). They have the most rigorous education requirements including thousands of hours of experience. Be sure they do comprehensive financial planning and not just investment management (unless that’s all you’re interested in). The team at YFP Planning works virtually with pharmacy professionals across the country for one-on-one fee-only, certified financial planning. You can set up a free discovery call to see if YFP Planning is a good fit for you.

financial planner for pharmacists, financial planning for pharmacists

17. Start Educating Yourself

Before graduating from pharmacy school, I received about two hours of financial information. Since I didn’t make it a priority to learn about money while in school and didn’t have any good examples to follow, I had a very weak foundation. That resulted in some big mistakes in my first year and a half as a practicing pharmacist.

You don’t need a master’s degree in finance to be successful with money, but you should have the basic knowledge that helps you make good decisions and develop good habits. Some of the YFP team’s favorites include Money: Master the Game and Unshakeable by Tony Robbins, and The Millionaire Next Door by Tom Stanley. If you want more education that is focused on pharmacists, check out our book Seven Figure Pharmacist: How to Maximize Your Income, Eliminate Debt, and Create Wealth and the YFP Podcast.

18. Consider a Side Hustle

Side hustles are ways to make extra cash beyond your full-time job. This could be moonlighting at another pharmacy or hospital or could be something completely outside of your training. Having an additional stream of income can help you achieve your goals faster and reduce the risk of relying solely on your main job.

If you want some ideas, check out this post 19 Ways to Make Extra Money as a Pharmacist in 2020. You can also check out the podcast as we frequently have pharmacists on the show who talk about side hustles they started.

19. Set up Systems to Avoid Lifestyle Creep

Lifestyle creep is one of the biggest threats to a pharmacy graduate. This is when your expenses meet or exceed your income no matter how much you earn. With incomes starting out high, there is a tendency to get comfortable and maintain a certain lifestyle.

Spending the majority of your money on things that bring you pleasure and happiness today and the need to compare yourself to those around you are the main contributors to lifestyle creep. So you have to protect yourself from yourself. Many pharmacists have recommended, “living like a student” for the first few years following graduation. This is a great way to avoid upgrading your lifestyle and making large purchases too quickly.

Another strategy is to automate your contributions toward savings and investments so you never “see” certain money. If you can divert a percentage of income before it hits your checking account, you won’t be able to spend it. Increasing your savings in step with your raises is another great way to prevent lifestyle creep.

20. Connect with the Your Financial Pharmacist Facebook Group

Surrounding yourself with people on the same journey is a great way to help you achieve your goals. We have some great discussions on the Facebook group and you can post your own questions at any time. Join over 7,000 pharmacists and students for some extra motivation and inspiration by clicking here.

21. Use a high-yield savings account or money market account for big purchases

When you consider inflation, money sitting in regular checking or savings accounts can lose a lot of purchasing power over time given most interest rates are essentially next to nothing.

Sure you avoid market risk or the risk of keeping cash in other investments but there are other options that are less risky and can yield at least some return. These include high yield savings accounts and money market accounts.

If you are sitting on a bunch of cash that’s for an emergency or you are saving for a big purchase such as a car or home within 5 years or less, these can be good options to earn a little extra money. Now if your savings amount is relatively low and you aren’t adding anything to it then it may not be anything substantial, but remember it’s better than 0.001%.

I did a review of my experience with CIT Bank which offers competitive interest rates from 0.85-1.40% for their high yield savings and money market accounts.

Financial Planning for Pharmacists

While these are some great tips to get you started on your journey, everyone has a unique situation. Whether you want to pay off your student loans, make the right investment decisions, or simply build a solid financial plan, YFP Planning can help you get your income working for you (rather than the other way around). YFP Planning offers fee-only financial planning for pharmacists. You can book a free discovery call to learn more!

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5 Steps to Creating Your Best Budget

Posted on by yfpadmin

The New Year is upon us and there is no better time to be thinking about setting and keeping your financial goals. And once those financial goals are set, no better way to achieve them than by having a monthly spending plan (aka budget) that includes those goals.

If we are being honest with ourselves, who gets a little nauseous when the topic of budgeting comes up?

I mean, besides a few financial nerds out there (myself included), not many are a fan of the whole budgeting thing.

“It takes too much time.”

“I already know how much I spend.”

“I don’t know how to make one and follow it.”

“I’m afraid of what I might find when I track my expenses.”

“I don’t like to be so restricted.”

“I make enough money, so I don’t need to budget.

These are some of the most common reasons I hear for all of the hate surrounding budgeting.

I admit that, I too, agreed with most of these statements until I experienced first hand (through my own journey paying off $200,000 of debt) how powerful the budget can be.

You Need a Budget

Data suggests that most, if not all of us, need to put a budget in place.

We are drowning in student loans with pharmacy graduates now coming out of school with on average more than $172,000 of debt (Ref: AACP Graduating Student Survey, 2019). That kind of debt load means a big monthly payment and a big monthly payment means less money available each paycheck to achieve other goals. These rising student debt loads, amongst other factors, justifies a need to have a monthly budget to scale back other expenses.

Our credit card debt is at an all time high, suggesting we are consistently spending more than we make each month. According to the Nerdwallet 2019 American Household Credit Card Debt Survey, Americans have more than $987 billion in credit card debt (say what?!) with the average household carrying a monthly balance of just under $7,000. Rising credit card indebtedness suggests we need some help with keeping expenses in check.

