Financial Planning / Podcast

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

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How to Talk to Your Aging Parent About Finances

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

About Today’s Guest

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

Summary

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

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

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

Mentioned on the Show

Policy Genius
Mom and Dad, We Need to Talk: How to Have Essential Conversations with Your Parents About Their Finances by Cameron Huddleston (Amazon)
Cameron Huddleston
Mom and Dad, We Need to Talk: How to Have Essential Conversations with Your Parents About Their Finances by Cameron Huddleston (Barnes and Noble)
Cameron Huddleston on Facebook
Cameron Huddleston on Twitter

Episode Transcript

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

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

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

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

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

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

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

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

Tim Ulbrich: Right. Right.

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

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

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

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

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

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

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

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

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

Tim Ulbrich: I really like that.

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

Tim Ulbrich: Sure.

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

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

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

Tim Ulbrich: Oh, I love that.

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

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

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

Tim Ulbrich: Everyone’s together, right.

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

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

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

Tim Ulbrich: Right.

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

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

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

Tim Ulbrich: Yes.

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

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

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

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

Cameron Huddleston: Yes.

Tim Ulbrich: I remember, yes.

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

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

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

Tim Ulbrich: Absolutely.

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

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

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

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

Cameron Huddleston: Thank you.

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YFP 105: How Jamie Leigh Tipton Started a Compounding Pharmacy

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Jamie Leigh Tipton on Starting a Compounding Pharmacy

Jamie Leigh Tipton, a new practitioner from North Carolina and owner of Tipton Compounding Pharmacy, shares her journey of starting her own business and the importance of building a strong financial foundation to be able to do so. Jamie Leigh’s mom, Janet, also joins the show to talk about her involvement in the family business, how she helped Jamie Leigh graduate debt free and why she has encouraged Jamie Leigh to start her own business.

About Today’s Guest

Dr. Jamie Leigh Tipton completed her Doctorate in Pharmacy from Creighton University School of Pharmacy in May 2017 after studying pre-pharmacy at Western Carolina University. She has always had a passion for compounding and dreamed of bringing this unique practice to her hometown of Franklin, NC.

During her time in pharmacy school, Jamie Leigh spent time working with Professional Compounding Centers of America (PCCA). This PCCA education included compounding boot camps, advanced compounding techniques, and drug information research on how compounded medications affect each individual patient. Her research was published in one of PCCA’s Apothagrams which is distributed to compounding pharmacists throughout the country.

Jamie Leigh participated in educational and training rotations at various locations such as retail pharmacies, compounding pharmacies, hospitals and a local veterinarian practice. She also took part in the National Community Pharmacists Association (NCPA) student ownership workshop and was accepted to attend Live Oak Bank Pharmacy Ownership Student Summer Program.

While a pharmacy student, she was a member of the Rho Chi Honor Society and received many awards including the 2017 Merck Award for academic excellence. As the owner of Tipton Compounding Pharmacy, located in the beautiful mountains of Franklin, NC, Dr. Tipton’s dream has now become a reality.

Summary

Jamie Leigh Tipton grew up in Franklin, North Carolina and knew that was where she wanted to continue her life. She was accepted to an online pharmacy program and knew early on that she wanted to open her own pharmacy. Being enrolled in an online program allowed her to continue to network and connect with her community.

Jamie Leigh graduated from pharmacy school in 2017 at the age of 23. She was single with no children and had built a strong financial foundation. She knew that if she entered into a comfortable six figure pharmacy job, she would have a hard time leaving to start her own business. With a lot of support from her family, Jamie Leigh was able to graduate from pharmacy school debt free and open up Tipton Compounding Pharmacy shortly after graduation in her hometown.

Her family is committed to supporting Jamie Leigh and the business. Her mother and aunt work in the pharmacy, truly making it a small family business. Janet, Jamie Leigh’s mom, encouraged her to follow her dream and to find happiness in what she was doing. Janet and her husband helped Jamie Leigh pay for college through her high-end real estate career and their 529 college savings plan. Scholarships helped to fund Jamie Leigh’s last couple of years of school.

Jamie Leigh explains that the family members working at the pharmacy aren’t taking a salary yet and are investing back into the company. This will set back her personal retirement age, however they knew that going into the business and have planned to fund retirement accounts. One of the biggest pressures Jamie Leigh feels is the financial sacrifices her family has made to make this dream a reality. Jamie Leigh knows how much they have invested both financially and with their time.

Jamie Leigh shares that she did a lot of online research in the beginning stages of starting the business. She says that you have to be 100% passionate about the business you’re wanting to begin. If you are, you’ll be dedicated in doing research and learning more which are the best steps you can take to start your own business.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? Welcome to this week’s episode of the Your Financial Pharmacist podcast. I’m excited to welcome Jamie Leigh Tipton and her mom Janet to the show to talk about their journey opening up Tipton Compounding Pharmacy in Franklin, North Carolina. Before we jump into the interview, let me introduce Jamie Leigh. She completed her doctorate of pharmacy from Creighton University School of Pharmacy in May 2017 after studying pre-pharmacy at Western Carolina University. She’s always had a passion for compounding pharmacy and dreamed of bringing this unique practice to her hometown of Franklin, North Carolina. And she did just that, which we’ll talk about here during today’s show. During her time at pharmacy school, Jamie Leigh spent time working with Professional Compounding Centers of America, also known as PCCA. This education with PCCA included compounding boot camps, advanced compounding techniques, and drug information research on how compounding medications affect each individual patient. Her research was published in one PCCA’s apothagrams, which is distributed to compounding pharmacists throughout the country. Jamie Leigh participated in educational and training rotations at various locations, such as retail pharmacies, compounding pharmacies, hospitals, and a local vet practice. She also took part in the National Community Pharmacists Association Student Ownership Workshop and was accepted to attend Live Oak Bank Pharmacy Ownership Student Summer Program. While a pharmacy student, she was a member of the Ro Chi Honor Society and received many awards, including the 2017 Merc Award for Academic Excellence. As the owner of Tipton Compounding Pharmacy, located in the beautiful mountains of Franklin, North Carolina, Dr. Tipton’s dream has now become a reality. So Jamie Leigh and Janet, welcome to the Your Financial Pharmacist podcast.

Jamie Leigh Tipton: Thank you for having us.

Janet Tipton: Thank you.

Tim Ulbrich: Well, I am so excited to do this interview. And I want to give our listeners some quick backgound to how this episode came to be and why I am so energized and excited to finally be at the point of recording this. So several weeks ago, Jamie Leigh joined the Your Financial Pharmacist Facebook group, and in her responses to the questions we asked to join the group, she mentioned owning her own compounding-only pharmacy as a new graduate, so a graduate of 2017, as I mentioned in the bio. We have not yet featured an independent pharmacy owner on the podcast, and I thought it was unique that Jamie Leigh had taken the path that she did, owning her own pharmacy, right out of school. So I reached out to Jamie Leigh to schedule a time to talk via phone to learn more about her story, and when I called the pharmacy, Jamie Leigh’s mom, Janet, picked up the phone as Jamie Leigh was compounding a troche before the store opened. Janet and I had the opportunity to talk for a few minutes, and I quickly realized that this was a family business at its core, all hands on deck. I myself grew up in a small business family, and this got me excited, this got me fired up on so many levels, as I’m excited to be their story to the YFP community as I’m hopeful it will inspire some of you out there that have entrepreneurial dreams, that have the entrepreneurial itch, whether that be a side hustle or a full-time venture, to take one step to pursue that desire and passion. So Jamie Leigh, let’s start with your decision to pursue an online PharmD program at Creighton. So obviously, Franklin, North Carolina, is home, you pursued an online pharmacy degree program at Creighton, which I believe is one of the only if not the only one that’s out there in the country. So why did you make that decision to pursue your pharmacy degree online?

Jamie Leigh Tipton: I had done a lot of research with different pharmacy schools, and I knew that I always wanted to stay in Franklin. And I also knew that staying here would enable me to be able to network better. I always had dreams of owning my own pharmacy. At the time, I wasn’t sure what that would mean, at the time. But I always wanted that to be my end goal. And so when I was researching different ways to do cyber (?) pharmacy school, distance pharmacy school, whatever that meant, Creighton at the time was the only distance pharmacy school. And they were really good. I just kind of took a leap of faith there and applied and was able to interview and get in. And it is a great program. They’ve been doing it for over 20 years, so I felt comfortable that this wasn’t their first go-around with distance learning. And that really helped kind of set the path of being able to network here, setting up everything here to be able to not only do the pharmacy school but also do all the research I needed to hopefully set the path of opening my own eventually.

Tim Ulbrich: Yeah, I love how strategic you were with the decision. I mean, we know that small business, especially in small communities in town, it’s all about that networking, the community, and being a part of that community. And making that decision to stay involved in the community and build that network while pursuing your pharmacy program, as you mentioned, a quality program that had been doing it. And I think that that speaks to the vision that you had in terms of getting the company started. So in your bio, as I had read earlier, you mentioned an interest in compounding pharmacy that you had early on, which I think is somewhat unique not only in business aspirations but also knowing a very specific area of practice of pharmacy that you wanted to do. Where did that interest in compounding pharmacy come from?

Jamie Leigh Tipton: When I was in pharmacy school, when I first started, I really didn’t understanding completely what it was, especially since there was not one in Franklin. So it wasn’t like growing up in a big city where you have a lot of different compounding pharmacies and knew what it meant. So when I started in school and learned a little bit more about it, I thought it was so interesting because I actually had a friend that would not, could not swallow a pill. And I always wondered if she got sick in any way, what would she do? And learning that through pharmacy school made me very interested in it, knowing that the children, animals of the world that can’t just swallow a pill, as easy as it sounds, would need help along the way. And that’s kind of where my passion more started, just learning about in pharmacy school all the different things that you could do. And then they also offered an extra course that you could take through PCCA, and that’s where I was able to fly to Houston and see and be able to do in the lab a bunch of different compounds, depending on the unique need. And that’s all kind of in pharmacy school where it started.

Tim Ulbrich: So let’s fast forward a little bit to 2017. You graduate with your PharmD, and at this point, you decide as a new graduate that you’re going to take on opening your own pharmacy from the ground up, building and all. And we’ll talk about that in a little bit. Why did you want to take that path rather than working for somebody else, having a stable, six-figure income? And was there one or two deciding factors that really pushed you in this direction to open your own business?

Jamie Leigh Tipton: I always knew that some form of ownership was what I wanted to do. It was interesting because I was born and raised in Franklin. And when people would see me, they always would say, “Oh, I can’t wait until you graduate so that you can open a pharmacy.” It’s almost like the whole community kind of knew the plan, even probably before I did. So just being able to go through the process — on the fourth year of rotations, it was probably the most evident that I wanted to do that. And so with the whole family, it was a lot of discussions throughout all of the fourth year, getting prepared, because as soon as I graduated, we already had a lot of the building blocks in place to be able to do this. And it is a risk. I was 23? When I graduated and single with no kids. So the risk for me was different than probably other people graduating at different times of their life. But it, to me, was a risk worth taking. I felt like I’m not one that likes change very much, so if I would have gone immediately into a six-figure position at a community pharmacy or a chain, that I would get so comfortable and used to what I was doing that it would be really hard to leave afterwards and go and do such a big risk later on in my life. So for me, it was just one of those things, you start at the very beginning while you’re going and just don’t stop until you can make the dream happen.

Tim Ulbrich: I really appreciate what you said there about the difficulty of it being if you’re comfortable in that position, if you’re comfortable with a six-figure income, especially if you’re living up to that income, maybe there’s a home that’s involved, there’s other expenses, you know, pursuing that dream, not impossible, becomes a little bit more difficult versus jumping right out of the gate and being able to establish expenses and other things off of a lower income and salary, especially as you want to invest that money back into the business. So I’m going to ask you one more question about risk before I put your mom, Janet, on the hot seat because I think that, you know, as I heard about your story to begin with, it wasn’t like you were buying into an existing store that had a proven business model but rather, you were starting this from the ground up. So obviously, that means you most likely did a needs assessment, you did a business plan, you really evaluated what was out there. Did you ever weigh at one point, should I buy into an existing business versus start something from the ground up? Or did you know and have clarity that you wanted to start your own thing from Day 1?

Jamie Leigh Tipton: I talked to a lot of different pharmacists along the way and kind of what we gathered from them was either open your own business from the ground up here in this area or move away and open one eventually after getting some experience. Some different pharmacists were saying the city may be the place to go. We’re about two hours away from both Atlanta and Asheville, North Carolina, so that was one thing they were saying is maybe it would be best to try the city or maybe it’s best to get compounding experience for a few years first before you open it. And for me, wanting to stay here in Franklin, the options were a lot more limited because for me, I didn’t want to go to Atlanta and open up my own because I know for me, it was a community aspect of wanting to stay where I’ve been all my life. So really, as far as working somewhere, buying an existing one in Franklin, that wasn’t an option for us just because there was no compounding pharmacies in Franklin at the time. So to buy an existing one would have meant to move away, which at the time, I didn’t want to do. I wanted to stay in my hometown and grow it from there.

Tim Ulbrich: Yeah, I think the reason — in part, one of the reasons I asked that question I think is I’ve talked with others that are thinking about opening up their own pharmacy. I think sometimes, there’s comfort in going into an established business model. But that often comes with a higher price tag or a lower equity position or other things as you’re establishing that business. So really identifying if there’s a market, where there’s a need and a gap in that care, and obviously, you’ve identified. But the compounding-only aspect of your business I think certainly, that’s an opportunity worth pursuing. So Janet, first of all, thank you for joining us as well. And you know, when I went home after Jamie Leigh, you and I talked a few weeks ago, I was so jacked up because as a father of three boys and soon to be a fourth boy, very, very passionate about teaching my kids about entrepreneurship and encouraging them in their dreams around business. I was really struck in a good way about how supportive and encouraging that you’ve been to Jamie Leigh to pursue this entrepreneurial dream that she has. And I feel like many parents — and it may be a generational thing, and this is certainly a very broad statement — but many parents I think would encourage their child to take the “safe” and comfortable option, which would be in pharmacy the contract that has a six-figure salary. So tell me a little bit more about where that encouragement comes from and why you have been so encouraging to Jamie Leigh in this journey.

Janet Tipton: Well, I’m not going to lie, it would have been really easy to encourage her to use her doctorate degree and get a job as a pharmacist somewhere else and not have the headaches that come with owning a business. But on the other hand, it was weighing the options of the rewards of owning your own business and the benefits that come with that. I had been raised in that spirit. My father owned his own business. My grandfather owned his own business. So it was something that was familiar to me and that I was raised in. So encouraging her to follow her dream and do what would make her happy was our No. 1 goal.

Tim Ulbrich: And so as I understand it, a big part of this — and I’m going to ask Jamie Leigh more about this a little bit later about the financial position that allowed her to take on this opportunity — but as I understand it, you were able to help Jamie Leigh with paying for college so that she wasn’t graduating saddled with student loan debt as many pharmacists are right now, with the average being about $160,000 when they come out of pharmacy school I think really handcuffs — to refer to the golden handcuffs — really handcuffs what you’re able to do in terms of if you have high student loan debt, that might put you in a position where you have to depend on a six-figure income or a corporate position. So how did you practically manage to do that, to save up, to help her pay for college? And what are some strategies that our listeners might employ that are thinking about trying to do something similar for their own kids when they send them off to college, whether that be in the short-term or the long-term?

Janet Tipton: My background is in education. I got my Master’s in education and taught for several years. But then things changed, and my path changed to real estate. And I became a broker in real estate and worked in the high-end golf and lake community locally. By doing that, by pursuing real estate, honestly, that gave us the vehicle of being able to save and invest for Jamie Leigh’s education. And I funded and invested in a 529 college plan. And there were a lot of questions at that time as to how much to invest because you don’t know at the time you’re starting to set up a 529 plan where they’re going to attend college, if it’s going to be a four-year college, if it’s going to be an eight-year college, if she’s going to get a degree, you know, just with her Master’s or with her doctorate. So it’s kind of a guessing game to decide how much to invest to begin with. But I’ll have to be honest that the 529 plan really helped us be able to fund her college. It did not all of it because I guess at the time, I really wasn’t anticipating the doctorate, but her having academic scholarships helped fund the last couple of years of her education. So it was very important to us, all the pharmacists that are out there, they know how much it takes to get their degree and how much they work toward it. So we, my husband and I, always wanted to try to help with education and get that funded. So thankfully, because of the 529 plan, we were able to do that.

Tim Ulbrich: That’s great. So it sounds like a combination of 529 played a big part in that, scholarships, a piece of that, real estate investing, you know, that certainly played a portion of that as well. And so Jamie Leigh, my follow-up to that is, you know, how important was having a solid financial foundation? Here, specifically, no student loan debt and being able to take on the risk of starting your own business.

Jamie Leigh Tipton: It was critical. I would not have taken this risk had I had student debt. It would have been too much to bear with all of the weight and the stress of opening and running a business along with the stress that would be added of paying off student loans. It would be too much to have both.

Tim Ulbrich: And so in addition to the student loan debt, were there other aspects or things that you would recommend to those that are looking to start their own business around emergency funds or other things in terms of building that solid foundation that you can approach your business with confidence and be able to take on some of that risk?

Jamie Leigh Tipton: We knew starting out that no one would be taking a salary family-wise just so that everything we make could go back into the business. So I’ve always been a saver. Any Christmases, birthdays, graduations, I’ve saved all the money and tried to invest a lot of it. Just like I said, the unkown of knowing what I would do eventually but something around ownership, so I’ve always tried to save everything I’ve got gift-wise in order to invest some of it to have a little bit of the wiggle room while we get up and running, knowing that there wouldn’t be a salary for awhile and going from there.

Tim Ulbrich: So let me ask you about that for a minute because I think often, we can get enamored and caught up in the things that come along with starting your own business and it’s exciting. But there’s also the reality of things that are challening, like deciding to invest in the business and not necessarily taking a salary for a period of time. And so I’m guessing some of our listeners are thinking, how are you personally reconciling, you know, eventually at what point might you take a salary? And does this mean delayed retirement savings? Or are you counting on sort of the equity in your business as being an asset that you’re building over time? So how are you reconciling that component of when to take a salary versus putting that back in the business and potentially delaying retirement savings because of that?

Jamie Leigh Tipton: (inaudible) an estimate of how long we’re not going to take a salary versus starting to take a salary, so we have that planned out as far as a timeline. And it does kind of set back the retirement as well. But we’ve kind of planned for that too that eventually, getting into a Roth IRA and different pieces of retirement. I know a lot of pharmacists sometimes hit the high end of the Roth IRA and can’t invest, but as we’re growing, I hope to be able to take some of what I make and put it to that and keep investing in mutual funds as we grow. But yeah, we’ve always had kind of a timeline of at this certain point, we’ve got to start taking a salary. But it’s just as we can and are able to, we are trying to always take everything and put it back into the business.

Tim Ulbrich: And I think too, it’s important for our listeners to understand, you know, the value of equity and ownership in a business certainly has a monetary value. And I think from many different perspectives, which we won’t necessarily get into detail here, but can play a very significant part from building long-term wealth, tax advantages, eventually at some point, maybe a sale of a business, but as you’re putting some of that sweat equity in, there’s obviously value that’s being built through that equity as well. So Janet, one of the questions I wanted to ask you is I know when we talked a few weeks ago, you had mentioned as you built this pharmacy from the ground up with Jamie Leigh, very much being a family type of endeavor, the building, as I understand it, has the pharmacy that is in one part of it, but the other part is open to eventually be rented out I’m guessing as commercial real estate. Talk us through how you made that decision collectively to take on potentially more loans to build a bigger building but also have the long-term vision that some of this could be used for real estate investing.

Janet Tipton: I think my background as a broker in real estate has helped in that because obviously, anybody that’s in real estate knows that it’s location, location, location. So when I was thinking and hearing from Jamie Leigh that that’s what she was kind of wanting to do, I started looking around in our town for some land and trying to find a location that I thought would be good. And we were able to find the land that our pharmacy has been built on, and it’s, in my opinion, a great location that’s right on our main street, it’s adjacent to our local hospital. And so we were able to obtain the lot and plan the building. And yes, we have Plan A, B, C, D, E, F, G, H and so forth. But one of the things that the way that the lot lays, we were able to build not only the pharmacy on the top level, but the way the land lays, we were able to also include a lower level to our building. And we are finishing that off and going to rent that. As a matter of fact, it’s going to be finished at the end of this month. And we have most all of it rented. And so that will also help us to be able to bear the financial burden that comes with building a building. And then hopefully, if hopefully this business will go well, but even if not, I think this will be a great real estate investment for Jamie Leigh down the road to have a building, to have a location, to have the land, and to have the rental income.