We aren’t able to cash flow emergencies that come up. According to a 2019 Bankrate Survey, approximately 60% of those surveyed didn’t have enough in savings to pay for a $1,000 car repair or emergency room visit. Do you have a fully funded emergency fund? If not, a budget may help you get there.

We aren’t saving enough for retirement. One-third of Americans report they have no retirement savings and 23 percent report having less than $10,000 saved (Ref: GOBankingRates 2016 Retirement Survey). A good budget will help you prioritize retirement along with other goals to ensure you are on track to meet your goals.

So, if you have paid off all your student loans, have no credit card debt, have a fully funded emergency fund, and are on track with achieving your financial goals (including securing the nest egg you will need to retire), you just may not need a budget.

If you are reading this and thinking to yourself “I hate budgeting but I can respect I need one…” or “I’m in a relationship with someone who hates budgeting and we need some help working together…” check out the blog post written by my wife, Jessica Ulbrich, ‘When Budgeting Isn’t Your Thing.’ While I’m a little biased, she provides an awesome perspective on budgeting, especially for those that hate everything about it.

Choosing the Best Budget that Works

While one budgeting method will never be right for everyone, the team at YFP believes that the zero-based budgeting technique is the one that can yield the greatest results.

With a zero-based budget, you account for every single dollar that is spent (before the month begins) and, more specifically, every single dollar has a purpose. The goal is to spend your paycheck down (on paper) to $0 and to figure out a way to make sure your goals (beyond meeting monthly expenses) can be funded, rather than hoping you have money left over at the end of the month. In just a minute, I’ll walk you through a 5-step process for putting this zero-budget in place, so hang with me.

With the zero-based budget, you are putting yourself in the best position to be completely in control of your spending. Since you are essentially micromanaging your money, you quickly pick up on spending behaviors and habits.

While this method of budgeting can yield the greatest results, it can also be more time consuming than other budgeting methods, and can be exhausting at times to track (subsequently leading to burnout). Therefore, this highlights the necessity of (1) having someone keep you accountable with your monthly budget, whether that be a financial planner, significant other, and/or friend; and (2) creating incentives and rewards along the way for achieving goals to keep you motivated.

5 Steps to the Zero-Based Budget

Hearing about a zero-based budget for the first time can feel overwhelming. Let’s break it down to 5 simple steps that will help you get this in place.

Before moving forward, be sure to grab the YFP budgeting template, which follows these 5 steps and is ready for you to fill out!

Step #1 – Determine Your Take-Home Pay

This is the amount you will be working with each month to cover your expenses and put to good work to achieve your financial goals. The take-home pay (or net pay) is the amount that shows up on your paycheck every pay period after taxes, health care premiums, retirement contributions, and any other deductions withdrawn from your base (gross) pay. For student pharmacists, take-home pay would include loan disbursement money, plus any earned income.

Step #2 – Account for Necessary Expenses

While the definition of ‘necessary’ could be debated, for the purpose of this activity, let’s include the following as ‘necessary’ expenses: housing, transportation, food, utilities, insurance premiums if applicable (i.e.., life, disability) and minimum payments on your debts (i.e.., credit cards). In this step, consider food as what you need from the grocery store to comfortably survive. Don’t include your trips out to restaurants here (this will go in Step 3). Depending on your philosophy towards giving, you may also include giving in this category.

Step #3 – Determine How Much to Spend on Discretionary Expenses

Think of discretionary expenses as the nice to have, but in a true financial emergency, they could be cut. These include eating out, trips for coffee, vacations, clothing expenses beyond the bare minimum, extra payments on debt, etc. It is very easy to justify any one of these as an ‘essential’ expense, so it’s important to really be honest with yourself when evaluating this category. If you have no idea how much you spend on these types of expenses in a month, a good place to start is to review your past month’s banking or credit card statement.

Step #4 – Calculate Your Disposable Income

Your ‘disposable income’ is calculated by taking your take-home pay and subtracting your essential and discretionary expenses. That number is the amount you have to put towards other financial goals (i.e., building an emergency fund, saving for kids’ college, down payment on a home, etc..). For example, as a pharmacist, if a you had a take-home pay of $7,000 with ‘necessary’ expenses of $3,000 and ‘discretionary’ expenses of $2,000, you would have $2,000 of ‘disposable income’ to put towards other goals.

Step #5 – Allocating Disposable Income to Goals

Finally, this is where the magic happens. Allocate your ‘disposable income’ to your financial goals. If the amount of ‘disposable income available isn’t enough to allow you to meet those goals in a time frame that is desirable to you (or results in a deficit), go back to the discretionary areas in Step 3 and make some cuts. Once you have completed Step 5, you should have “spent” your entire income, meaning that every dollar has been assigned, resulting in $0 balance.

If you find yourself frustrated that you cut expenses and still aren’t able to allocate the desired amount towards your goals, it’s time to start looking more at the income side of the equation by optimizing your paycheck and/or putting together a plan for earning additional income.

YFP Podcast Episode 28

In Episode 28 of the Your Financial Pharmacist Podcast, Certified Financial Planner, Tim Baker, and I go into much more detail about:

  • why having a budget is key to your long term financial success;
  • why so many people fail with keeping a budget;
  • two other common budgeting techniques besides the zero-based budget, the pros/cons to each, and why the zero-based budget wins out;
  • how to handle irregular expenses; and
  • electronic tools/apps that you may consider to implement your budget.

In addition to being available on the YFP web site, the podcast is also available on iTunes, Stitcher, Google Play and Spotify.

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