Tim Ulbrich: Well, I will say if our listeners need a visual, when you Google “Tipton Compounding Pharmacy,” a picture comes up of the building. And it is beautiful, so I love the design, I love the look and the feel of it. And I would also encourage our listeners to check out the website, which you also both have done a great job with, TiptonCompoundingPharmacy.com. I think the website looks great. It’s a great design and I think really nicely describes your services and the vision that you have for the company. So great work on that. Jamie Leigh, one of the things that stuck out with me when we talked a few weeks ago is that you said you would have been wondering, what if? your whole life if you didn’t pursue this dream. Tell me a little bit more about what you meant by that.

Jamie Leigh Tipton: The stress of owning a pharmacy is a certain beast. But going to bed every night with a really comfortable job but not necessarily a job that you have always dreamed of is even more of a mental taxation on you. I would have hated to wonder every day what if it would have worked? but be too afraid to try. One of my favorite shows is Shark Tank, and this week, Daymond John put on social media a quote that I thought was really relatable to this question. He said, “It’s scarier to watch your dreams slip from you than it is to know you tried to make them happen.” And he also said, “Who’s farther, the person that took a step forward and fell? Or the person that stood still and did nothing?” And I think both of those quotes were really good. He was responding to someone saying, “Should I open the dream business I’ve always wanted to do?” And I think that’s so true. I mean, there are good days, and there are bad days of owning your own. But if it’s truly what you’re passionate about and what you want to do, I think it’s worth it because the wondering every single day of what if? would just be such a heavy burden to have to bear.

Tim Ulbrich: Absolutely. And I think with small business or any business in general, I think sometimes we talk so much about the monetary piece. But I know, for me personally, while the business aspect is critical — if you’re not generating revenue and a profit, it’s ultimately not a business, so that has to be there. But at the end of the day, the feelings of creativity and autonomy and being able to create vision and execute vision, that, to me, is just so incredibly rewarding. And I think that it’s something that people should keep in mind if they want to pursue something of their own. So let’s talk a little bit about, you know, the other side of owning your own business. As I mentioned earlier, it’s not always peachy along the way. And there certainly are struggles. So question for both of you — and we’ll start with Janet — you know, what are some of the struggles, maybe some of the sacrifices that have come from having a family business and jumping into this venture of starting this compounding pharmacy?

Janet Tipton: Well, my husband and I, we kind of lived our lives in reverse. We did a lot of traveling and went to places we wanted to go when we were younger. Both of us were, at the time, in education, so we had summers off. And we traveled there. So now that I’m in the retirement age, I really had no desire to go anywhere else. Kind of been there, done that. So there’s no point of pleasure trips in our future. We have given that out. So yes, there’s financial sacrifices, and there are many sleepless nights, but Jamie Leigh is our only child, and as parents, we wanted to do whatever we could to help her get started in this business. And so that’s what we’ve done. And you mentioned about this thing of family business, and that’s true. I am pretty much in the retirement age, my sister, my only sister, is also at retired. And so both of us work here, trying to help Jamie Leigh. So it just is at the right time in her life and our lives to try to pursue this dream of hers. And like I said, hopefully this will work. And if it doesn’t, then at least it’s a good investment, and we’ll go to the next plans if we need to. But we’re going to do everything we can to try to make this venture of hers happen.

Tim Ulbrich: So Jamie Leigh, what about for you? And I would also follow that up with, you know, one of the things I think I would be thinking about owning my own business, especially if I had my family involved, might be some of that pressure of having the family involved and wanting to have it be successful, especially if there’s been an investment in that. So talk us through that aspect and then just also globally, what are some of the struggles and challenges that you have had in terms of owning your own business?

Jamie Leigh Tipton: I would say (inaudible) that the whole family basically sacrificing all their time in retirement time, it is one of the probably the biggest struggles I have, just because I know how much they’ve sacrificed financially in time to try to make this work with me. I know that they say they did a lot of their traveling before I was born, so I hear wonderful stories about it, but at the end of the day, retirement’s also a time to where you can just sit and do nothing if you want to. So I know what all of their sacrificing just to make my dream come true. So it is a lot of pressure. It’s a lot — like she said — a lot of sleepless nights worrying about different things, feeling sometimes like the weight of all of this on your shoulders. But then having their support means everything. But it is kind of a back-and-forth. You basically eat, sleep and breathe the pharmacy. On the weekends, we sit and talk about it. On the weekdays, we come and work. And then at nights, we talk about it some more. And there’s really no extra time, at least at this stage, to have a life and vacations, really, not much of anything except just doing everything we can to talk and plan to just make this work.

Tim Ulbrich: That’s great. Thank you both for sharing there. And Jamie Leigh, my last question for you, as I know we have many listeners that might have entrepreneurial dreams, whether that’s their own business, a side hustle, but I think often are struggling with where do I start? And where do I draw inspiration from? Besides Shark Tank, which I also love, is there a podcast, a book, a blog, a TV show, or something that you’d recommend to our community that they may be able to draw inspiration from?

Jamie Leigh Tipton: I really just did a lot of online research. I’ve read different financial books and Dave Ramsey books, the “Rich Dad, Poor Dad,” just different things, financial bonds. I think really, above everything, the one thing I would say if you want to open a business, you have to have passion for it. It’s not for the faint of heart, so if you don’t have passion for what you’re doing, it won’t work. It just takes too much time and effort to not be completely dedicated and happy with what you’re doing. I don’t know that there’s a TV show or a book that will do anything more than what just pure passion can do. I had found a quote earlier that I liked that success isn’t made in a microwave, it’s made in the crockpot, and that’s so true. It’s not an overnight success. I know some different books, some TV shows, you get the wonderful overnight successes, but it takes time to grow and build a business. And it takes a lot of planning, many months were spent just talking for hours about the big picture but also short-term goals that it takes to get there. When I first started pharmacy school, one of our head advisors said that pharmacy school was like eating an elephant. You have to do it one bite at a time. And I think it’s the same way in opening a business. So ultimately, I think the main thing you have to have is passion for it. And then if you have the passion, then you’ll be dedicated enough to research different areas and depending on if it’s a pharmacy or if it’s a totally different business, there will be different podcasts, different shows and books that will meet that need of learning more information. But overall, you have to be dedicated to want to pursue this way.

Tim Ulbrich: That is great, great wisdom. So thank you for sharing. And I would encourage our listeners to check out TiptonCompoundingPharmacy.com. I also know and have seen Tipton Compounding Pharmacy on Instagram and Facebook group. And if any of our listeners are in the North Carolina area, around Franklin, North Carolina, I’d encourage you to check out the store and have a chance to talk with Jamie Leigh and Janet as well. So thank you both for coming on the show, for your time, for your willingness to share your journey. I know it has inspired me in a significant way, and I’m confident it’s going to do the same to our listeners. So thank you both very much.

Jamie Leigh Tipton: Thank you.

Janet Tipton: Thank you.

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YFP 104: Jason Long’s FIRE Journey

Posted on by yfpadmin

Jason Long’s FIRE Journey

Jason Long joins Tim Ulbrich to share how he retired from his retail pharmacy job at the age of 38. Jason dives into what the FIRE methodology is and how he and his wife saved for retirement.

About Today’s Guest

Jason Long is a husband, former retail pharmacist, early retiree at age 38, self-made millionaire, distance runner, author of three books, and advocate of rational thought. He holds a Bachelor of Science cum laude in Chemistry from Middle Tennessee State University and a Doctorate in Pharmacy cum laude from Mercer University. Since retirement, he has volunteered as a tour guide at a natural history museum, a teacher for a non-profit ESL program, a marathon pacer at numerous charity events, and a voter registration assistant. He is the current state half-marathon champion and former state full-marathon champion. His interests include Japanese culture, classic cinema, classic music, astrophysics, running, cycling, swimming, traveling, reading, painting, and playing video games.

Summary

Jason Long retired from his retail pharmacy job at age 38. He was able to retire at such a young age by seeking out FIRE (financial independence, retire early). Jason shares that FIRE is a lifestyle choice that’s starting to spread to more people. This methodology is less interested in wealth accumulation and is more focused on leading a meaningful existence, in Jason’s opinion. Jason was able to save up enough money to where the revenue from his investments will provide enough income to live on, meaning he no longer has to work for money.

Jason shares the FIRE is based on the Trinity study which focused on sustainable withdrawal rates for retirement spending. If you have a million dollars, you can withdraw 3-4% a year, giving you an income of $30,000 to $40,000 a year. Jason says that you have a 95% chance to still have money left if you’re withdrawing this amount for 30 years. He and his wife have closer to a 3% withdrawal rate and he’s not worried about them running out of money.

In June 2017, Jason retired at age 38 after saving just over $1 million. He says that it’s still surreal that he’s been retired for two years as it hasn’t fully sunk in yet. Jason decided to pursue the FIRE route in 2005. He was in his last year of pharmacy school and had come to the realization that pharmacy wasn’t what he wanted to do in life. He became curious to know where he’d be in the future if he lived at the same standard of living as his parents did but earned a pharmacist’s salary. He used a spreadsheet to start calculating scenarios and found that if he was earning $105,000 but only spent $35,000 a year, around the age 39 or 40 a return on investment from his portfolio would exceed the cost of living. He didn’t realize that this was a methodology that others were using. In 2015 he found others who were also following this FIRE path.

To reach $1 million, which was in savings only and doesn’t include social security or home equity), Jason and his wife really stuck to only spending $30,000-35,000 a year. His starting salary as a pharmacist was $110,000. The first step they took was to buy a house, but not a mansion. Then, all their money after maxing out 401ks and IRAs, went into Vanguard accounts. They steered clear of getting caught up in big buckets that drive up expenses, like expensive homes and cars. Jason reminds listeners that houses depreciate in value and land appreciates and feels like viewing home ownership as an investment is a myth.

Jason explains that you have to shift your focus and remember that earning $30,000 a year gives you a better standard of living than 99% of people who have ever lived on this planet and to not compare yourself to others. He also shares that it’s necessary to invest beyond a 401k or IRA if you’re wanting to retire before age 59 ½ as there are federal limits to those accounts. Lastly, he shares that happiness doesn’t come from having material things, instead it comes from being financially secure, from having your life in order and being content with what you have.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? Welcome to this week of the Your Financial Pharmacist podcast. Excited for this episode. I’ve been wanting to talk about the FIRE movement for some time, FIRE standing for Financial Independence Retire Early, and I’m glad to have the opportunity today to do that alongside of Jason Long, a pharmacist that retired at the age of 38. So Jason, welcome to the podcast.

Jason Long: Ah, thank you for having me.

Tim Ulbrich: Excited to be here, and I have to start by telling our listeners, which I think is just an indicator of what FIRE is all about, when we were trying to schedule this interview, you know, I think I first started out by proposing several dates and times, and your response was something along the lines of, “Hey, I’m retired. I can do this whenever.” So here we are, and obviously, flexibility of time and freedom of time is one of the positive aspects of Financial Independence Retire Early, and we’ll talk about that. And when I heard about your story, it was published in the New York Times, and we will reference that and link to that in our show notes, and that story from the Times mentioning your retirement at the age of 38, leaving a job making roughly $150,000 a year, I thought, we have to have him on the show. And I think that there’s many pharmacists that will not only be interested in your story but may have similar aspirations and want to know why you did it and how you did it and certainly what could be the path for them to move into that in the future. So before we jump into the specifics of your story and how you achieved early retirement, let’s talk about what exactly is FIRE. I think many people may not be familiar with that concept. So Jason, give us a summary of what is Financial Independence Retire Early. What is this movement all about? And what defines someone achieving FIRE status?

Jason Long: Well, I don’t know it’s so much of a movement as it is just a lifestyle choice that’s starting to grow. I think people, my generation, younger, are becoming a little less interested in wealth accumulation and just living a meaningful existence. And the whole thing with being financially independent, retire early is that you have saved up enough money to where the revenue from your investments will provide enough income for you to live on. That can be a small amount or that can be a large amount. It’s just up to the individual. But yeah, it’s basically just not ever having to work for money. That doesn’t mean you can’t work or that you don’t have something going on on the side, but in my instance, I don’t really have anything going on. I’m just living off the income from the investments.

Tim Ulbrich: So we’ll come back later and talk about your withdrawal and how you’re functionally doing this, but just to build off of what you said, is there kind of a specific rule of thumb in terms of, you know, x amount is needed to be able to draw this much so that you can live off the savings? Knowing that that could be different from one person to another. But what typically is that definition in terms of what is needed to get to that point of achieving FIRE?

Jason Long: Sure. There’s some debate around that. But the generally agreed upon amount is based on something called the Trinity Study. It was done a few years ago to see what percentage you could withdraw on a year-to-year basis. And the way that works is — we’ll just use some round numbers for example. If you have $1 million, you can withdraw something like 3-4% per year, that would be $30,000-40,000. The Trinity Study said that if you withdrew 4% per year and adjusted upward for inflation, and you didn’t adjust that $40,000 amount based on market performance, that you would have a 95% chance over 30 years to still have money left. Turns out the original researchers have amended that to actually be 4.5% because expense ratios have dropped. The cost of managing your money has actually decreased over the years. A lot of people will do it themselves or they’ll use fiduciaries. But for a longer timespan, a lot of people are looking at 4%, maybe 3.5%. In our instance, we’re actually a little closer to 3%. So there’s no historical precedent for a 3% withdrawal rate.

Tim Ulbrich: So just again, for our listeners to get a step back, the idea being here that you’re building up some type of nest egg, for lack of a better word, you know, it could be $1 million, it could be $1.5, $2 million. And then some percentage, you know 3-4%, which obviously what we’re getting to is that what you’re going to be living on and what you need in that nest egg is largely driven off of your expenses and that percentage and of course trying to maintain that amount so you’re not having to dip into that over time. So let’s get into for you specifically, June 2017, the day you retired at the age of 38. You noted on your blog it was the day before you’re 20th anniversary from high school graduation. And at the time, you had savings of just over $1 million. So talk us through what you were feeling at this point in time. I mean, obviously you made the decision that you were going to retire. Were you anxious? Were you excited? All of the above? Talk us through that situation.

Jason Long: Well, honestly, it was a little anticlimactic. You reach a certain amount that you want to get to, and that’s a great day. But it’s not like you’ve reached the finish line, you know? There’s a few things you have to brush up on. And I don’t know, I guess it was kind of surreal to realize that, you know, I had just called and put in my work notice. And two weeks from then, I would work my final shift and then never have to go back to it. There was a sense of relief, I guess, that I’m not — you know, it’s been almost two years, and I don’t think it’s fully sunken in yet. But anxiety, no. Like I said, there’s no historical precedent for a 3% withdrawal rate to fail. Now, that doesn’t mean there’s not going to be unforeseen expenses or that there couldn’t be some future event that might bring catastrophe. I mean, there’s always a chance of an astroid strike or nuclear war or what have you. I mean, but all we have to go on is historical precedent. And we have even a slight buffer above that, I think maybe 3.2%. If you were to have retired in 1968, I think is the worst year you could have picked due to a flat market and large inflation. But you know, even now, we’ve moved up to $1.2, so it’s so far out of the realm of danger that I don’t ever give it any thought.

Tim Ulbrich: Right. Which I’m glad you brought that up, Jason, because I think often, people hear FIRE, and they think risk and without really digging into the math and what do the numbers say, and I appreciate your comments around kind of the historical perspective and 3%. And I would argue, as I think you would agree with me, I mean, people who are $200,000 in debt that have no savings, that are spending all of their income working for whomever, that that job could change tomorrow, go away, whatever. Obviously, there’s a risk position in that that has to be considered as well.
Jason Long: Another risk that a lot of people overlook is that you risk wasting your life working 30-40 years in a job that you really despise. I mean, so is the alternative of going broke early really that bad?

Tim Ulbrich: Well, and I’ll talk about this at the end, but I’m grateful to be in a position that I love what I do each and every day, and I know many pharmacists do. Some do not. And so I think if for somebody for whatever reason does not and there’s not another opportunity that’s available or for whatever reason the transition can’t happen or maybe somebody has found themselves in a career path that wasn’t necessarily a great fit, then I think the FIRE option and really digging into the math, as we’ll talk about here in a little bit, is certainly a viable option. But if nothing else, as I think about the Financial Independence, Retire Early, I’m passionate about independence period, whether or not there’s the retire early component of it. As I’ve talk about before on this show, having options and having flexibility is always a good thing. You never know what’s going to be thrown at you in terms of life events, and you never know what may change over the course of time, either related to your interests or the profession or other variables. And so when did you, Jason, when did you determine that you were going to pursue this route? And talk us through not only when that moment was or roughly that moment was — because obviously, there had to be a timeline of planning to go to a place to accomplish what you did — but also what motivated some of that decision to pursue early retirement.

Jason Long: I think it was 2005, I was in my last year of pharmacy school. And I had kind of come to the realization that it wasn’t exactly what I wanted to do in life. And you know, how I got to that point there is a different story altogether, but I was putting some spreadsheets around, and I was just kind of curious — I was like, if I lived at the same standard of living that my parents had, but I made the amount of money that a pharmacist does, where would I be at financially at age 40, 50, 60, 65? Just running the numbers just to see. And I think I had assumed — I don’t know what pharmacists were making. I think maybe $105,000-110,000 a year. And you know, we grew up working class. Just my dad worked, and my mom took care of the kids, but made about $35,000-40,000 a year. And then I assumed maybe like 3% interest, which was pretty safe at the time, just based on a CD or whatnot. And I plugged those numbers into the spreadsheet, and I noticed a strange thing kind of happened around age 40. I was 26, so somewhere around age 39-40, I noticed that the Return on Investment from the portfolio exceeded the actual cost of living at that point.

Tim Ulbrich: Yes.

Jason Long: So I was like, this is strange. You could foresee, you could feasibly have the amount of money to live off of by not working. And being naive like I was at the time, I just kind of thought, well, hey, I’ve discovered something here. And I went all the way to probably 2015 never having encountered another person who had discovered this. And then I kind of did a Google search one day. I was like, well, yeah, that was kind of stupid of me. There were plenty of people. And you described it as a FIRE movement. So yeah, that was the day back in ‘05, I said, you know, I don’t think I really want to be a pharmacist. I was like, but you know, I’m three-quarters of the way across the street. I’m going to go ahead and cross it and put in 12 years, 13 years, 14 years, and try to make the best of it that I can. And then when that day comes, I can kind of transition over to something else if I want to do something else or if I just want to sit around and play video games and watch movies, I can do that too.

Tim Ulbrich: So I’m going to read something from your blog before we jump in and talk about the saving strategy and how you actually did it and how much you were saving because I think it resonated to me a little bit about your journey and put some life to kind of your passion and motivation. From the blog is, “It’s been said that retirement is merely a decision to stop trading time for money. Since I no longer need more of the latter to sustain my standard of living and since I do not enjoy, never have enjoyed, the primary method at my disposal to acquire the latter, I have decided that the former is of more value to me going in life.” So you mentioned, Jason, kind of your last year of pharmacy school, 2005, and then obviously you had a 12-year time period roughly to that point where you actually retired. And so we look at that point of retirement at the age of 38, you’ve got a little over $1 million, so that’s a fairly short runway to get to a net worth of $1 million or more. And to clarify for our listeners, we’re only talking here in terms of savings. So we’re not talking about home or other assets, and we’ll come back to that in the future. So we’re purely talking about savings that had been accrued over time. So how did you practically do it? For those that are listening, thinking, hey, maybe this is a path that I’m interested in in some shape or form, you know, what percentage of your income were you saving? And where did you put it? And how did you get to that point?

Jason Long: Sure. Like I said, I think I started out at about $110,000 a year and was spending $30,000 a year, not including the house payment I believe. It may have been $25,000 plus the house payment.

Tim Ulbrich: OK.

Jason Long: But my first step was to, of course, buy a house. And I say house, I don’t say mansion or McMansion, or something on a cul-de-sac near a golf course, you know. If you want those things, that’s great. But you really have to step back and ask yourself, is it going to make you happier? Is it worth trading perhaps 10 years of your life to have a nicer place, maybe even just to impress people that you don’t like? But you know, our answer was a 1,600-square foot house in a neighborhood in Ohio. And I think that house was $120,000 or $125,000. We paid that off in about two years, maybe. And after that, all the money went into — well, of course, at the time, we were doing the 401k, IRA, contributions. I think after that, it pretty much transitioned — well, after a few years, we had moved back to Tennessee and had gotten more land and we built another house here. But after all the house and real estate was paid off, which was maybe around 2010, all the money went into a Vanguard account. And there are a different number of companies you can use. I like Vanguard because they’re nonprofit, and they have low expense ratios. But yeah, you just basically open up an account and decide what you want to invest in. There’s, again, a lot of healthy debate about your asset allocation. But the main things that I look for are index funds. And that is basically just a — you can think of a mutual fund as being a collection of stocks. But an index fund is a collection of basically all stocks on an index, like an S&P or the Dow or the Nasdaq or whatever. Vanguard offers one called the ETSAX, or basically all U.S. stocks. So instead of trying to pick and choose or knowing or pretending that you know things about a company that you don’t, you can invest in the market as a whole. And there’s very little management that goes into that. Therefore, there’s very little expense that Vanguard charges you to manage that fund. I think it’s at least maybe .04% per year. But you open that up, and anything in excess of what you can contribute to your 401k and your IRA, we would put into that.

Tim Ulbrich: I love the approach of low expense. And you mentioned the advantage of those coming down historically. I mean, I personally have funds, .03%, .04%, .05%, .06%. And so you, I think from the blog I saw, you rep basically three major funds, roughly 60% in U.S. stock index fund, 20% in an international index fund, and 20% in a municipal bond index fund. So keeping it simple, keeping the expenses down. So am I correct, then, as I look back and hear you say making over $100,000 a year, obviously started at $110,000, that went up, your expenses roughly $30,000 a year. So you were saving north of 70% of income? Or were there other expenses not accounted for?

Jason Long: No, it was about 70% per year. I think it’s probably important — some people are going to be listening to this and pulling their hair out over $30,000 a year. That’s not probably feasible out on the Coast. If you’re in New York, LA, Silicon Valley, whatever, you’re listening to, you’re paying $30,000 a year probably in just rent. But the cost of living out in rural Tennessee is a lot lower. So yeah, I think I ended up — we started out maybe about $30,000. It may have moved up to about $36,000.

Tim Ulbrich: OK.

Jason Long: One of the things you have to watch out for is something called lifestyle inflation. You know, that’s where you’re starting to make more money, and then you start to get more tempted about buying things that maybe you want and don’t really need. So you’ve just got to make your choices there.

Tim Ulbrich: Yeah, and I know you’re very well, obviously, versed in this. And our community is as well, but I talk a lot about cost of living, as you mentioned, West Coast, Northeast, other cities, other areas, obviously even within Ohio, cost of living varies significantly from one part to the next. But pharmacists’ salaries don’t adjust accordingly, in terms of at least accounting or offsetting that. I mean, maybe slightly. You know, for example, let’s say an average pharmacist’s salary in Ohio, let’s say is $110,000-115,000, maybe that’s $120,000 to $125,000 to $130,000 out in California, but that percentage bump is nowhere near obviously the cost of living difference from rural Ohio, rural Tennessee to the West Coast. And as we think about retirement and what you need and coming up with that calculation, determining that number, that expense number is really what’s driving that. So if you’re making $100,000 a year, and your expenses are $90,000 a year, that runway to retirement and what you need obviously is much, much longer. If you’re making $100,000 a year, and you determine that you can swing it either through strategically cutting expenses, cheaper on home, cheaper on car, strategically choosing where you live, obviously, there’s some sacrifice here in the equation, although we talked about what you’re weighing that against as a potential pro, but that is a much different nest egg that you need. And obviously, your situation of what you’re living off of I think highlights that perfectly. So I do want to highlight, Jason, to just build off of what you said, I mean, buying a relatively small home, affordable home, $120,000-125,000, paying that off quickly, you know, for me — and I’ve seen this in my own life but also in working with many other pharmacists — home and cars tend to be, you know, probably the two big buckets that can drive up expenses. Certainly many other things that go into lifestyle creep, but you know, if a home is 40-50% of your take-home pay, it’s going to be difficult to keep these expenses down. So for those listening that have not yet purchased a home, I think strategically looking at the home buying, especially if this concept is a priority, and keeping the cars down, really focusing on money going into assets and things that are growing and not depreciating value is really important.

Jason Long: Yeah. You know, a lot of people don’t realize, houses depreciate in value.

Tim Ulbrich: I agree.

Jason Long: There has been a lot of research on this. Land appreciates, houses depreciate. There’s been a myth that home owning is an investment. And it’s just not. At best, you can probably hope to break even.

Tim Ulbrich: Break even, yep.

Jason Long: And you know, that’s fine. You know, I’m not judging how other people live. But to get philosophical about it, people need to ask themselves, like I said, are they going to be happier having a large house? You know, George Carlin, comedian, once said — and I’ll clean this up a bit for the podcast.

Tim Ulbrich: Appreciate it. We don’t have the explicit rating, so I appreciate that.

Jason Long: He said, “People buy stuff they don’t need with money they don’t have to impress people they don’t like.” And when you realize that happiness doesn’t come from having things, happiness comes from outside. It’s from being financially secure, it’s from having your life in order, it’s from being content with what you have. When you realize that, and you realize that you’re probably not going to be that much happier in a $.5 million home versus a $100,000 home, you know, that opens up all sorts of possibilities for you. The house and the car, you know, if you’re the kind of person who wants people to look at you and think highly of you and envy you because you’re driving the $50,000 Lexus, that’s fine. I’m not going to judge how that person lives, but I guarantee that the person driving that car is not any happier for having that car than someone who’s driving a dependable $10,000 car.

Tim Ulbrich: Absolutely. Great stuff there. I think a lot for our listeners to take away and reflect on there as they think about their future plan and what matters most. And I would reference to our listeners, and we’ll link in the show notes, you know, Jason, I mentioned earlier, often — before we recorded — I mentioned often when I ask a group, “Hey, have you heard of FIRE?” typically, I don’t get a whole lot of hands raised. But when I say, “Hey, have you heard of Mr. Money Mustache?” people are like, “Yes, I have!” So I’m going to link to an article back from 2012, I know it’s a very popular article but really highlights the importance of looking at the math on this, and that article’s called the shockingly simple math behind early retirement. And you know, essentially what Jason’s highlighting with his own journey, what that article highlights is that saving a significant percentage of your income and keeping your expenses down really changes the projected timeline to retire. And so, for example, saving 50% of your income towards retirement can move that timeline of retirement from 50 years down to less than 20 years. So again, for you, when you talk about your journey and putting numbers into a spreadsheet, whether it’s looking at an article like this, I think it’s a matter of doing the math, looking at the expenses, and asking yourself some more of those philosophical questions that you had talked about.

Jason Long: Yeah, let me say one other thing. People who question whether or not they want to live on a $30,000, $40,000, $50,000 a year or whatever, it’s good to remember that $30,000 a year is higher, gives you a better standard of living than 99% of people who have ever lived on Earth. And if you find that I don’t think I could live that cheap, then that statistic should probably tell you, it might be a good idea to reevaluate your position in life.

Tim Ulbrich: Yeah, Jason, I’m so glad you said that. One of the point of comparisons I often use because I think it’s helpful for pharmacists to shift the point of reference away from peers because it’s not a helpful comparison.

Jason Long: Comparison is the thief of joy.

Tim Ulbrich: Yes, yes. And often, I’ll talk with resident that, you know, residents’ salaries have actually come up, some in the mid-$40,000’s, low $50,000’s. And I hear things like, I can’t save anything, I can’t make any headway in my student loans. And I get it, cost of living is different, no judgment in terms of that. But if you shift the point of comparison to what you just mentioned or the median household income for a family of four in this country is in the low- to mid-$50,000’s. I think shifting that point of comparison can help put some of that into perspective. So one of the things I want to talk about, Jason, and you mentioned in your story, I read in your blog, is that you’re purely looking at the numbers based off of the investments that you’ve grown north of $1 million. And you’re obviously trying to draw that down — or not draw that down, I’m sorry — live off a percentage of the growth so that you’re not drawing from and letting that fall below $1 million. But you are not including any of your assets in terms of house or land or other assets, or you’re not banking on social security or inheritances, equity in the home, other types of things, correct? You’re purely just looking at the savings component?

Jason Long: Yeah, I would say equity on the home would be an absolute last resort, you know, absolute worst-case scenario, not even historical precedent but an unprecedented territory would you have to rely on house equity or social security or inheritance or anything like that. I fully expect those things to be there, but I’m just not going to rely on them.

Tim Ulbrich: OK. So in terms of the withdrawal plan, currently, you mentioned the numbers you’re working off of. So what does that practically look like month-by-month if you look at the percentage that you’re drawing from, trying to keep the portfolio above $1 million?

Jason Long: Yeah, so basically, just assume $1 million and assume $30,000 a year of living expenses. Quick, back-of-the-envelope math, that’s 3% a year. A lot of people may say, “Well, hold on. The average return on investment in the market historically, adjusted for inflation, is 7%.” And some people may say 10%. Dave Ramsey’s one of them who greatly overestimates what the market returns. But the reason you can’t withdraw 7% a year is something called sequence risk. And that is when is the bad year going to come?

Tim Ulbrich: Right.

Jason Long: And these scenarios, these simulations, you can play out basically shows that if you get the bad years up front, it’s going to have a lot more impact than having the bad years toward the back.

Tim Ulbrich: Right.

Jason Long: So you have to put that extra buffer in. You can’t just assume that you’re going to get the steady 7% a year. You will run out of money if you do it that way. So yeah, we basically just withdraw out whatever we need to every month. In our case, we’re on about 3.5% withdrawal, minus whatever the side income might be coming in from a variety of different sources. But yeah, it’s just log on every month and see where you’re at and withdraw what you need to pay off the credit card and rebalance and go from there.

Tim Ulbrich: So Jason, I’m sure many pharmacists are thinking, hey, I’ve got an employer match in a 401k or should I be taking advantage of those types of retirement accounts that have tax advantages, 401k’s, 403b’s, Roth IRAs, and you mentioned earlier that you did a little bit of that. But obviously, you’re depending on assets that you can draw before the age of 59.5 without a penalty. So any words of wisdom or advice for people that are thinking about trying to achieve retirement status prior to the age of 59.5 where they would need funds? And how they might think about balancing where they’re putting their money?

Jason Long: Yeah, if you’re wanting to retire before traditional age, before 59.5, it’s going to be necessary to invest beyond 401k and IRA. There are federal limits to what you can contribute to those. So you’re going to have to invest in taxable accounts. And you put that into some investment firm like, like I mentioned, Vanguard. You put all your money into that after you’ve contributed to the 401k, IRA. And like you had said, you have to be mindful of the fact that it’s not easy to get your money before 59.5. There is a clause called 72T. Basically, if you convert your IRA over to an annuity and take a certain amount of withdrawals per year based on your expected living, you’re allowed to withdraw it without penalty. I don’t know exactly how it works. I don’t plan on having to dip into that. We have enough in our already taxed accounts to go until maybe 60, 61, 62. But yeah, you have to be mindful that there is a 10% withdrawal penalty on the 401k. And that’s on top of any taxes you’d have to pay because it does count as regular income. I’m probably not the best person to ask about all that. I’m, of course, not a financial advisor. You just have to be mindful that you’re going to have to pay penalties if you withdraw the wrong way. And that’s going to increase your cost of living.

Tim Ulbrich: Yeah, and I think the takeaway there for our listeners is to be thinking about those logistics in advance and where you’re putting your money and some of the tax implications and things if this is a desire that they have to retire before traditional age. So Jason, one of the counterarguments to the FIRE movement is, you know, you’ve got 50+ years of living and satisfaction from work and social connections from work and fulfillment and won’t you get bored? You know, that type of a thing. Which I know is a very individualized situation and really depends on current fulfillment from work and hobbies and other types of things. So talk us through a little bit of that and what you’re currently doing with your time and hobbies and interests and things that you’re working on and exploring.

Jason Long: So basically, I guess it would be fair to say I do what I want. I have a ton of hobbies. I do volunteer work. I have picked up a lot more of the housework and errands and things like that since I’ve left. I’ve been able to spend more time with family. As far as like hobbies, you know, like anyone else, I read and watch movies, play video games. I build things. I exercise, I run, I cycle, swim, go to the gym, cook, kayak. I picked up some new things: golf, started collecting baseball cards again, which is something I haven’t done since I was a child. I volunteered. I’ve been a tour guide at Natural History Museum. I have taught English as a second language to adults here for a nonprofit. I volunteered in voter registration. I’ve done litter pickup. It’s just a lot of things to keep you busy. And if for some reason, you eventually run out of things, you can always go back to work, you know? There’s nothing saying you have to stay this way. But yeah, I’m pretty much on my own schedule. And I do what I want when I wake up.

Tim Ulbrich: So I think you probably answered this question for me in the list of things that you’ve been doing and even new things that you’ve picked up, but I have to ask the question, do you have any regrets looking back?

Jason Long: Zero.

Tim Ulbrich: OK. Awesome. So one of the questions I have is I’m guessing we have many of our listeners that are hearing your story and thinking maybe for the first time or second time, this might be a path they want to pursue or at least be on a path toward financial independence, whether or not they decide to retire early. However, many of our listeners, what we know is the average student loan debt, $160,000 a year, we have some salary compression that’s going on, 32 hours often is sort of the new 40. So for a graduate today coming out with $150,000-160,000 of debt, let’s say they’re making $100,000 a year, is FIRE an option for them? I mean, is that a path they can pursue? And if so, what advice would you have for somebody listening today that is looking at their debt load and looking at things and saying, I’m not even sure this is an option.

Jason Long: It’s always an option. It’s just depending on the circumstances, it may take you a little bit longer to get there than it did, say, 10-15 years ago. As far as the steps, you know, it’s going to vary on an individual basis. It’s going to be dependent upon what your student loan interest is. It’s going to depend on what your mortgage interest is. We — personally, I took the safe route, and I paid off the house first. The house mortgage was only 5% a year. Well, I could have put that money in the market instead and make, on average, 7% a year. So maybe that wasn’t the smartest choice, but it was probably the safest choice. If a person has student loans at, say, let’s say they have some at 7% and they have some at 4% and then they have a house at 6%, it makes sense to go ahead and pay off the 7% student loans first and then the 6% house and then the 4% student loans. Or you could maybe go the route of well, I’m just going to not worry about that. And I’m going to invest in the market first. And you know, maybe that works out for you. And maybe it doesn’t. The safest route is to just pay off your highest interest rate loans first. And work your way down from there.

Tim Ulbrich: Yeah, and if I could build on what you said there, you know, since your number is pretty much on target, many of the students coming out today with their pharmacy loans, unsubsidized, 6-7%, but there are options out there that I think somebody could look into as a strategy to allow them to invest aggressively. So we’ve talked before on the podcast about loan forgiveness, which certainly comes with risks that need to be evaluated, although appropriately evaluating the risk and the benefit, but obviously being a strategy that could allow for freeing up additional moneys to invest and invest more aggressively at a younger age, looking at competitive refinancing rates that can lower your interest rate and incentivize investing. So really looking at the options that are available out there if this is a path that somebody wants to pursue. So Jason, let me end here by asking for your recommendation for something that helped you on your journey, learning more about FIRE and kind of strategies around pursuing this, whether that be a book, a blog, a podcast. Is there a resource you would recommend that was helpful for you?

Jason Long: I have a pretty unconventional one. It’s “Walden” by Henry David Thoreau. I’m sure a lot of people have read it in high school or whatever. But it’s basically just the accounts of one man going to live off in nature for a couple years and realizing, hey, I don’t need money to do this. I’m happy. And then he would have visitors come over and be like, well, why are you eating this? Why don’t you eat nicer things? And he’s like, well, you’re only eating nicer things to compensate for the stress that you’re experiencing in your daily life. I kind of like to think of that as maybe the original Financial Independence book. It’s probably not, but it is pretty influential on my mind mindset as far as not wanting things I don’t need, just being content with what you have. Because like I said, I didn’t even realize this was a movement, a so-called movement or a thing until about 2015. There’s a lot of good stuff out there. There’s — some of the people that got me started — or not got me started but kind of helped me along the way there toward the end was on Reddit. There’s a sub-Reddit on there called “Financial Independence” that people can basically share their stories, share their goals, ask questions, and it’s a helpful community. You know, there are maybe a few naysayers on there. You have to be mindful of the fact not everyone is fortunate enough to have a six-figure job, you know. A lot of people say, well, it’s all hard work and this and that. You know, I couldn’t disagree more. No. You did nothing to be born in this country. You did nothing to be born in this era. You did nothing to be born intelligent. You did nothing to be born with good, helpful parents. You know, it takes a lot of different things to be in this situation. But when you find yourself in this situation, yes, it does require hard work and discipline to be able to do it. But always be mindful of the fact that if this is a thing that you can even think about doing, there are a lot of factors that went into that that’s beyond your control. You got lucky. The rest of it, the hard work, that’s up to you. So don’t go preaching to other people about how you can do it. If you go on these forums, be mindful that there are people on there who may not have had the same opportunities as you did. So be careful about what you say because there are real people online, and they can be hurt by, you know, what you say on there.

Tim Ulbrich: Yeah, and I think, Jason, it’s a great reminder that there is not one right financial path or plan. And I think what I really appreciate you helping me and our listeners think about is some more of those philosophical questions about why are we doing what we’re doing? And really evaluating, self-reflecting on that and then for some listening, this may be the path. For others, maybe a version of this, maybe something different. But you know, I think for each of us to focus on our own and certainly find resources and support. But in no way do we have to judge the path that others are taking. So Jason, I appreciate the time that you’ve given here. I appreciate you sharing your story with our listeners. And I wish you the best going forward.

Jason Long: I enjoyed it. Thank you.

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Celebrating 100 Episodes of the YFP Podcast!

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Celebrating 100 Episodes of the YFP Podcast!

Tim, Tim and Tim celebrate 100 episodes of the Your Financial Pharmacist podcast by reminiscing about their favorites, talking about the future of the podcast, and hearing updates from several guests and pharmacy entrepreneurs that were previous guests on the podcast.

Summary

YFP celebrates 100 episodes! Tim, Tim and Tim talk about their podcast journey so far, what’s to come in the next 100 episodes, and hear updates from guests and other pharmacy entrepreneurs.

The Tims agree that it has been incredible to witness the growth of the YFP community and extend their gratitude to all of the listeners. They find it inspiring to see how people are impacted and empowered by the content on the YFP podcast.

After discussing their favorite episodes, several previous guests come back on the show to share updates on their financial journey and they way the YFP podcast has impacted their lives. We hear from Nick Ornella, Jill and Sylvain Paslier, Derek Schwartz, Blake Johnson, Alex Barker, Blair Thielemier, Adam Martin, Ashlee Klevens Hayes, and Nate Hedrick.

The conversation shifts to why the YFP team continues to publish podcast episodes and what the next 100 episodes will consist of. Tim Baker shares that they are just scratching the surface and have so much more content and stories to uncover. Tim Church says that what motivates him to continue is when he hears stories of the transformation of people from the YFP brand. Tim Ulbrich is excited to continue moving the issue of personal finance and how it affects so many aspects of one’s life. Although the team at YFP are working hard to share the impact of personal finance, the collective community of pharmacists that have formed are where the big changes and movement will be seen.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? Welcome to this week’s episode, Episode 100 of the Your Financial Pharmacist podcast. Excited to be here in-person with Tim Church and Tim Baker. I don’t think there’s any other way we could have done this than being in person in Episode 100. We’re going to have fun with this episode. We’re going to reminisce a little bit on the journey, we’re going to talk a little bit about what the community means to us. We’re going to talk through some of our favorite episodes, and then we’ve got some special guests coming back on to the podcast, giving us an update and talk about what Your Financial Pharmacist has meant to them in their own journey as well. And then we’re going to finish off this episode talking about what do we see as the future of Your Financial Pharmacist? And what are the hopes and dreams that we have going forward? Now, before we get in and get a little bit sentimental on, you know, what this journey has meant for us, I want to first express I think as I was reflecting over the last few weeks, awaiting Episode 100, I was trying to think of what is one word or one feeling that comes to mind when I think about Episode 100. For me, it was a feeling of gratitude, of gratitude to the Your Financial Pharmacist community that really, without this community and without the support of empowering and helping one another and being so encouraging to one another, none of this is possible. And I think as we think back to starting this journey of the podcast back in summer 2017, it was all about creating a platform that inspired and empowered people to take on the steps that they needed to take towards their journey of financial freedom, whatever that might look like in their own financial plan. And to see some of that beginning to happen, to see the community empowered and helping one another is an incredibly powerful feeling and I think one that is more rewarding for us than certainly anything else. So Tim and Tim, as you kind of think on this journey, here we are at Episode 100, what are some of the feelings that come to mind, Tim Baker? It’s been a fun ride.

Tim Baker: Yeah, it’s really been unbelievable to me. And I think the podcast has really been a great conduit to really push forward I think our vision of what YFP, what we want YFP to be and I think what YFP is really doing for a community of like-minded pharmacists. And you know, I think when we met via Twitter and we were kind of looking at those messages back and forth — maybe we’ll post those on the show notes, you know just kind of the screenshots, which are fairly funny.

Tim Ulbrich: For someday when everybody’s like, what is Twitter?

Tim Baker: What is Twitter, yeah. You know, I guess I never would have thought that like this would have been a thing. So I think that I can’t really express the feeling that I get when we get feedback, either about the podcast or just us speaking, going around and speaking with different pharmacy schools and communities. And it’s just – I said it, it just jacks me up. It gets me fired up, you know, because other people are getting fired up about a topic that can be fairly dry and boring. But I think that that’s what this thing, YFP, is really – and it’s like when we started the podcast, it was me and you. And we’re like, what’s a podcast?

Tim Ulbrich: And will anybody listen?

Tim Baker: And will anybody listen? And I think the answer to that is yes. And you know, it’s kind of figuring that out and like now, it’s kind of taken on a thing of its own. And we’ve had so many great contributions and so many great stories and voices. Like, I’m a fan of the show. And lots of times these days, I’m not part of the show. But I listen and I get inspired by the community. And you know, that’s kind of been in the – it’s kind of poured over to this Facebook group and some of these other avenues that we see interaction and engagement. So if we would have – we’re at Episode 100, so we started the podcast two years ago, essentially, like I never would have thought it would have been this. I thought, you know, I thought we would have a few episodes. I think the average podcast is like eight episodes long or something like that.

Tim Ulbrich: Seven or eight is what I’ve heard.

Tim Baker: And we’re at 100. And I think it’s a credit to you, Tim Ulbrich and really Church, I think being all three of us kind of putting out great content, in my opinion, and seeing that engagement level rise and that needle move is what we talk about.

Tim Church: Yeah, first off, kudos to you guys because I had nothing to do with the podcast in the very beginning. And just taking it from idea and vision and actually making it happen, I mean, I think it’s unbelievable. I mean, when you look back, even the quality and the organization that you guys had to make this happen has been unbelievable. And to watch that grow over time has been really cool. And the opportunity to jump in on some episodes and then now kind of getting to interview some of the guests on the side hustle edition, it’s been really fun to be a part of that. But one of the things that really fires me up too is just seeing how this has been able to get the word out that this topic of personal finance is so important. But it’s not just about, you know, getting your finances in order and growing your net worth but just that feeling of relief, peace, the passion, and of being on that journey and feeling like you can do anything beyond just getting your finances in order. So I think it’s really cool to see that. And I think the pod has just been a great way to get the message out, to get people involved, and it’s resulted in a lot of great relationships over these two years, you know, with pharmacists in the community, with even non-pharmacists, with schools of pharmacies, organizations. So I think it’s just been a fun ride.

Tim Ulbrich: Yeah, and I think that empowerment piece is so important. I mean, I’m thinking back to Tim Baker, when were at APhA in Seattle just a couple months ago, and people coming up to the booth and talking about the podcast. And you know, I think while it’s fun that people recognize the podcast, you know, that’s rewarding for a lot of the work. What gets me more excited is when somebody says with such enthusiasm, “Hey, I listened to this episode and now, my spouse and I or I did this or one step closer,” and they start to light up with energy that they feel like their finally in control of their financial plan. And it may be a baby step, it may be multiple steps, but that sense of empowerment as I think about the vision of where we were a few years ago, that’s what it’s all about. And it’s not about us, it’s about people feeling like that they are in a sense, in control of their finances and that peace of mind that comes with it. And I think that as I reflect, you know, Tim Church, when you talk about kind of not being involved as much in the podcast on the front end, like the work you’ve done with the side hustle series and as we really look back at the journey of 100 episodes, the front 50 really being focused on a lot more content and topics and we’ve shifted and done a little bit more on featuring more stories and side hustles and entrepreneurial types of journeys, we’re going to do a little bit of both going forward, but I think the evolution of the show over time has been a lot of fun. So let’s on that note, talk about favorite episodes because I think it’s fun to reflect back. And I think I have about 95 out of 100 of them memorized in terms of which episode. But I don’t think we could mapped out all the content that we’ve done. It’s been fun as we’ve had people reach out and say, “Hey, I’ve got a cool story.” And it kind of takes on a life of its own over time. So Tim Church, favorite episode? And maybe a runner-up.

Tim Church: So this is very tough. There’s a ton of them. And none of the ones that were my favorite are with me in them. So I’ll throw that out there. But Episode 057, the Power of Automating your Financial Plan, which is one that you did solo, Tim Ulbrich, which was awesome because I did one episode solo, and it’s really hard.

Tim Baker: It’s hard. It’s really hard.

Tim Church: It’s really hard to talk, but you did such a good job. And when I think about that topic, I think it’s so important to not only make it as a convenience factor, but really, that’s one of the most powerful ways to grow your net worth over time and getting that in play. And I think there’s a lot of cool technology out there that you can make it happen. But that, to me, was really powerful. And then my runner-up was Episode 073, How to Determine the Priority of Investing, which –

Tim Ulbrich: The buckets.

Tim Church: Yeah, which I nicknamed “Baker’s Buckets” because we talk about kind of the order in which you put in your tax-favored retirement plan. So that was a cool episode too.

Tim Ulbrich: Awesome. Tim Baker, what about you? Favorite and a runner-up.

Tim Baker: Yeah. I think my favorite, the one that sticks out to me, I really liked the episode with Adam and Brittany Patterson.

Tim Ulbrich: Oh, so good.

Tim Baker: Where, you know, I think Adam was the first episode in Episode 031 where he was just walking us through the journey of paying off $211,000 in 26 months. It’s unbelievable to me that to be able to achieve something like that in that short a time frame is just something that, you know, causes me to really pause and really think about that feat. And it’s impressive to me. And I think we had both of them back on Episode 059 to kind of talk through life after debt and really, the world’s their oyster. And obviously, I know Adam and Brittany. They’re actually clients of YFP Planning. And they’re just fantastic people and great to just learn more about what drives them and really help them to kind of take their journey to the next level. So I think those would be my 1A and 1B. I think my runner-up to that one, I really liked the episodes that Alex Barker, I think we had him on a couple times.

Tim Ulbrich: Three, right, now?

Tim Church: He holds the record.

Tim Ulbrich: Yes.

Tim Baker: He’s one of those individuals that, like I think when he talks, I listen. I think he has a very conversational way to kind of get his point across and his story, and to be honest — I think I’ve told him this in the past is that when I was, you know, thinking about launching Script Financial, now YFP Planning, I needed an education. I needed to really understand more about the clients for which I was to serve, and at the time, I didn’t have a lot of pharmacy clients. But I really wanted to plug into that world and see what makes pharmacists tick, what are they really looking for? And in Alex’s podcast was actually one of the ones that I reviewed and listened to. And I really like it. And the fact that we had him on our podcast so many times, and he’s a big supporter of our brand and we of his, you know, I think what he’s trying to do with Happy PharmD is just commendable. And I think I really enjoy having him on the podcast.

Tim Ulbrich: Great recommendation — sneaking in three, by the way, with the 1A, 1B. We’re going to let it slide.

Tim Baker: Yeah, you know, I’ve got to have some more.

Tim Ulbrich: You know, I would add — certainly I agree with everything you said about Alex. I think he’s a thought leader, I think he stimulates great conversation, great discussion, which we need in our profession. You know, the Pattersons, what’s so cool when I think about the journey that they’ve had, they are now out there doing education.

Tim Baker: Yeah.

Tim Ulbrich: You know, they were at their state association right now in Alabama. So I think back to the compounding empowerment, like they had such a transformation. Now they’re sharing that journey to help others along that way. And that is awesome. I mean, that fires me up.

Tim Baker: It’s inspiring, yeah.

Tim Ulbrich: That’s the exponential factor in terms of allowing the message to get out there and really having a true impact and change. You know, for me, I think that — this was really, really hard. I think about a lot of these episodes, and one of the things I’ve never talked about on the show before is I think selfishly, by doing so many of these interviews, being able to talk to these people is just an amazing benefit. It’s so inspiring and there’s stories that stay with me. They make me better as a person, as a father, as a business owner. And as I had to really think about which one of these, what rises to the top for me is Episode 060 with my colleague at the Ohio State University is Breanne Porter. And she talks so much about her lessons learned through accruing $224,000 of student loan debt. But I think why that episode stands out to me is her transparency and her honesty of what she didn’t know and what she now knows and how she feels throughout that journey. And I think that while we have featured so many debt-free stories along the way, what I really like about that is she’s not yet to the point of being debt-free. And she’s in the grind, she’s in the weeds, she’s working through it. And I think that’s going to resonate and will resonate with so many people as well. The other one that stands out to me, which I’m excited we’re going to have her back on the show in Episode 109 is we had Carrie Carlton on Episode 009. And she talked about her journey beginning to build a real estate empire. And spoiler alert: That empire has expanded. But real estate’s a passion of mine going forward and I think will be a great asset for many pharmacists to consider. And that opened up for me just a whole new area to think about of how she’s really leveraging her skill set in a very different way from pharmacy but is diversifying her income and building up assets in other ways. So those are our favorite episodes from the Your Financial Pharmacist podcast. We’d love to hear from you about what you thought your favorite episodes were and of course, content ideas you have for us going forward, always welcome it. [email protected]. At this point, we’re going to bring back some of the guests that we’ve had on the show before, some of our favorite episodes and stories. We’re going to ask them, we have asked them to give a quick update of their story, where they’re at. And so let’s hear from those guests right now.

Nick Ornella: Hello, this is Nick Ornella from Episode 079 of the YFP podcast. Since being on the show in December, my wife and I submitted the final payment on her student loans, so over $37,000 paid off in a little over 10 months. We took a two-week trip to Spain and Morocco to celebrate and also to celebrate our 1-year wedding anniversary. And after that little spending splurge, we started saving again, this time hopefully to start a family here in the near future. I’m still working full-time as a pharmacy manager at Walgreens, and I’ve been working hard on my blog, the Young Professional’s Guide to a year off. And as YFP celebrates its 100th episode, YFP had an impact on my own journey because Tim Ulbrich was there for me way back in 2016 when I decided to take a year-long sabbatical from my pharmacy career to travel. I found the YFP website and blog and reached out to Tim, and he was there to give me advice and encouragement. He was a big reason why I decided to hit pause on my career and to pursue my dream of traveling for a year. And that year ended up being just an incredible experience and one of the best years of my life. So I’m forever grateful for Tim and YFP for the help and inspiration that he gave me. And I think the work that YFP is doing is important because it helps young pharmacists get out of debt, become financially independent so they can live more intentional lives and not be controlled by debt obligations. You know, it allows people to take bigger risks like starting a new business or becoming an entrepreneur or doing something crazy like I did and quitting their job for a year to pursue a lifelong dream. So a big congrats to Tim and the YFP team on 100 episodes. Please keep up the good work!

Jill Paslier: Hey, it’s Jill and Sylvain Paslier from Episode 050. We wanted to give you a little update on what we are up to now. We’re still budgeting every month, and it feels really great to be saving money instead of sending so much back to the bank for loan payments. Our current spending plan has a little more room for fun stuff like traveling and enjoying our hobbies like playing music. I’m also trying to be a resource for the local college of pharmacy to help encourage financial literacy education for the students. I’m also facilitating Financial Peace University, which is a Dave Ramsey course, at our local church.

Sylvain Paslier: Being in control of our finances and becoming debt-free has given me peace of mind to actually leave my 9-5 job and launch my own business. And I think it’s working well because I could focus on the work instead of worry about the money. I even started my own podcast.

Jill Paslier: I think YFP is a great resource, especially for students and new pharmacists as we are learning how to manage our own personal finances. Many of us make the transition from making very little money to making significantly more, and I think it’s important to make this adjustment wisely so that we have a purpose and a plan for our money. I also really love the online YFP community, such as on Facebook. We can ask questions and have peer support as we continue to learn about managing our money together.

Sylvain Paslier: While there are plenty of resources out there on wealth management and personal finance, finding a specific community of people that you can relate to makes for meaningful connections and increased motivation and progress, which is great about the YFP community.

Jill Paslier: Thanks for listening. Bye!

Derek Schwartz: Hi, this is Derek Schwartz from Episode 014 of the YFP podcast. My podcast aired in September of 2017, when I was still on my journey to becoming debt-free. And my journey started in late 2014, when I made my first student loan payment, and I had over $180,000 in student loan debt to tackle. 40 months later, in early 2018, I made my last student loan payment ever. I paid off $180,000 in debt in 40 months, and looking back on it, it was such an incredible time to not do things with money because I sacrificed every dollar that I could to go into student loans. Every penny I could pinch would go back into it. And that’s the secret. That’s what you’ve got to do. I tell people, if you’re really serious about paying off your debt as soon as you can, you have to budget and squeeze out every dollar and cent you can to go back onto the student loans. Trust me, it’s worth it being on this side. Since I’ve been debt-free, I’ve been able to save money for an emergency fund, I’ve increased contributions to my retirement accounts, and this summer, I’m looking to purchase my first home. All of that couldn’t have been accomplished without paying off my student loans first. And one of the reasons I’m really excited about the YFP community is it’s a group of other pharmacists that are looking for the same goal. They’re looking for financial stability. They want to get their student loans paid off. They want to save money for retirement so they can have some. And it’s such a great community that brings in all the questions, you can get all the answers there, and it’s been amazing to have been a part of it since Episode 014 of my podcast. Happy 100 episodes of the YFP podcast! And I look forward to the next 100. Thanks, everyone.

Blake Johnson: Hey, guys, this is Blake Johnson from Episode 082 of the YFP podcast. Just a quick update on where me and my wife are. We just finished up rehabbing our eighth rental property with our business partners. And that was exciting for us because in April, that marked one year of being in business, and we were able to close, rehab and rent out our eighth property. So we’ve made good strides here in our first year, and we hope to continue to do that in the following years. However, at this time, our market is getting flooded with investors, so we’re planning on slowing down the purchasing a bit and make sure we invest wisely and purchase at the right price. Outside of that, we continue to invest in our Vanguard funds, specifically, our BTSAX mutual fund and also invest and max out my wife’s 401k. This summer, we’re going to enjoy a little trip, bigger than usual. We’re going to go over to Europe and spend a week in Paris and Prague. We both like looking at architecture and just kind of soaking in the environment and culture over there. So we’re going to enjoy that. That’s just a quick recap on where we’re at. But I just want to congratulate the guys over at YFP for celebrating its 100th episode coming in. These guys are making a huge difference, and the reason why is as pharmacists, we just don’t receive, in most schools, financial matters. We spend so much time learning about clinical decisions and learning about all of the different chemistry and pharmacology of drugs, but we never have any education on finances. And that’s a problem because we’re in a profession where it’s great, we come out making six figures, but we have no education on how to invest that wisely. And the guys at YFP are making sure that we know how to do that. When we graduate, we can take two roads. We can go on one road and just spend it all and never invest it and when we retire, have no money. Or we can take another road where we learn to live on less than we make and invest it wisely. And the guys at YFP are laying out a great road map on how to do that. They’re teaching people how to invest it wisely, how to protect ourself with insurances and make sure you know who to talk to if you don’t understand the stock market and how to invest your money. So guys, congratulations on your 100th episode, and I hope down the road as we look back 20 years from this that we see pharmacists that are retiring with lots of savings and lots of money saved up. That way, they can continue to give of their time and also of their money, just like we give in our profession now. Congratulations, guys, and I hope to see more good from you.

Tim Ulbrich: So thank you to those guests that came back on the show, took time to give us an update on your story. We appreciate your contribution, obviously, to the podcast and the community. And at this point, we’re going to hear from some of the pharmacy entrepreneurs out there that have been just incredible collaborators and partners for us over at Your Financial Pharmacist and in large part, have allowed us to be successful in the work that we’ve been doing.

Alex Barker: Hey, this is Alex Barker, the Happy PharmD founder, where we help pharmacists create fulfilling careers and lives. I had the privilege of being on Episode 007, 038 and 092. 100 episodes! Congratulations, YFP team, all of you Tims. Few podcasters reach this milestone, so this is great. But what should be celebrated more is their mission because the more pharmacists who pursue financial freedom, the more impact our profession can make. Because I believe what stops most from pursuing a dream, a goal, a great ambition, something risky, is the excuse of not having enough money. But financial freedom makes that excuse go away. And in turn, it frees up pharmacists to pursue greater and bigger things. Look, I was able to pay off $200,000 in debt. And that has financially freed my family to live our dream. And this summer, we’re actually celebrating by going around the country in a road trip. This is something that we would never be able to do if we were financially burdened. And it may seem like a long way for you to go. But trust me, we thought the same thing when we first started this journey. You can do it. Financial freedom is possible. Cheers to the YFP team and all you financial freedom-seekers.

Blair Thielemeier: Hi, this is Blair Thielemeier, founder of Pharmapreneur Academy and author of “How to Build a Pharmacy Consulting Business.” I was a guest on Episodes 039 and 089 of the YFP podcast. And as they’re celebrating their 100th episode, I was reflecting on the difference that YFP is making in pharmacists’ lives in helping them create a solid financial foundation on which they can build a business. So we all know that the job market is somewhat shaky these days. Being able to build a side hustle in pharmacy consulting is literally changing pharmacists’ lives. And having a solid financial foundation just gives you the ability to take more risks in your career and do something you truly love. So I just wanted to say thank you to all the Tims for creating this amazing podcast and doing this work in helping pharmacists change their financial lives.

Adam Martin: Hello, this is Adam Martin, founder of the Fit Pharmacist, speaker and author of both “Rx You: The Pharmacist’s Survival Guide to Managing Stress and Fitting in Fitness,” and “Scripting Your Success: How to Jumpstart Your Career,” as well as host of the Fit Pharmacist healthcare podcast. I was a guest on Episode 091 of the Your Financial Pharmacist podcast, and as Your Financial Pharmacist celebrates its 100th episode, I want to congratulate the Tim team on this monumental achievement. Seriously, job well done, guys. I believe that Your Financial Pharmacist is making a difference in our profession because as pharmacists, we are trained to perform root cause analysis to medication error review. This translates to finances perfectly, as stated in their book, “Seven Figure Pharmacist,” as root cause analysis unveils that financial problems, regardless of the specific situation, stem from the five behavioral biases that impact financial decisions: overconfidence, hyperbolic discounting, loss aversion, status quo and herd mentality. In the book, Tim and Tim share their experience with all of the pharmacists and students they have helped to overcome financial burdens through their work. Overall, they help us to overcome the most common financial pharmacy pitfalls, keeping us away from financial fitness through the work that they do. Congratulations, guys, on all you have given through investing in our profession. Wishing you great success on the interest you have compounded throughout the years. With gratitude, Adam.

Ashlee: What’s up, listeners? Ashlee here from RxAshlee. I was on Episode 095, just a couple weeks ago, with Tim Ulbrich. And I had so much fun. And when I found out that you guys are celebrating your 100th episode, I was like, oh my gosh, I have to congratulate you. I know what an accomplishment that feels like. I understand the hard work, the blood, sweat and tears that go into building a podcast, building a platform, creating such an awesome, valuable show for the pharmacy profession. I believe the work that YFP is doing is critical because of the need that we are going through in pharmacy. So many of us are graduating with student loans. So many of us are graduating with all of these questions of how do I invest in myself? How do I prepare for my future? And all three of the Tims are really meeting us there. They’re giving us what we need and that support, tips, advice on how to strategize and making sure that we can live our best lives inside the profession and, most importantly, outside. So thanks again to all the Tims, to all the YFP community, you guys are really the future of this profession. And I love, love, love supporting you. Thanks again, and congratulations! I am always going to be one of your No. 1 fans.

Nate Hedrick: Hi, this is Nate Hedrick, founder of the Real Estate RPH and frequent guest of the YFP podcast. Just wanted to take a second to congratulate Your Financial Pharmacist on their 100th episode. I really feel like YFP’s making a difference in the pharmacy world. They’re providing some much-needed financial education. Especially as someone who graduated pharmacy school with literally hundreds of thousands of dollars in student loan, it’s been really nice having them as a resource as I work toward paying off that loan and ultimately, trying to achieve financial freedom. Looking forward to partnering with you guys even more in the future, and I’m excited to see what you have in store for the next 100 episodes. Congratulations, guys!

Tim Ulbrich: So to those pharmacy entrepreneurs, thank you so much for taking the time to provide your input and know that we, the collective Tims, have so much respect for the work that you’re doing. You’re an inspiration to us each and every day, each and every week, and it’s certainly fun to be a part of this community of pharmacy entrepreneurships that are, I think collectively helping one another and hopefully paving the ways for others that want to go into this area as well. So I want to end this episode in us having some conversation about why do we keep going? So as we think about episodes 101 through 200, you know, what’s the point? What’s the purpose? What’s the content? And why do we continue to go on this journey? And so Tim Baker, as we think about the future and where we’re heading and the mission of YFP and really, I think that we believe we’re just kind of getting started on this journey, what’s the future look like? Why do we keep going from here on?

Tim Baker: Yeah, so you know, I think sometimes it’s hard with the day-to-day, you get so busy with what you’re doing and obviously working with clients and things like that it’s sometimes hard to slow down and reflect, which is a little bit — I don’t want to say it’s hypocritical, but what I try to do is force clients to do that on their journey and with their financial plan and really take stock of where we’ve been and where we’re going. But you know, there’s a few times recently — obviously with this episode that you think about just where the heck we were a couple years ago and I think where we’re at. But I think more recently, you know, when we were at the APhA conference in Seattle, we had a booth there, and I wish Tim Church was there with us because he would have ran through a wall after that experience because he would have just been so fired up about I think the buzz that we saw there. And literally, I don’t even know how long we stood there just meeting different people that walked by our booth. But it could have been two or three, four hours, I have no idea. It felt like two minutes because you just talk to people — and I think one of the things that’s really crazy about the podcast is that you feel — people speak to you as if they know you. And maybe they do because they’ve heard us so much on the podcast. And you know, I don’t take that lightly. And I think for me, it’s just like you said, seeing people fired up about a topic that they maybe weren’t fired up about it two years ago. And I think about all of the content that we have out there with the podcast and the guides and the blog posts and things like that, but I really think that we’re only scratching the surface. I think that there’s so many things that we have yet to uncover, and I think the scope of what we’ve talked about it broad, but I think even doing a deeper dive or even expanding our scope and our discussion. And I think wanting to be thought leaders, you know, in and around the profession of pharmacy I think is important to us and really, ask those good questions. So I just get really, like I said, I get really fired up about thinking about where we still I think need to venture and go. And like I said, it’s been a great ride. Like I kind of reflect on my own personal journey, and I think about how grateful and how lucky, really, I am to have come across you guys, you know, Tim and Tim. And I think without you guys, like none of this is really possible. And I think like when we start to go down the path of saying, hey, we’re doing this podcast and we’re doing financial planning and the book and all this stuff, and I think the mindset from Day 1 is can we row this ship in the same direction, this boat in the same direction and one Tim looking out for the benefit and the interests of the other Tim has just been, it’s been an honor, really. Not to sound cheesy, but I know I’m exactly where I need to be because none of this feels like work to me. It feels like I am perfectly positioned to be doing what I’m doing because I enjoy working with pharmacists as a financial planner as much as I enjoy trying to figure out the business and where we’re going to go with YFP and, really, the direction that’s still ahead of us. So thank you guys. That’s my thought.

Tim Ulbrich: Tim Church, what gets you jacked up about the next 100 episodes?

Tim Church: Yeah, it’s been a really fun ride. And I think that the one thing that really gets me fired up — and you guys kind of mentioned that already — is just the transformation. There’s been a number of people that have said as a result of interacting with our brand, whether it’s the podcast or some other form, that a change has happened for the better and that they’re in a better position than they were before they heard of us, before they listened to some piece of content, before a story was told. And so I think there’s a lot more people out there that need to hear some of these stories to get inspired and motivated because I think it can have just an incredible amount of change and movement across everybody in the profession. I think one of the other things that really fires me up is when schools and organizations reach out to us to come in and really be able to cater to a larger group. And I think that’s really a cool thing when we’re able to make a bigger impact in that way. So I think those things are really interesting and motivating to me to kind of keep things going.

Tim Ulbrich: Absolutely. And I think one of the things we’ve talked a lot about this weekend together is while certainly we are running a business, I think what gets us more excited is actually moving the needle on this issue. So as we all know that personal finance is such a thread of every part of your life that if your financial house isn’t in order, it impact lots of things. It impacts marriages, it impacts relationships, it impacts your quality of life, your satisfaction at work. And I think really moving the needle with helping on these transformations and helping people put their financial house in order is really what we want to hopefully continue to do and look back and say, ‘That was a really fun journey in doing it.’ And one of the things I think we’re super passionate about is this education around personal finance and financial literacy needs to be in every college of pharmacy across the country. And we’ve begun to pave that road, but we have some exciting plans hopefully to continue that into the future, but making sure that every graduate is coming out with some basic skill level and understanding of what they need to do as it relates to their financial plan. And I should say that the only way we’re going to move the needle on this issue is not through the three of us running as fast as we can. The way we move the needle on this issue of personal finance and everything that comes with it is through the collective community of thousands and thousands of pharmacists saying, we care about this topic and we want to do this a different way than maybe it’s been done before. And that’s what it’s about. It’s about empowering the community to collectively move this issue forward. And we’re not going to do it as the three of us. It needs to be this group as a whole. And so I want to also thank — you know, I think just to echo Tim Baker’s comments — I mean, without the three of us, I think the collective power of what we each bring, you know, this wouldn’t be where we’re at. So I think us working together and running the same direction is where we need to go with the community alongside of us. I think we also would be remiss if we didn’t thank Shea, Andrea and Jess for — this takes a lot of time. I think we’ve been spending three or four hours this afternoon putting together a couple episodes, and that means sacrifice, it means time away from family. And that’s not easy. And I think for them, allowing us to pursue our dream and our passions, you know, I think it goes without saying that we love you guys and certainly appreciate what you do. And Caitlyn and the entire team at YFP, Caitlyn, Paul, Frankie, Tom…

Tim Baker: Christina.

Tim Ulbrich: Christina, I mean, as we think ahead to the future, hopefully more on the team as well. We’re so grateful for your buy-in to the vision, your commitment to what we’re trying to do. And again, it’s about the team, and the team is really I think moving everything in the same direction. So let me wrap up by saying to the YFP community, we thank you. We’re grateful for your continued support of the work that we’re doing. We’re excited to be here at Episode 100, but I think we’re more excited about what lies ahead for the next 100 and beyond.

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YFP 099: Key Financial Moves for Pharmacy Graduates

Posted on by yfpadmin

Key Financial Moves to Make as a Pharmacy Graduate

Tim, Tim and Tim discuss several key financial moves to make as a pharmacy graduate.

Summary

Tim, Tim and Tim are live for another episode of the YFP podcast. On this episode, they discuss several moves every pharmacy graduate should make as they are transitioning into new practitioner life (based off the blog post: https://yourfinancialpharmacist.com/20-financial-moves-every-pharmacy-graduate-should-make/ ).

Two important first moves pharmacy graduates should make is having an emergency fund and eliminating credit card debt. Tim Baker explains that you should eliminate credit card debt as it’s the most predatory with high interest rates and doesn’t allow you to build wealth on your own. Creating an emergency fund gives you a cash reserve so that you don’t get into more credit card debt. He suggests having a 3 to 6 month emergency fund.

Long-term disability insurance is an important move to make because you never know what is going to happen. Disability insurance provides you with income in the event of an illness or an accident causing you to not be able to work.

Determining a student loan strategy is always a decision that new graduates are faced with. However, the answer depends on many factors including how you feel about the loans, what type of loans you have and whether you are going to work for a qualifying employer (PSLF), among others. Tim Baker reminds listeners to be intentional and to find a professional that understands loans to help guide your decision making.

Another important move to make is to begin investing in your company’s 401k, 403b or TSP retirement fund by at least contributing to the match. As mentioned many times before, an employer match provides essentially free money that you are unable to go back in time to get. Tim Church also shares that lowering your AGI by contributing to a retirement fund could lower your student loan payments, thus allowing you to simultaneously build wealth.

Considering a side hustle is important during this time as so much is changing in the job market. Many pharmacists are experiencing pay cuts as full-time hours are changing from 40 hours to 30 hours/week. A side hustle utilizes your skills to bring in other income, whether it is through pharmacy work or another passion you have.

Lastly, the Tims discuss the importance of avoiding lifestyle creep.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? Welcome to this week’s episode, Episode 099 of the Your Financial Pharmacist podcast. One episode away from Episode 100. We’re going to talk about financial moves we think every pharmacy graduate and every new practitioner and even others should be making when it comes to their own financial plan. Now, we’re going to talk about a handful of things that come from a great blog post that Tim Church wrote, “20 Financial Moves that Every Pharmacy Graduate Should Make,” and that entire list of 20 and that blog post is available over at YourFinancialPharmacist.com/20. Again, that’s YourFinancialPharmacist.com/20. So when I pulled up this blog post, Tim Church, there’s a lot here. I mean, how long did this one take you to write?

Tim Church: That one took awhile because you guys had some input on that as well and we kind of went back and forth and tried to hit all the key moves that we wanted people to know about.

Tim Ulbrich: Absolutely. And you know, as I think about back to graduating from pharmacy school — I’m sure you feel the same way — this would have been a list of, wow, I wish I would have known these things at graduation, right? So that’s the goal. I think a lot of lessons that we’ve learned along the way, lessons we’ve heard from the community, wanting to help out graduates and new practitioners as they’re making this critical, important transition into new practitioner life. So Tim Baker, the first two that I want to talk about are what you referred to in Episode 026 of the Your Financial Pharmacist podcast, which are around emergency fund and eliminating credit card debt, which you call “baby stepping” into your financial plan.

Tim Baker: That’s right.

Tim Ulbrich: So talk me through why those are so important in terms of getting started with a financial plan.

Tim Baker: Yeah, I think those are really the two things that I look at when I look at someone’s financial situation is what do we have in cash reserves and what’s the consumer debt look like? You know, typically from a consumer debt perspective, the debt’s going to be the most predatory. You know, paying high interest credit card for balances that you’re carrying, you’re never really going to transition to the ability to build wealth on your own. We talk about the eighth wonder of the world is compound interest. You’ve got to make that work for yourself, not for a credit card company. So that’s probably, you know, from the get-go, what’s that picture look like? And almost everything else stops — almost — maybe everything. I’m thinking of like an employer match, but almost everything else stops if that’s a thing because it’s just, like I said, it can be tough to get out of. The second, basically once we get out of that predicament, the second thing is having some cash reserves a la an emergency fund so we don’t get back into the credit card debt. There’s a stat out there that says 40% of Americans can’t cover a $400 emergency. That’s super scary. So for that percentage of Americans, what is their emergency fund? It’s the Mastercard. It’s the Visa. It’s the American Express. And then we kind of just repeat the cycle. You know, I have clients that they have a ton of credit card debt, and then they consolidate down into a personal debt, they wipe the slate, and then they clear it eventually, and then they do it again. And hopefully, now that they’re working with me, we’re going to break that cycle. So the emergency fund really allows you to do three things. First, it gives you peace of mind. Knowing that you have cash money in the bank allows you to sleep better at night. The second thing it does is it really allows you to avoid that predatory credit card debt. You know, like we said, most people will reach for the Mastercard, the Visa, to get out of those emergency situations. And then finally what it does is it allows you to get your money working in the investment world and keep it working without having to basically withdraw that in the event an emergency happens.

Tim Church: So Tim, where do you recommend your clients keep their emergency fund? And how much do you recommend that they have?

Tim Baker: That’s a great question. So you know, typically what we say is you want to have 3-6 months of non-discretionary monthly expenses, which is just a really a fancy word to say expenses that are going to go out the door regardless if you work or not. So those are going to be things like your rent or your mortgage, groceries, utility bills, your loan payments. So if you’re a single income earner, and you have $5,000 of those expenses after you add them all up, then you’d take $5,000 times 6 months, and it’s a $30,000 emergency fund. If you’re a dual income earner, you typically are allowed or should, recommended to have closer to 3 months. So it would be in that situation, $15,000. And the idea is that, you know, a dual income earner, you’re not putting your proverbial income eggs in one basket. Typically, both spouses or both partners are not going to lose their job at the same time. So that’s basically how you calculate it. Now, where to put it is a great question as well. So you want, typically you want something that is liquid that you can get to it at a known price, which is cash is best. Maybe not too easy to get to, something that bears some interest, but that’s not typically the point of the account. So when I started advising clients on emergency fund, I looked at a lot of different routes, a lot of different banks, actually. Ally, Synchrony Bank, Capital One, to name a few. I really like Ally; that’s what I use. I typically recommend that. It’s just easy to use, easy interface, app is clean, website is clean and easy to use. And it gets 2.2%, which I like. So that’s typically the high-yield savings account that we’ll look at for the emergency fund.

Tim Ulbrich: So as we think about the graduate coming out today, May 2019, they’re facing $150,000-200,000 of student loan debt, overwhelmed, likely, with that and what it means, lots of other competing priorities. And now they’re hearing 3-6 months worth of expenses and all of a sudden, they might look at their budget and figure out this is $10,000-30,000, and they say, “Thanks, Tim, Tim and Tim, but here’s the reality of what I’m working with.

Tim Baker: Yeah.

Tim Ulbrich: So the question is, where do I even get started with this? And what’s the baby step I can take to begin this process?

Tim Baker: I think you want to phase, you have like a phase plan. So as an example, if I’m looking at $10,000 worth of credit card debt, which I see all the time for a P4 or resident, I really don’t have anything cash at all, I sit down with a client and say, “OK, let’s build a baseline emergency fund.” So maybe it’s $2,500. Maybe it’s $5,000. Maybe it’s $10,000 of, in that case, a $25,000 or $30,000 emergency fund. So I think building a baseline emergency fund, a target that we can get to that once we achieve, then we can kind of look at the credit card debt and be gazelle-like, if you want to say, laser-focused, and really plow through the credit card debt. Now, and the reason that we do that is because, you know, obviously in an ideal world, we’d like to snap our fingers and all of a sudden, we have cash reserves for credit card debt. But the reality is is that that’s not going to happen overnight. So typically, my recommendation is to take bite-sized pieces, get to a baseline emergency fund that you feel comfortable with, and once we achieve that, then go to Phase 2, which is turn off the emergency fund contribution, apply that completely to the credit cards, hustle, side hustle, listen to Tim Church in that regard, and really start making moves towards that. And then once that phase is over, let’s get back into the emergency fund and get that going.

Tim Ulbrich: So we talked about several important things around emergency fund, 3-6 months of expenses, we talked about you want it liquid, you want it when you need it for an emergency, get it out of your checking account so that you can hold some of that temptation of pulling from it from your day-to-day expenses. One of the things we didn’t mention is just the power of actually naming it an emergency fund.

Tim Baker: Yeah.

Tim Ulbrich: So I think we often talk with pharmacists — which I’m sure you see this with clients — where they say, “Hey, I’ve got this lump savings account,” and in their mind, they have five or six things they’re saving for. But really, the power of calling it an emergency fund, which is really true with any other goal.

Tim Baker: Yeah, I mean, it’s so true because the psychology says that you’re less likely to steal from your emergency fund if you call it an emergency fund if it’s not for an emergency. It’s just like we talk about with a travel fund, it’s great to have a travel fund, but if you can actually call it where you’re planning to go next, you know, Disneyworld, Iceland, wherever that is, you’re less likely to steal from Minnie and Mickey Mouse because it’s named “Disneyworld” if I want to go buy something that I’m not necessarily, that that fund is not necessarily for. So I think it’s important to do that. You know, we kind of do the mental accounting. I see a lot of clients that have cash in an account, and it will be $20,000, and I’ll say, “What’s that for?” And they’re like, “Well, I think it’s an emergency fund. I don’t know.” So my thing is clearly delineate what it’s for. And if there’s a travel fund mixed in with the emergency fund, break it out, you know, separate those funds.

Tim Ulbrich: So first two moves that we’re talking about here are eliminating credit card debt, coming up with a plan, and establishing an emergency fund. Again, we’re pulling from the “20 Financial Moves that Every Pharmacy Graduate Should Make” over at YourFinancialPharmacist.com/20. Next one, Tim Church, is get long-term disability insurance. So you know, I think this one is tough. Nobody likes to think about a situation where hey, for whatever reason, I’m no longer able to work as a pharmacist because of a car accident, chronic illness, whatever. And certainly, this isn’t as exciting as paying down debt or building wealth, right? Nobody likes to send in insurance premiums. So why should pharmacists, even young pharmacists and graduates, be thinking about having disability income protection in place?

Tim Church: I was one of those people for awhile that felt that, you know, nothing was going to happen to me. I’m young, I’m healthy.

Tim Baker: Invincible.

Tim Church: Not much is going to happen. But the reality is when I learned a couple pharmacists that I knew that I was working with, they were unable to work, at least temporarily, because of autoimmune diseases, accidents that they had in their cars. I mean, the reality is stuff happens. When you look back, how much time, energy, focus, money, did you put in to become a pharmacist and be able to practice, be able to make an income? So when you look at that, all that was put in to get there, I mean, don’t you think it’s a good idea to protect that? And that is really where long-term disability comes into play. And long-term disability insurance, it’s really income insurance. And what it does is it provides you with money in the event that you’re not able to work because of illness or accident.

Tim Baker: Yeah, and I think a lot of people, they forget that one part is most disabilities occur because of an illness, not because of an accident. And you know, like I always tell pharmacists is like, you’re not going to like it. You’re not going to like paying premiums for a disability policy because quite frankly, they can be expensive.

Tim Church: Yeah, a lot of times, even more expensive than life insurance that you’re trying to —

Tim Baker: Yeah. But the fact is that you’re more likely to be disabled than to have a premature death. You’re more likely to have way more expenses when you’re disabled versus a premature death because alive, you probably have medical issues that you have to deal with, so this is doubly important because it’s one of those things where you always think it’s going to happen to somebody else. And the fact of the matter is, you’re right at the precipice of your career and really, your earning potential, and you want to protect that. Becoming a PharmD is — I don’t know firsthand — but I understand it’s very difficult. And you spend a lot of blood, sweat and tears to get to where you’re at. So you want to protect that ability to earn.

Tim Church: Yeah, and I think one of the questions that often comes up is well, my employer provides it. So I don’t really need to worry about it or need to get that. And you know, that may be the case, and I think there are some situations where you may have enough coverage and you may be protected, but I think a couple things that you want to consider is that even if you do have something through your own employer, the couple things you want to consider is No. 1, is it portable? Because the days of working for the same employer for your whole entire life, that may not necessarily be the case now. So if you move and change jobs, you know, is your new employer No. 1 going to offer it? But what if your health status changes and you need to get coverage on your own? So a lot can change. And the second thing is just because your employer provides it, it may not be exactly what you need. So one of the things when I was working part-time for a hospital, I was checking out what was offered based on my fellow employees who were working there, and what we found was that they only offered own occupation coverage for two years. So own occupation is one of those riders or add-ons, sometimes baked into the policy, that you really want to be aware of. But essentially, what that is is if you can’t work as a pharmacist, you’re going to get a percentage of your pay every month as a benefit. Whereas other policies and other coverage, they’re having any occupation, which means if you can do any kind of meaningful work, you’re not going to get that monthly benefit. So that sometimes is a little bit even more expensive as well but something you want to keep in mind.

Tim Ulbrich: Yeah, and unfortunately, navigating the selection of a disability insurance policy isn’t always super easy, just the way these products are sold and the options, the riders you mentioned, the time periods, the elimination periods, and so we’ve got some great resources that we would point you to. Episode 045, we talked about how to determine your disability insurance needs. And then also, if you go to YourFinancialPharmacist.com, at the top, you’ll see an option that is “Protect Your Income.” We’ve got some great information about life and disability, which connects you with our partner for both of these, which is PolicyGenius. And I just recently went through this process of purchasing additional disability insurance as well as life insurance, very easy, very transparent, a great process to follow. So make sure to check out those resources if this is something that you need. Alright, Tim Baker, we’re going to take on the, probably the No. 1 question we get from new graduates is, what the heck should I do with my student loans? I’ve got $200,000 of student loan debt, I’ve got all these options available to me. Unfortunately, it’s incredibly confusing, forgiveness and non-forgiveness, federal and private. You know, as you talk with clients and specifically those that are just coming out of pharmacy school, where do you start in terms of this question of determining a student loan payoff strategy?

Tim Baker: Yeah, it can be a monster. You know, it can be a monster topic, a monster thing to kind of wrap your arms around. And you know, a lot of times, I’ll have a pharmacist that will talk to me, and they’ll say, “Hey, this is my situation. What should I do?” And I’m like, “It depends.” You know, it depends. And like I said, I always say that’s the worst answer ever, but it truly does. And there’s so many ways to kind of tackle the student debt. And part of it — the question I would ask first is like, how do you feel about the loans? And you know, it’s probably a question that you know the answer to, but you probably haven’t asked yourself. So you know, if you’re feeling like, meh, the loans are there and I’ll pay them off when I pay them off and it’s kind of like, I view it as like a mortgage debt that I’m just going to pay off over time, and I’m cool with that, versus I can’t sleep at night, it’s a weight on my chest, I get anxiety about this. And these are all like real-world answers that I’ve gotten to that question. That’s going to affect the ultimate strategy, the strategy that you ultimately pick in the end in terms of how to attack the loans. So I think having an inventory, an emotional inventory, of the loans is I think a good first step. But then transitioning to an actual, physical inventory. And I’ll tell you what, like I think back when I first started advising pharmacists on the student debt. And I’d say like, “What do you have?” And they’re like, “I don’t know.” You know? And there was no awareness or there was less awareness than I think that I see more pharmacists that kind of walk in my door — virtual door, I guess — but I think that having a physical inventory of what you have, who you owe, when that starts, is important as well. And then from there, I think you start selecting a strategy that fits your needs and kind of what you want to do, whether it’s a forgiveness strategy, a refinance, like be aggressive with it, which might coincide with refinance. There’s a lot of ways to kind of go about this. I think one of the things that I would be cautious about is really twofold. One, you want to be intentional. You don’t want to get out of school and meander and be like, oh, like I’ll figure it out later because later happens, and you’re still in the same amount of debt that you started with. The second thing is that if you’re working with a professional, if you have six figures worth of debt, and you’re working with a professional that doesn’t understand loans, find a professional that understands loans. There’s so many — so going on another rant — there’s so many young professionals that I talk with, and they say, “Yeah, I’m working with an advisor at Blah, Blah, Blah, and the advice is that the loans will figure themselves out.” And I want to like fall on the floor because literally weekly, we show pharmacists that the path that they’re on could potentially cost them six figures in difference. And I think it’s like, I’m incredulous. I’m incredulous.

Tim Church: Yeah, I mean, I think you make a good point. And I’ll attest to that personally because I was one of those people that made a huge mistake, you know, not pursuing the Public Service Loan Forgiveness program cost me over $100,000. Now, you know, the benefit is that my loans are paid off now, and I can tell other people about it. But you make such a great point that — and I don’t think we can emphasize this enough — is you really have to lay out all of the options that are available to you. And you have to kind of complement those emotions behind the loans with also the math, right? You have to couple those two together to figure out, OK, what is the best plan going to be? And then I think even kind of taking it a step further is when you look at the average student loan debt that a pharmacist has, we’re talking $160,000, which could be a lot more if you go to a private school, is if you’re able to get forgiveness through the Public Service Loan program, then go for it. I mean, the math really makes sense there. And that could actually have a lot to do with the job that you choose or that you ultimately go from your first one.

Tim Ulbrich: Yeah, and I think this really is the time that we have to emphasize further what Tim Baker just said is it’s about intentionality of choosing an option and a plan. You know, I spoke with a group of probably about 120 students last week, and when we get to this topic, I think what they want often is a slide that I know I wanted as a student, which is the “here’s the best option.” And the reality is when it comes down to these variables like how do you feel about it? What’s the rest of your personal situation? You know, do you work for a qualifying employer or not? You know, what are the interest rates? What’s the goals? What are you trying to achieve? Are you a nontraditional student? All of these factors go into choosing the one best repayment strategy for you as an individual. And that might be different than your classmates and others that are out there. And so I think what we’re really advocating here, especially to those that are coming up on graduation, you’re going to enter the grace period, which is really everything but gracious when we think about interest continuing to accrue during that time period. But using this time so that when that notice comes to you that says, “Hey, by the way, here’s your payment, Johnny,” that you’ve already come and decided upon a plan that is best for your situation. And I think that this concept of intentionality goes well beyond just student loans but empowering yourself and putting yourself in a position that I have done the work, I’ve done the research, and I know that this one option is best for me. And now, you’re on the trajectory to get those paid off or whatever the plan might be around forgiveness as well. I can also speak, Tim Church, as I think about the forgiveness and costing, I think you and I did the calculation the same weekend we were together, but also PSLF-eligible, and as I tell many people, for me, wandering into the standard 10-year repayment plan, keeping my loans at 6.8% was probably the worst thing I could have done. You know, refinancing certainly would have been a better option than what I did, Public Service Loan Forgiveness would have been as well. Alright, so finding a student loan repayment strategy, and credit here to Tim Church, I can’t even count how many resources we have on the website around student loans. We have multiple podcast episodes, we talked about PSLF, we talked about the recent news with PSLF. And if you go to YourFinancialPharmacist.com/ultimate, Tim Church wrote the blog post of all blog posts on how do you evaluate the strategy of choosing the best loan repayment option. We’ve got a quick-start guide on student loans, we’ve got calculators.

Tim Baker: We’ve got a quiz.

Tim Ulbrich: Got a quiz. So head on over to the website, YourFinancialPharmacist.com, where you can get started today. Alright, next one we have here as we continue to work through financial moves that every pharmacy graduate should be making is begin the process of investing in your company’s 401k, 403b, or TSP. So Tim Baker, talk us through briefly, if we’re thinking of a new graduate coming out, they start to work for an employer, find out that they have this retirement option, maybe they have a match, maybe they don’t, they’re probably asking themselves the question of, what do I do with this? Where do I begin? And how do I evaluate the balance against debt, emergency fund, and all these other things?

Tim Baker: Yeah, and sometimes, you don’t have to do anything. You know, President Obama was in office when they really started to put forth an auto-enroll feature. So a lot of the psychology behind that was we’re more likely to participate in something if we don’t have to opt into it. It’s more, given the option to opt out, it really pushes participation rates up. So for a lot of retirement plans, you know, you start with a job, and eureka! You’re starting to contribute after maybe a certain period of time, and you’re beginning to see a balance into a 401k, a TSP, a 403b, which is a great thing. And sometimes, you don’t even have to pick the funds yourself. It’s just a target date fund. So what I would say to this is absolutely, if you have access to a 401k or any type of retirement plan, get with your HR department and try to learn as much as you can about them. Sometimes, you’re not going to need to do anything, but the big question that I would ask is, what is the match? And that should be something that you probably should be evaluating as you’re looking at employers. So what is the match? And 9.5 out of 10 times, you should be at least contributing to the match. I don’t care if every other part of your financial house is on fire, most of the time, it’s free money, we talk about it. You want to be contributing up to the match. Now, if you do have, if you’re in a lot of trouble with credit card debt, and it’s almost too much to get out of, that might be a situation where you don’t do that. But at least contribute until you get the match, and then in terms of looking at the funds, that’s less important. It’s time in the market, not necessarily time in the market or picking the individual funds. That’s kind of next-level stuff that I do with clients. But you know, you’re going to want something that’s low-cost in terms of expense. You know, it might be out of the scope of this particular episode, but I would definitely look for things like index funds and that type of thing to really buy the market rather than try to beat the market.

Tim Church: Yeah, and I think Dave Ramsey probably would fundamentally disagree with what we’re saying right now because —

Tim Ulbrich: Is he listening, do you think?

Tim Baker: Maybe.

Tim Church: Because we’re basically saying that most people should be in the match, regardless of your student loan debt. I think one of the caveats is that if you look at the amount of student loans that the typical graduate’s going to have, it’s not going to be a quick fix in one year, two years. I mean, we’re talking this could be a decade-long, maybe a little bit longer or could be a little bit faster, depending on the track you’re on. But the big thing is you can’t go backwards in time and get the match and make up for those years that it was available to you. So I think that’s really big. And then the other point that I would make is depending on what student loan repayment strategy you go in, that if you’re in PSLF and you’re all-in or you’re even doing the non-PSLF forgiveness, you may actually be going way in on your 401k, your 403b, because by doing that, you can actually lower your adjusted gross income, which ultimately will lower your income-driven repayments that you have to make and so you can basically be simultaneously be building some incredible wealth while you’re paying off your student loans.

Tim Baker: Yeah, so that’s kind of like, the next step in terms of an inventory of your loans, selecting a strategy and optimizing that strategy. Really, that’s what we’re talking about here is getting the most out of the strategy and from the forgiveness perspective, the more that you can into those pre-tax buckets that lower your overall adjusted gross income, the better. You’re paying your future self, but then you’re AGI, which lowers your payment and maximizes your forgiveness.

Tim Ulbrich: Yeah, and I think what we’ve often seen with new graduates, new practitioners, is that evaluating what your options are inside of your retirement plan, you know, we talk about on the podcast about fees and asset allocation and calculating your next egg, and all that can quickly become very overwhelming, but I think your point is such a good one to emphasize. Again, get it started, take the match, begin to build that time for compound interest to work, certainly make an investment to learn more about this. And I’d point here too, we spent a lot of time really detailing — I think it was chapters 12, 13 and 14 of “Seven Figure Pharmacist” — all about investing. We tried to write it in a very fundamental, basic way of understanding the strategy, but just beginning that education, whether it’s “Seven Figure,” the podcast or some other resource, making that commitment to long-term knowledge. And I think investing is one piece. But not letting that component of, hey, I don’t have all the knowledge, be a barrier to start in the first place. OK, the last one I want to talk about before we wrap up here, since we have the king of side hustles here, Tim Church, is for new graduates to be thinking about considering a side hustle. And Tim, you’ve done an awesome job with the podcast, the side hustle series. We’ll link in the show notes to an article, “14 Practical Ways to Make Extra Money as a Pharmacist in 2019.” But why should a pharmacy graduate today be thinking about a side hustle?

Tim Church: It’s a great question. And I think in 2019, a lot of things are changing with pharmacy, in terms of the job market. A lot of pharmacists are experiencing pay cuts because, you know, what’s considered full-time may be cut down to 30-some hours. And so I think that’s one of the things that is why people are getting more excited about this topic, but I think it’s really risky in no matter what job that you have, to really rely on one income source. And I’m not saying that every single person needs to go out and have eight jobs. But I think it’s important to look at other ways to diversify how you’re getting that income. We have a great blog post on there called “14 Practical Ways to Make Extra Money in 2019,” so if you go to YourFinancialPharmacist.com and you click on “Make More Money,” there’s some suggestions there. But a lot of them are pharmacist-related, so really taking the skills and the knowledge that you already have and kind of utilizing that to look for other ways to bring value and eventually bring income. But I think also, one of the things that I would have you consider is really looking at do you have other skills even outside of pharmacy that you can monetize?

Tim Ulbrich: Absolutely. And I think one of the things that doesn’t get talked about enough with a side hustle is just an opportunity, you know, some of the things could be creative outlets, they could be things that you’re passionate about, and some certainly make more money than others. But you know, what is that worth? And what is that value of having that opportunity to create and to be innovative and to think of some entrepreneurial opportunities? So I would agree, and we won’t get on the career soapbox right now, we’ll save that for a later date. But I think that in 2019, I’m not sure — and at least as long as we’ve been in the profession, you know, for 10-15 years — I’m not sure there’s a better time to be taking some entrepreneurial risk than there is right now. You look at some salary compression, you look at a healthcare market that’s very complex, when you put any of those two together, that means it’s ripe for innovation and entrepreneurship. And so I think we’ve been in a period where pharmacists have been very comfortable in their salary, and I think that often diminishes the need to feel like they need to take some risk, but I think we’re seeing that changing. And while that may be a difficult period, I think there’s some excitement to be had there as well. So again, make sure to head on over to the website, YourFinancialPharmacist.com. As Tim mentioned, we’ve got a section on that about “Make More Money.” We’ve got the side hustle series on the podcast. And the last thing we would mention here is in avoiding lifestyle creep. And we talked about it in Episode 098 of the podcast, but I think it’s just fundamentally important for every graduate, new practitioner and I think in general to be thinking about it. What can you be doing to avoid lifestyle creep? And when we talk about retirement savings and contributions, at the end of the day, your expenses is really what drives much of that. So what can you be doing to live off less than you make and be balancing the things we talked about on that last episode of taking care of your future self but also enjoying some things today?

Tim Baker: Yeah, I think one of the things to highlight here is, you know, there’s probably a lot of people out there that are listening that are saying, “OK, Tim and Tim and Tim, you want me to have a huge emergency fund, and you want me to pay off my credit card debt, and you want me to buy disability insurance. There’s a long laundry list of things that you’re saying I need to do. How am I supposed to do that?” And you know, I think the thing that I enjoy about working with students and residents who are in that transition process is guess what? Like you’re a resident, you’re making $40,000, you’re probably going to be making quite a bit more in the coming months when you kind of transition away from residency. Or if you’re a P4, and you’re going to work for a community pharmacist or whatever that looks like, you’re going to be making more than you’re going to make as a student. So let’s imagine a world where you’re not making $110,000 or $120,000. You’re making $70,000. You’re making $80,000. And these goals and these things that we want to check off become a lot more workable, a lot more manageable. And that really requires some doing. It requires some — what we essentially are doing is stepping into the income. And we’re paying ourself first in the emergency fund, checking off the block with the disability. We’re building that into the budget because what often happens is that we go and we say, man, I’m going to get that large new apartment, I’m going to drive the Beamer, I’m going to do all those things. And then it’s like, oh, I need an emergency fund. Oh, I need to pay $120 a month for my disability policy? And it’s so much harder to go back. So if we can step into it — and this is like, remember when we were talking to USC this time last year, whatever it was, I was like imploring, I was like, this is for you P4s, you know, this is a perfect time to really put a plan together and be intentional and step into the income because it’s so much harder to go backward in that spending behavior.

Tim Church: Yeah, and I think it’s a great opportunity to basically let people know about your services and what you’re doing because I think one of the things that you do really well is you take all of these things and you help break it down for people in a way that’s easy to digest because I think it can be really overwhelming. I mean, I know when I was graduating and trying to figure this out, I didn’t figure it out at first. I made a ton of mistakes, and then it cost me, you know, doing that. So I think if you’re somebody who feels like just overwhelmed with all these different moves that we’re recommending that you make, I think you should definitely reach out to Tim Baker and book a call. See if you guys are a good fit. Not everybody is going to be a good fit, and not everybody needs that extra attention. But if you’re somebody who feels that way or just interested in learning more, I think it’s a great opportunity to do that. And if you want to book a free call, you can do that YFPPlanning.com.

Tim Ulbrich: Awesome. So we’ve covered I think six or so of the 20 financial moves that you talk about in that blog post. Again, we’ll link to that in the show notes. It’s YourFinancialPharmacist.com/20. So if you’re a regular listener, maybe you’re not a graduating student, maybe you’re not a new practitioner or a year or two out, do us a favor, share this with somebody that maybe you have somebody, a student on rotation, maybe you know a student, an intern that you work with, but you know, one of the most common things we hear is hey, I wish I would have known these things sooner. And that’s exactly what this list of 20 is all about. So as always, we appreciate you, the YFP community. Thank you so much for taking time to listen. If you like what you heard on this week’s episode of the podcast, please head on over to iTunes or wherever you listen to your podcasts each and every week, leave us a review. We’d love to have a rating as well. And certainly we hope you will join us on next week’s episode, Episode 100 of the Your Financial Pharmacist podcast.

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YFP 096: How to Do a Backdoor Roth IRA

Posted on by yfpadmin

How to Do a Backdoor Roth IRA

On this episode, Tim Baker welcomes Christina Slavonik, CERTIFIED FINANCIAL PLANNER™ and the newest member of the YFP family, to the show. Tim and Christina break down how to do a backdoor Roth IRA conversion, a move that most pharmacists should consider making.

About Today’s Guest

Christina joins us with approximately 15 years of experience in the financial services industry. After serving in various capacities, she attained her Registered Paraplanner℠ designation in 2013 and then her CERTIFIED FINANCIAL PLANNER™ designation in 2017. She currently resides in Ft. Worth, Texas with her husband, Paul, and their two cats.

Summary

Christina Slavonik has been working for YFP for a couple of months as a CERTIFIED FINANCIAL PLANNER™. On this episode, Christina and Tim discuss how to do a backdoor Roth IRA, also known as a Roth IRA conversion.

First, Tim Baker reminds listeners to follow “Baker’s Buckets”, meaning that you should always start saving for retirement with an employer match when available as this is free money. From there, it might make sense to max out an IRA or HSA. After you’ve maxed out your IRA and HSA, go back to your employer 401(k) or 403(b) plan to add in the $19,000 you can put in every year.

Most pharmacists bring in around $125,000 a year, meaning they cannot deduct their traditional IRA contribution as they are above the income limits. In 2019, single taxpayers with a MAGI of $122,000 and married filing jointly taxpayers with a combined income of $193,000 can’t contribute directly to a Roth IRA.

Christina explains that you can instead do a backdoor Roth IRA. First, open up a traditional IRA if one is not already opened and contribute the first $6,000. Then, you can make the conversion by filling out and submitting the appropriate forms. You are then able to convert the nontraditional money to a Roth IRA.

Christina and Tim discuss how to contribute to these accounts, best practices for waiting periods, steps for filing taxes if you contributed an excess amount to an IRA, and a recap of the Roth IRA conversion process.

Check out this blog post for more information on backdoor Roth IRAs.

Mentioned on the Show

Episode Transcript

Tim Baker: What’s up, everybody? Welcome to Episode 096 of the Your Financial Pharmacist podcast. I am so excited to welcome back Christina Slavonik, our newest member to the YFP family. I know, Christina, we heard a little bit from you at APhA Seattle, so welcome back to the podcast.

Christina Slavonik: Yes, thanks so much, Tim. I’m glad to be back.

Tim Baker: So I guess, you know, Christina, just to put you on the spot here, you know, you’ve been working with us for the last couple of months.

Christina Slavonik: Yes.

Tim Baker: How has it been at YFP? And what’s different about us?

Christina Slavonik: Sure. Yeah, it’s been so refreshing. Just really a breath of fresh air just working with —

Tim Baker: Awh, shucks.

Christina Slavonik: Younger people, you know? And we all have, you know, the same kind of not really have the same backgrounds, but at least we have the same things that we’re all working through and especially when you’re able to narrow down your clientele to one niche, it really helps you focus on what they’re really needing, what they’re really wanting, and then being able to share your own life stories as you go through that path together.

Tim Baker: Yeah, I think it’s one of those things where, you know, in my past life, I would work for firms that was kind of a jack-of-all-trades, kind of master-of-none type of thing. That’s not really our game. You know, we really want to focus in on the big issues that are facing pharmacists out there and really provide good service and solutions to really tackle those issues. So today, we’re going to talk about Roth conversions. Like I mentioned, it can be a little bit of a technical subject, but one of the things that we probably should mention first as we kind of get into our list of steps here is way back when in Episode 073, How to Determine Priority Investing, we kind of talk about what Tim Church has deemed “Baker’s Buckets.” So typically when I sit down with clients, you know, I say, “Hey, client, typically how we like clients, pharmacists to really fill their retirement buckets, you know, you should always start with your employer match. So if your employer match is 3%, 5%, 7%, that’s free money.” And nine times out of 10, that should be what we are trying to get, get at least to the match. But from there, depending on the 401k or the 403b, what that plan looks like, not everyone’s 401k, not everyone’s 403b, is going to be equal. So there are some really great 401k’s and 403b’s out there. There are some that are kind of not so great. So it might make sense to kind of go into the IRA world or the HSA world and really max out that bucket next. So typically, for the IRAs for 2019, you can put in aggregate between the Roth IRA and the traditional IRA, $6,000 per year. So that’s roughly $500 per month. In the HSA world, the Health Savings Account, which we’ve talked about time and time again, it’s the only account out there that has a triple tax benefit. So basically it goes in pre-tax, it grows tax-free, and then it comes out tax-free if it’s used for qualified medical expenses. You typically, for a single individual, it’s $3,500 per year that you can do. Or if you’re a family, $7,000 per year. So once we max those out, then it might make sense to go back into the employer plan, the 401k, the 403b, and get to that $19,000 that you can put in — this is not counting your employer contribution — that you can put in every year into that 401k. So Christina, now that we kind of have “Baker’s Buckets” aside and we’re diligently putting in a contribution into the IRA, what happens next with regard to this whole conversion? And why would I convert I guess to begin with?

Christina Slavonik: Sure. Well, in looking at the typical pharmacist’s salary, which I believe is around — latest stats is around $124,000-125,000. You already know that you cannot contribute directly to a traditional IRA. Well, you can, but you can’t deduct it. So that’s the caveat with that. So where the Roth IRA comes into play is most of the times, you won’t be able to contribute directly to the Roth because of your income limits. So I know for 2019, if you’re single and you make an income, a modified adjusted gross income, of $122,000 or if you’re married filing jointly and you’re making an income of $193,000, then you can’t contribute directly to a Roth. So how you can do that is by doing a backdoor Roth IRA or it’s also known as a Roth conversion. And what you will need to do is open up a traditional IRA, and this is assuming you don’t already have a traditional IRA open. We’ll get into the reason why — what will happen if you do currently have a traditional IRA. But first things first, you open the traditional IRA, you put your — say you’re going to max out your contribution for the year — you’d put your contribution in there first of $6,000. And then you can make what’s called a Roth conversion, and normally your firm, your wealth provider, whoever you have your investments with, they should be able to walk you through what forms are needed. You fill out the form, submit it, you have a Roth IRA opened. And then you’re able to convert those traditional dollars, non-deductible traditional dollars, into your Roth IRA. And the beauty of that is not only is your money going to be in the Roth, but it’s going to be after-tax, you’re not going to have to pay any taxes for it going in because you just made the non-deductible contribution. You will have the earnings grow tax-free. And then if you’re — there’s certain stipulations about once you hit retirement or you’ve had the account open for five years, you can start to withdraw those contributions and earnings tax-free. So there are many, many other benefits to having the Roth IRA. One, you do not have to make what’s called a required minimum distribution. And with a traditional IRA, you have to start pulling out money at the age 70.5. You have no choice.

Tim Baker: Right.

Christina Slavonik: But with the Roth IRA, you avoid that altogether as well.

Tim Baker: So just to recap on that, you know, and to back up, anytime that you see “Roth,” you automatically should think after-tax. So whether that’s a Roth IRA, a Roth 401k, a Roth 403b, the money that goes into that bucket is going to be after-tax. The flip side of that is the traditional IRA, the traditional 401k, the traditional 403b, those are all funded with pre-tax dollars. So in simple terms, you know, if I have a traditional 401k and I’m putting in 10% and I make $100,000, then basically I’m putting $10,000 into that account, and the government sees as if I’m being taxed on $90,000. So it lowers my income for which I am taxed on. In that same breath, you know, if I’m putting into a Roth, once I’m putting in with after-tax, so I don’t go from $100,000 to $90,000. I stay at $100,000. But when the money comes out in retirement, I’ve already been taxed on it, so I’m not going to be taxed twice. Whereas traditional, when it comes out, it will be taxed. So it’s important to understand that dynamic. So everyone can contribute to a traditional IRA as long as you have earned income. But not everyone can contribute to a Roth IRA. So if you make a certain amount of money — so it’s if you’re single, if you make more than $137,000, married filing jointly, if you make more than $203,000, then the door slams shut for the Roth IRA for you. So what the Roth conversion does it takes those non-deductible IRA contributions — so everyone can contribute to a traditional IRA, not everyone will get a deduction. So because we don’t get a deduction, we want to move essentially those moneys from the traditional IRA to the Roth IRA and, you know, for a variety of reasons, Christina, that you mentioned, that’s the thing to do. So Christina, if I am a Do-It-Yourself investor out there and I’m looking at kind of my investment game, I don’t have anything open outside of the 401k that I have through my employer, basically you’re saying first step is to open up the traditional IRA and the Roth IRA concurrently? Is that right?

Christina Slavonik: That is correct. If you can, yes.

Tim Baker: OK. And then if I know that I’m not going to be getting — I’m not going to get that deductible IRA contribution so I’m single, I make more than $122,000, how should I actually go about contributing. Should I wait ‘til the end of the year or the tax year to contribute? Should I be contributing per month? Like what’s your thoughts on that?

Christina Slavonik: Sure. Well, it really just depends on personal preference. I’ve seen both sides of the spectrum where a person will save money, like just put it aside in a regular bank savings account, set that aside for their IRA contribution at the end of the year, and right before the tax deadline, they will put it in and do the conversion right away. You know? Others will contribute monthly to that traditional IRA and over time, once they get the contribution to where they can max it out for the year at $6,000 for 2019, then they would make the conversion. And so yeah, the only caveat with contributing directly to the traditional on a monthly basis is if you do have it in any kind of interest-bearing account or if you do decide to put it in a short-term investment, when you do convert, you are going to be converting those earnings as well, which may have a little bit of a gain or may have a little bit of a loss.

Tim Baker: Right.

Christina Slavonik: So it’s just something to consider when you’re going about that process.

Tim Baker: And I think that’s kind of the nuance is it can be a fairly complicated situation, so that’s kind of some of the nuance that a lot of people may not think about is that, you know, if you contribute $6,000 over the course of the year but the account has grown $100-150 in appreciation, that’s something to consider when you’re doing your conversion. And most likely, you’ll have to pay the tax on that, on the difference. So Christina, when you go to make a non-deductible contribution to your IRA, there’s some say that you should have, there should be a small waiting period to let the funds settle. Can I actually go and convert that right away? What does that look like? What’s best practice with regard to making a conversion?

Christina Slavonik: Sure. The common consensus is just to wait a few months, you know, just to let that contribution settle. There are some people that will do the conversion right away, but just because you just want to look like you are making a non-deductible contribution and not immediately converting, it just kind of puts some space between that. It’s just kind of a best practice.

Tim Baker: Sure. Well, and I think there’s some think that the Roth conversion is something that’s illegal or that we shouldn’t be doing. That’s not the case. This is a perfectly legal kind of technique to move the non-deductible traditional IRA contributions into the Roth that is part of the how the tax code is written. So let’s fast forward to it’s April 2020, we’re hopefully in the process of filing our taxes, which we just recently got through, what are some of the steps that we should do in terms of any forms that we need to file or anything that we need to worry about with regard to filing the taxes? And then secondarily, if we see that maybe we’ve contributed in excess to the IRA, how do we fix that issue?

Christina Slavonik: Sure. Well, make sure your CPA or whoever is doing your tax return, that they know that the contribution you had originally made into the traditional was a non-deductible contribution. And most likely, they will have a form 8606, which they will need to fill out. And yeah, just make sure they’re aware of what you were doing. And as a best practice, we try to say if you can do your contributions and your conversions in the same tax year, that helps your CPA or tax preparer out a lot so he doesn’t have to be tracking what happened in 2018 versus what happened in 2019, so to speak. So there’s for that one. And if you for any reason get a massive pay raise and you had been contributing directly to a Roth and then you go back and you look and you see, oh my goodness, I’m making — my income is being phased out, I shouldn’t be able to contribute directly to a Roth, well, you’re going to have to figure out — there’s a calculation or you can have your tax preparer help you — that you’re going to have to remove whatever excess contribution you had put into the Roth IRA.

Tim Baker: Right.

Christina Slavonik: And so again, there’s a calculation to go about figuring that out, but just know that there are three ways that you can remove it. If you happen to catch it before the tax filing deadline, by all means, withdraw it. Journal it back over. You could talk to your firm and see how they go about doing that. Some will just, you know, say to recharacterize, which normally doesn’t happen until after the tax filing deadline, or you can apply the contribution to the next year. Just don’t make a Roth IRA contribution directly. But just know that if you do decide to leave that excess contribution in the Roth IRA, there is a 6% excise penalty that you will have to pay every year that excess remains in there. And so generally as a best practice, if it’s not a whole lot, I would just say carry it forward to the next year. You may have to pay a small 6% on whatever that excess was, but at least you’ll be covered for the coming year, if that makes any sense.

Tim Baker: Yeah, so just to kind of recap, from basically January to April of say 2020, you can still contribute towards your 2019 bucket for the IRA. So if we were to kind of determine that we’re at our limit already, you could essentially contact your custodian, whether that’s Vanguard or Fidelity or whoever, and say, “I’d like to apply that excess contribution forward to the 2020 bucket.” So Christina, you know, in terms of the process, we have determine what your adjusted gross income, which again, that’s going to be the number that really drives the train on a lot of this tax stuff that goes on. And typically, you take the gross income and you subtract out any contributions you make to the retirement plans. And if you have HSA contributions, student loan interest deduction, if you’re a resident out there, you can probably still get those. That gets to that number, and that’s going to be the driving force of what you can do from a traditional IRA, a Roth IRA, if it determines that you can only make non-deductible traditional IRA contributions, make those contributions, typically, you want them to season a little bit. So wait 30-60 days to get those into the account, and then go ahead and basically fill out the necessary to make the Roth conversion. So we’re essentially, we’re moving those non-deductible IRA contributions from the traditional bucket into the Roth bucket, which is the after-tax bucket because we’re going to pay the tax on it anyway, and there’s lots of benefits to do that. And come tax season, working with your CPA, your advisor, to fill out Form 8606 just to track all of that. It’s best to do that kind of in the same year, so contributions basically marries up with the tax season that you’re filing. And if there is excess contributions to the Roth, we can fix it before the tax filing deadline or recategorize after the fact. You could also contribute to the, move it forward to the next year just so we kind of stay within compliance. So Christina, any other thoughts on the Roth conversion? Anything that we missed that probably listeners should know about when they’re trying to tackle what sounds at first glance kind of can be a very simple procedure but when we peel back the onion a bit, it can be a little bit complex. Any other thoughts?

Christina Slavonik: Yes, just one final thought. When it comes to look at your traditional IRAs — and this is just assuming you have other traditional IRAs when you are considering doing a Roth conversion — that amount that you convert, you can’t just pick that ‘Oh, I want to do this sum of money in this IRA.’ It takes into account your entire balance, not just the $6,000 contribution for the year. So say you were to have your traditional IRA, you have $20,000 in there. Well, for that initial tax year, you may have to move over the full $20,000 because it’s going to take into account — the conversion piece will take into account all the money you have in that one traditional IRA. It’s blind. It can’t really see that you only want to do $6,000. So that’s just one other piece of advice to keep in mind. Most people that do this kind of transaction, they do not have traditional IRAs. If they do, it’s only for this purpose. So that is just one thing that I’d like to point out there, Tim.

Tim Baker: Yeah. Another thing to also point out is I think this particular technique is going to become more and more valuable. With the new tax code, for a lot of people out there, taxes are going to be lower in the near future. So to kind of do this conversion and get these moneys in the right bucket, I think is very valuable. But also remember when you make the contributions into the IRA, whether it’s the traditional or the Roth, that’s just half the battle. The next part of it is really selecting the investments that are inside of that. So we come across pharmacists that are putting money into an IRA, but they’re not actually investing that, whether it’s in a mutual fund or an ETF or a stock or a bond, that type of thing. So understanding that when the money goes in there, we still have to take the necessary steps to get that invested and get that money working because at the end of the day, intelligent investing where you’re taking risk in the market and know that the market is going to go up and down is necessary really to become that “Seven Figure Pharmacist” and really get ahead of things like tax and inflation. And these are some of the things that we work with when we go through the investment module with our clients is making contributions is only half of it. And we have to make sure that we’re building out a proper low-cost asset allocation that has exposure across a variety of sectors in the market, whether it’s large-cap or small-cap or international, bond, that type of thing. So Christina, great job today kind of going through this kind of somewhat complex topic. Like I said, Christina recently helped Tim Church on this blog post that we put out. So if you go to the Your Financial Pharmacist web page, YourFinancialPharmacist.com and check out our blog, you’ll be able to see a lot of this information, also, five steps that we talk through. If you go to YourFinancialPharmacist.com/096, YourFinancialPharmacist.com/096, you can get the basic steps for the backdoor Roth conversion, the checklist to kind of work your way through this process. And like I said, if you’re working with another custodian, a Vanguard, a Fidelity, they’ll be able to walk you through this hopefully to provide the necessary forms and guidance — maybe not guidance but at least point you in the right direction to go through the logistics of converting that. At YFP Planning, we kind of do this on behalf of clients as part of the investment management that we do. So Christina, thank you so much for coming back on the podcast, really enjoyed kind of having your voice on here. We’re going to have to do it again soon. Yeah, thanks again for coming on.

Christina Slavonik: Thank you so much, Tim. I look forward to doing it again.

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YFP 093: Highlights from APhA Annual Meeting

Posted on by yfpadmin

Highlights from APhA Annual Meeting

Tim and Tim interview several APhA conference attendees on the floor of the exhibit hall about their personal finance journey and the highlights of this year’s annual meeting.

Join APHA

Join APhA now to gain premier access to YFP facilitated webinars, financial articles, live events, resources, and consultations. APhA members also have access to receive exclusive discounts on YFP products and services. You can join APhA at a 25% discount by visiting www.pharmacist.com/yfp and using coupon code YFP. For more information about our financial resources, visit www.pharmacist.com/financial-education.

Summary

On this week’s podcast episode, Tim Ulbrich and Tim Baker interview several APhA 2019 conference attendees on the floor of the exhibit hall about their personal finance journey, as well as learning about their highlights and takeaways from this year’s meeting. Christina Slavonik, the newest YFP team member, shares some of her background and path leading her to become a certified financial planner. Brianne Porter talks about how Eileen McDarg, APhA 2019 keynote speaker, shared ways to practice and build resiliency and how to take care of your mental health as a pharmacist. Brianne also gives an update on her personal finance journey since her podcast appearance on Episode 60. She and her husband purchased YNAB, paid off $12,000 of debt, and began saving for an emergency fund which has brought her peace of mind. Gina, P2 at Virginia Commonwealth College of Pharmacy, joins the podcast after purchasing 7 Figure Pharmacist by Tim Church and Tim Baker. Gina discusses how financial skills aren’t focused on in pharmacy school and is taking personal finance into her own hands. At this year’s conference, Gina mainly attended info sessions and the Rutgers fellowship program roundtables. Kara, P3 at Florida A&M, speaks about how she experienced firsthand the importance of personal finance and of keeping track of money while growing up. Tim, P3 at USC, shares how he’s realized the importance of budgeting and minimizing loans while still in school. Tim and Tim close the episode with a reflection on the conference. Over the last couple of years, they have witnessed personal finance becoming more of an interest for pharmacists and have seen pharmacists increase their knowledge by utilizing resources like YFP.

Mentioned on the Show

APhA
YFP Blog
7 Figure Pharmacist by Tim Church and Tim Ulbrich
YFP Podcast
YFP Blog: Why Most Pharmacists Should Do a Backdoor Roth IRA
YFP 060: One New Practitioner’s Lessons Learned Accruing $224,000 of Debt in 7 Years w/ Brianne Porter
Your Resiliency GPS: A Guide for Growing Through Life and Work by Eileen McDargh
YNAB.
Use coupon code YFP for 25% off your APhA membership!

Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? Tim Ulbrich here with Your Financial Pharmacist, live from APhA with the one and only Tim Baker. Tim, how you doing?

Tim Baker: I’m doing well. How are you, Tim?

Tim Ulbrich: Good. Excited to be here in Seattle. We’re live at the booth.

Tim Baker: Yeah, this is crazy.

Tim Ulbrich: Yeah.

Tim Baker: This is the first time we’ve done something like this, and I feel like we want to soak up the ambiance that is APhA here in Seattle. Unfortunately, Tim Church is unable to join us, but we have a crack team that’s going to be helping in our booth, Cristina, our new associate planner is here. We’ll probably have her on the podcast a little bit later. But yeah, I’m excited. It’s a lot of buzz in the air, and we had a good opening night last night, lot of people stopping by the YFP booth. So yeah, it’s been good so far.

Tim Ulbrich: Yeah. It’s going to be a great meeting. We’re excited for not only the exhibit hall, we’re going to be doing some financial roundtables this afternoon with students and new practitioners, talking about budgeting, investing, home buying, student loans. And then we’re going to do a workshop tomorrow afternoon.

Tim Baker: Yep.

Tim Ulbrich: All about goal-setting, finding your why, and budgeting. So all things personal finance and pharmacy, that’s what we do at Your Financial Pharmacist. That’s what we’re doing here at APhA. And a shout out to the partnership that we have with APhA.

Tim Baker: Yeah, absolutely.

Tim Ulbrich: They’ve been a great partner and friend and really helping us spread our mission and message to help pharmacists achieve financial freedom.

Tim Baker: Yeah, and I’m really looking forward to — you know, we’re not quite sure what this episode’s going to look like, but I think we’ll splice together some conversations that we have with other APhA conference goers and just get a flavor of what they’re looking for in terms of the conference, maybe some of the things that, you know, are concerns of theirs for their finances. And yeah. I’m just kind of excited about this new format with the conference today.

Tim Ulbrich: So we’re signing off for now, and we’ll be back here live at APhA 2019 in Seattle, Washington.

–

Tim Baker: What’s up, everybody? Welcome back to APhA 2019 in Seattle. I am with Cristina Slavonik (?), who is the newest member of our YFP team. Cristina joined us about a month ago. She is our new associate financial planner, so she is working with me day in and day out, helping clients with their financial plan. So Cristina, welcome.

Cristina Slavonik: Thank you so much, Tim. So glad to be here.

Tim Baker: So why don’t you tell us a little bit about yourself and how you kind of came to be that newest member of YFP?

Cristina Slavonik: Sure. Well, I do have an extensive background in the financial services industry. Just kind of a brief background, I had training as a bank teller starting out like Tim 15 years ago. Kind of worked my way up through the ranks, worked in the private side where we did wealth management for high net worth clients. And then just recently, you know, got my CFP certification, Certified Financial Planner certification, and was looking to branch out. And one thing I liked about Your Financial Pharmacist is rather than catering to a broad market of people, you guys just focus on the pharmacy niche and what you can do for pharmacy students and those in all the various transitions of that career path with them.

Tim Baker: Well, yeah, and it kind of goes back to that whole idea of, you know, I feel like in a lot of financial planning firms, it’s a master of none, you know, kind of the jack of all trades. If you have a pulse, you can be a client. And for us, you know, we really want to focus in on what are the needs of the pharmacist community? And you know, typically, it’s centered around, you know, just being overwhelmed with the student debt and confused on how to properly budget and save and invest and the whole pain point around I feel like we’re just not progressing financially. So I think like keying in on that and really beyond the foundation of building out the financial plan. So Cristina, what have been your impressions of kind of the conference so far? And what’s that been like for you?

Cristina Slavonik: It’s been real exciting. This is my first conference. And just to see the energy and the inquisitiveness of everyone here, it’s really been quite an educational experience for me just to hear what is really on people’s minds, especially with some of the breakout sessions. We’ve had some really good, thoughtful questions and how people, they’re really trying to get on the right path and, you know, start out on the right foundation with their finances.

Tim Baker: Yeah, and I think it’s one of those things that a lot of pharmacy grads, you know, PharmDs, I think there’s a thirst for that, you know, in terms of like, OK, you know, what the heck do we do now? You know? Especially if we’re staring at some debt and, you know, really getting the foundation of a plan going. So I think, you know, what we’re really trying to do is bring some obviously products, you know, services, whether it’s the blog, the book, the podcast, that type of thing, financial planning, to the table and, you know, really assist those on their path to financial freedom. So Cristina, in terms of like, you know, the work that you’re doing with clients kind of day in and day out, you know, what are some of the things that you’re kind of helping us, YFP Planning, what does that look like?

Cristina Slavonik: Sure, yeah. I mainly help with the onboarding process, just making sure that any accounts that are transitioning over, that we have the proper paperwork in place and helping them through that process and also working with their financial behaviors. We do have some surveys that we put out just to kind of educate them on things they can improve on like maybe frugality or their confidence level. And just kind of helping them be better versions of themselves.

Tim Baker: Well, and I think client service is so important. And I love having you as part of the team and really kind of being, you know, another set of eyes and hands to really help clients through the process. And I think, you know, bringing you on as another Certified Financial Planner, another, you know, viewpoint on things, I think it will really grow out our service offering. And I’m really excited to have you on and really, we need to get you more on the podcast.

Cristina Slavonik: Yes.

Tim Baker: And doing your thing. I know you helped Tim Church on the Roth.

Cristina Slavonik: The back door Roth.

Tim Baker: The back door Roth conversion post. So we’re going to be featuring you more and getting your voice heard, so I think people are kind of sick of the Tim, Tim and Tim. So —

Cristina Slavonik: Well, now, we’ve got a female voice.

Tim Baker: We’ve got a female voice, and I did — when I interviewed Cristina, I said, can you change your name to Tim? And that was shot down. So you know, we had to break the mold. And I think it’s all positive going forward. So Cristina, thanks for coming on the podcast, more obviously in the future. And yeah, we’re just signing off for now at APhA 2019 in Seattle, Washington.

–

Tim Ulbrich: Tim Ulbrich here, back live from APhA. Day No. 3 of the APhA annual meeting here in Seattle, Washington. And lucky enough here to have one of our — well, one of my colleagues at The Ohio State University College of Pharmacy and a guest from Episode 060 of the Your Financial Pharmacist podcast, Dr. Breanne Porter. We had her on talking about one new practitioner’s lessons learned accruing $224,000 of debt in seven years and lucky to have her here alongside of me at the APhA meeting. How’s the meeting going so far?

Breanne Porter: Hi, Tim. It’s going well. Thanks for having me.

Tim Ulbrich: Yeah.

Breanne Porter: It’s very exciting.

Tim Ulbrich: Thanks for stopping by. You did an episode, Episode 060, that I have referenced often and I would highly encourage our listeners, go back there, check that out. It’s very inspiring.

Breanne Porter: OK.

Tim Ulbrich: I think you were very raw and genuine in the journey you’ve gone through and the lessons that you’ve learned. And I know you’re passionate about this topic and making sure others are on the track to financial success, right?

Breanne Porter: Yeah, that is correct. Yes.

Tim Ulbrich: So talk me through, you just came out of the main session this morning at APhA, all about resilience. So talk to me about what that session was about and the author of the book and the person facilitating that.

Breanne Porter: Yeah, so the keynote this morning was on resilience, and they had Eileen McDargh I think is how she says her last name. And she was really inspiring because she came in basically and, you know, we were talking a lot about mental health and some of these topics can be a little heavy. But really, what she shared with us were some basic practices and things that we can do on a daily basis to really help build that resilience. She talked about how it, in some ways, people may be more genetically predisposed. But it really is a practice that we can all work on to sort of build in our day-to-day and really become a little more resilient in the day-to-day. So it was very helpful.

Tim Ulbrich: And we got to kick the negativity out of our lives. Right?
Breanne Porter: Yes, yes. One of her practices is no red ants. So the people that suck the negative — that have the negative energy and suck it out of you, suck out your energy, basically. You’re not allowed to have them in your life. So no red ants.

Tim Ulbrich: I love that because I think that we all know just from being in the workplace, no matter where you are, I mean, that is such a factor of the culture of a workplace. And I think we underestimate the attitude and what we bring into the office each and every day impacts everybody around us. And that’s true at home, I mean, that’s true with family and so many other things. This topic of resilience, to me, is such an important one. We often talked about it on an admissions standpoint when we were admitting pharmacy students. You know, how do we assess resilience? Because we know in the students we work with, those that have it, and wherever it comes from and however you can find it, they’re going to be able to fight through, they’re going to be able to self-assess, figure out where they’re struggling, improve upon. We see in residency all the time, and I think it’s also true with personal finance. I mean, when people are coming out of school and you’re struggling with student loan debt and all these competing priorities, there’s a lot to work through. And so I think that topic of resilience is a good one. So again, that is Eileen McDargh, right?

Breanne Porter: Yes, McDargh. Yes.

Tim Ulbrich: And the book is called, “Your Resiliency GPS” if anyone wants to check it out. We would highly encourage you to do so. I’m going to be reading it soon, so I’m excited about that. So since we had you on in Episode 060, you shared that journey. And as I mentioned, we’ve highlighted that story. So what are some of the things that you’re working on right now in your own financial journey?

Breanne Porter: That’s a great question, actually. I feel like I’ve made a lot of strides. I’m very proud and excited. So I’m happy to share with the group. But we recently purchased YNAB, my husband and I recently purchased YNAB.

Tim Ulbrich: Love YNAB, by the way.

Breanne Porter: It stands for You Need a Budget, so as straightforward as it can be. We purchased that about six months ago, I think. And since then, we’ve paid off almost $12,000 in debt.

Tim Ulbrich: Wow, congratulations.

Breanne Porter: Yep. Thank you. We’re very proud of that. We started saving towards some goals. We have a huge emergency fund, which is great because I’m pretty sure I’m going to be paying out taxes now, as soon as I file with Tim Baker and his company. But yeah, basically, we’ve just really been able to I think, you know, become more confident in our financial health and really feel more comfortable. Because, you know, things happen now. I had a dog emergency the other day, my dog consumed 15 ounces of dark chocolate and had to spend a night at MedVet. And you know, a year ago, I would have just been carrying that balance for months, probably. And it felt so good to be able to just hand over the cash and be done with it.

Tim Ulbrich: You can’t put a dollar amount to that peace of mind, right?

Breanne Porter: No. Oh my gosh, no. I sleep so much better every night just knowing that I’ve paid off the debt but also, I have that money aside now too. So.

Tim Ulbrich: Yeah, I’m with you. And that’s a hard thing. We talk so much about the numbers, but when you talk about peace of mind, you talk about being on the same page with your spouse, when you talk about defining your goals and knowing you’re working toward achieving them, like that’s the stuff that really matters. And what I love about your journey and thinking about where you kind of came in a very passive participant in your financial journey to a very excited, motivated participant in your own journey. I mean, that’s really what it’s all about. You caught fire with it, and we often at Ohio State, we end up in financial discussions. People have to hear us talking about budgeting and other stuff. So thank you so much for sharing that update. And again, for those that didn’t listen, go back and check out Episode 060 of the podcast where Breanne shares a lot of her story. So have a great rest of your meeting.

Breanne Porter: Thanks, Tim. You too.

–

Tim Ulbrich: I’m here with Gina, who is a P2 at Virginia Commonwealth University College of Pharmacy, VCU School of Pharmacy, and here back at the APhA meeting, excited to have you stop alongside the booth. You just purchased a copy of “Seven Figure Pharmacist,” grateful for that, so thank you.

Gina: Yep.

Tim Ulbrich: So tell us a little bit about yourself, where you’re at obviously in your journey of pharmacy school and how the meeting’s going so far here at APhA.

Gina: Yeah. As Tim said, I am a P2. I’m currently looking to pursue a professional residency or a fellowship.

Tim Ulbrich: OK.

Gina: I’m not too sure yet. But definitely I’m also interested in compounding as well. I picked up the “Seven Figure Pharmacist” book because I was interested in — well first off, schools don’t really touch upon financial skills. We do host occasional lectures and talks, but I feel like this is definitely an essential skill. It’s important to have a job, but it’s rather how to utilize that such as like investing and all. And I figure I don’t have much background on that personally, so that’s kind of what I’m hoping to get out of that book.

Tim Ulbrich: Yeah.

Gina: Especially to prepare myself for graduation.

Tim Ulbrich: Yeah. And I’m so excited to hear you energized about this topic as a P2. You know, as I think back on my journey, part of the pain that I had paying back $200,000 of student loan debt is I wasn’t thinking about it early enough. So you know, the fact that you’re thinking about this early tells me that you’re passionate about learning and that will be everything in terms of your journey. And so establishing that principle of learning early on is so important. So kudos to you for investing in that. It’s an important thing to do.

Gina: Thank you. I mean, especially in this day and age, you know, tuitions are rising with any school, undergrad especially. Yeah, it’s definitely an important skill. It’s the future.

Tim Ulbrich: So here we are at the APhA meeting. So how’s the meeting been going? What’s been your favorite parts of the meeting so far?

Gina: Good. I’m a student, I’ve attended info sessions on — for example, I just came back from the Rutgers Fellowship Program roundtables, and that was pretty informative. Other educational sessions included like dietary supplements, contraceptives, etc. Yeah, it was pretty eye-opening.

Tim Ulbrich: Yeah.

Gina: Yeah.

Tim Ulbrich: Great meeting. It’s been beautiful here out in Seattle. And I know coming from the East Coast, the travel certainly can be exhausting. But it’s a great, great city here in Seattle.

Gina: Oh yeah.

Tim Ulbrich: Thank you so much again for just taking time. Thank you for your support of the work that we’re doing. And best of luck to you going forward.

Gina: Thank you. Thank you for having me.

–

Tim Ulbrich: Back at the exhibit hall here at APhA 2019 in Seattle. Excited to be here with Cara from Florida A&M University. And she stopped by the booth yesterday, had purchased a copy of “Seven Figure Pharmacist,” was so excited about it, we did a little recording. And we found out the audio wasn’t working. So she’s back today. So thank you for joining.

Cara: No problem at all. It’s a pleasure.

Tim Ulbrich: Yeah. So tell me a little about yourself, what year you are in pharmacy school and how your meeting’s going so far.

Cara: So I’m a P3 student from Florida A&M, and my meeting is — the meeting’s going amazing. You really get to network. And that’s so important in this job field right now.

Tim Ulbrich: Absolutely. So this topic of personal finance, I can tell in just my short interactions with you, it’s something you’re very passionate about.

Cara: Yes.

Tim Ulbrich: You told me that you are adamant on not being broke, right?

Cara: Yes.

Tim Ulbrich: We’ve talked about stories of many pharmacists that go through this process, accrue lots of student loans, have a good income but feel like they’re living paycheck to paycheck because of student loans and other competing priorities. So tell me about your desires going forward and why you’re so motivated about this topic.

Cara: So I’m motivated, first of all, my mom was a single mother, and I saw that it seemed like she was working as hard as she could, and she was sacrificing so much and still could barely make ends meet. And there’s no reason for that. She didn’t do as much as she could for me to turn around and do the same thing. It’s always you’re supposed to grow.

Tim Ulbrich: Yes.

Cara: So it’s important to have financial literacy. And she really pushed to me, like hey, you need to count your coins.

Tim Ulbrich: Yeah, absolutely. And I think, you know, what I love in my talking with you just for a short time, you have caught fire on this topic.

Cara: Yes.

Tim Ulbrich: And what I’ve seen is once people have that passion for learning, it’s game on. And a pharmacist’s income alone is good, but it’s not going to equal financial success alone. Or you’ve got to take that income and put it into work. We talk a lot about people that are income affluent but that haven’t turned that into balance sheet affluent. So it’s got to be able to transform that income into wealth. So I’m excited for you and for your journey. And while we’re here, I’m going to do a quick shoutout for Dean Johnnie Early at Florida A&M University, just left us in Toledo, Ohio, and went down there. So thank you so much for your time. And I hope you have a great rest of your meeting.

Cara: Thank you so much.

Tim Ulbrich: Yeah. Thank you.

–

Tim Ulbrich: I’ve got Tim here with me, a P3 from USC College of Pharmacy, and grateful for the opportunity to have you here for a couple minutes. Yesterday, you stopped by the booth. I was trying to talk you into doing some podcasting and you were a little bit nervous, but here we are, back today, and you’ve come back. So I appreciate your time.

Tim: Sure. Thank you for having me here.

Tim Ulbrich: How’s your meeting going?

Tim: It’s pretty great. It’s my third day, and I have met a lot of people and going to different booths here at the exposition as well as go to the research and poster presentations. I think that was cool as well. And being a delegate for Rho Chi and PLS. Also, I have never been a delegate before, so that’s also a new experience for me.

Tim Ulbrich: So it’s been a busy meeting. And I just found out that you are flying home very early morning tomorrow, getting into the LAX airport, and driving to USC to take a final exam. So it’s dedication for you to be here at APhA, investing in your professional development, which I’m excited to hear. And I can tell you’re excited about this topic of personal finance as well. So tell me what’s top of mind for you when it comes to personal finance as a current student and thinking ahead to making that transition into new practitioner life.

Tim: I think it’s very important to start early. As you know, currently interest, they may accrue, they don’t charge it. I don’t like making more interest.

Tim Ulbrich: Yes, baby interest. Capitalization.

Tim: Yes, they’re not being capitalized.

Tim Ulbrich: We call it baby interest.

Tim: Oh, OK. Then I’m making baby interest, but it’s just accruing. So I think it’s important now to start budgeting, see where I’m spending my money and try to minimize all the expenses that I don’t need so that I can minimize my loans and hopefully have not too much loans, especially attending university, so.

Tim Ulbrich: Yeah, try to minimize some of that stress later on.

Tim: Yes.

Tim Ulbrich: I’m glad to hear you say, we talk a lot about that while somebody’s in school, it can very much feel like Monopoly money. And you don’t realize the impact of how that interest is growing.

Tim: Right.

Tim Ulbrich: And then to your point, once you get into active repayment, that interest grows on the principal, and that starts growing interest, which is that process of capitalization.

Tim: Yes, exactly.

Tim Ulbrich: So for the students that are listening to this, anything you can do, Tim’s got good advice here. Minimize the amount that you’re borrowing, of course sometimes it’s easier said than done.

Tim: Right.

Tim Ulbrich: Ultimately, you’re trying to minimize that principal balance as well as the interest that’s accruing to minimize what you’re going to have to pay in active repayment. So USC College of Pharmacy, one of the top programs in the country. Tim Baker and I actually had a chance to come out there last year, talk with students, very impressed with the campus, top notch students — and I’m not just saying that to say that. We left that weekend just very impressed with the USC brand, the level of students, the caliber of the students, so I wish you the best of luck. And thank you for coming onto the show.

Tim: Of course. Thank you for having me, and thank you for coming last year. We really enjoyed you being there and teach us about finance.

Tim Ulbrich: Absolutely. Thank you.

Tim: Thank you.

–

Tim Ulbrich: Tim Ulbrich here, back on the floor of APhA in the exhibit hall with Tim Baker. We are wrapping APhA Annual 2019. Wow.

Tim Baker: Already.

Tim Ulbrich: Already, right? It’s been a great meeting.

Tim Baker: It went by really quickly. Yeah, it just seems like so much buzz this year around our booth and I think the topic of personal finance. APhA, like I said, puts on a good show here. Yeah, it’s been great. I don’t know, Tim, I feel like coming out of these conferences, I just get so charged up even not being a pharmacist myself but just, you know, about — I know there’s going to be some negativity at times about the profession of pharmacy, but I just get super jacked up coming from these types of meetings and going forward. And you know, for us, trying to find better ways to do what we do in terms of providing product and service for pharmacists with regard to their personal finance needs.

Tim Ulbrich: Absolutely. And there’s been a ton of energy around the topic of personal finance. And you know, I feel like thinking back to 2015 when we kind of started the journey, like one of the things we kept saying is we want to move the needle on this conversation.

Tim Baker: Yeah.

Tim Ulbrich: About personal finance. And I feel like, you know, we’re of course biased, right? We love this. But I feel like the awareness and knowledge of students and new practitioners — and we’ve talked with faculty members, and we’ve talked with others — the terminology, I mean, things I hear students talking about.

Tim Baker: It’s unbelievable.

Tim Ulbrich: Understanding refinance and budgeting, loan forgiveness. Like, we didn’t hear that 3-4 years ago. And I think we’re seeing that needle shift a little bit.

Tim Baker: You know, it’s funny. I was talking to a pharmacist today, and she came up and actually she’s right behind us in our booth here. She works for the FDA, and she’s like, “Hey, what do you think about like that married filing separately if I’m going for PSLF and my spouse isn’t?” And I’m like, wow. Before it was, what’s an income-driven plan. And now, we’re talking about oh yeah, I’m optimizing my PSLF strategy here. I’m doing this or that or refi or — it’s unbelievable. And you know, I don’t know if we can take full credit for that, but I think, you know, I think the fact of the matter is that there is absolutely more of an awareness than it was a couple years ago. And I think it’s a credit to our listenership and really, the students and the new practitioners out there that are really being intentional and looking at this stuff. And it’s super easy, as you can attest to, to not be.

Tim Ulbrich: Yeah, absolutely.

Tim Baker: And to kind of wander off or stick your head in the sand. So you know, that just jacks me up. And I love that, and I think, you know, I’m looking forward to next year’s conference in D.C. because I want to see even more of like the evolution from where we’re at today.

Tim Ulbrich: I couldn’t agree more. And I think the excitement and the energy around, you know, caring about this topic and, you know, we help pharmacists achieve financial freedom. That’s what we do. And we’re missing Tim Church out here.

Tim Baker: We are.

Tim Ulbrich: Because you know, we’re feeling this energy and this vision and what we’re doing is just as much a part of him as it is us and his contribution to that. So Tim Church, shoutout to you.

Tim Baker: He’ll probably be ready to run through a wall there, you know.

Tim Ulbrich: You’re right, he would. What you said to me that really resonated that I’m feeling is intentionality. I mean, we did some roundtables yesterday, and we talked about budgeting and, you know, finding your why and thinking about goals and all these other things. And I felt like the context of budgeting and seeing a group excited about, you know what, a budget doesn’t have to restrictive. A budget doesn’t have to be something that holds you back. A budget is about putting you in a position to achieve the goals that you really want to achieve, like that really is what this whole thing is all about. And that’s exciting.

Tim Baker: Yeah, and I think when you can reframe the mindset of like, you know, thinking of a budget as like, ‘oh, I don’t want to, it’s restrictive,’ to a budget allows you to really achieve the why and you know, to take the trips that you want to and to achieve financial independence when you want and that type of thing. It’s like, when you back it in, when you look at it that way, it becomes dare I say fun. It becomes more — you get more and more momentum when you’re working towards those goals and the budget really is the means to the end of that. And I think just there’s a — it’s almost like the “b” word is a dirty word. But I think it can be a very positive thing, you know, if you really ask those reflective questions of what is the point of all of this? Like what is the point of making this income of paying down these debts? You know? When I talk with clients and I ask those questions, it’s typically not like, oh, I wish I would have funded my Roth IRA. You know, looking back, it’s more like, I wish I would have done these things with my family or I wish I would have ventured out on my own and did something in business or whatever. And I think like, get excited about that. That, to me, is that encouraging thing. Like build a life plan and have the financial plan really support it.

Tim Ulbrich: Yeah, we preach, obviously, principles to build wealth. But our goal is to equally preach what leads to a wealthy life.

Tim Baker: Right.

Tim Ulbrich: And I think that’s so important for us and at least from my viewpoint, that’s what’s so incredible about being a part of this journey is to be able to see people unlock what matters most to them. And we’re getting ready to head into our last session here this afternoon where we’re going to talk with new practitioners all about that concept of, here you are as a new practitioner, you just graduated, you’ve got all these competing priorities. So what? What is this all about? And can we define that so that when we get into the nitty gritty of the financial plan and the budget and all of that, that we’ve got purpose, we’ve got direction, and we know why we’re being intentional. So as we wrap up APhA 2019 here in Seattle, Washington, just another shout out to the American Pharmacists Association, we appreciate their partnership. You know, it’s been so fun seeing the energy of students and new practitioners and others here at the meeting, looking at how can we better the profession, how can we evolve the profession? And we’re excited for what lies ahead in this partnership. We’ve got a webinar coming up in the month of April around home buying. We’ve got new content coming throughout the rest of the year. We’re going to do some more live events, the Day of New Practitioner Life this summer in Washington in July. So for those that are not familiar with the work we’re already doing, Pharmacists.com/YFP. For those that are APhA members, you can log in, access the catalog of webinars and other content that we’ve done. For those that are not a member, you can use the coupon code AYFP19, AYFP19, to get 20% off your membership. So Tim, it’s been a lot of fun.

Tim Baker: Yeah, same. Looking forward to next year.

Tim Ulbrich: Absolutely.

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YFP 088: Introducing YFP Planning!

Posted on by yfpadmin

Introducing YFP Planning!

On this episode of the Your Financial Pharmacist Podcast, YFP Co-founders Tim Ulbrich and Tim Baker announce some exciting news as it relates to the launch of YFP Planning, talk through the benefits of financial planning for pharmacists and reminisce on the origins of Your Financial Pharmacist.

Summary

On this episode, Tim and Tim dive right into an exciting announcement regarding the launch of YFP Planning. YFP Planning provides comprehensive fee only financial planning services now as part of Your Financial Pharmacist. Formerly Script Financial, YFP Planning covers anything that has to do with your financial situation including cash flow, budgeting, insurance, retirement, tax preparation, and estate planning.

Tim Baker, CFP and head of YFP Planning, shares that financial success and wealth were based off of an old equation that is now a myth. The old method of thinking focused on being income statement affluent where a high income is made, however you have no savings to show for it. Conversely, balance sheet affluence is where money flows in and actually sticks so you can save for a purpose.

Comprehensive financial planning forces you to look at your current financial state and make moves to better it. This can be especially helpful for pharmacists who typically have higher incomes and a lot of student loan and credit card debt. YFP Planning doesn’t just provide you with information on how to pay off your loans, save money, or create a budget, but instead also offers accountability and coaching. Having someone offering an objective approach to your financial situation helps you to see the whole picture and pushes you to take the steps you need to reach your goals.

The YFP Planning process starts of with a free discovery meeting where the YFP Planning team learns more about you. If you decide to move ahead with YFP Planning, the first meeting focuses on getting organized. Then, another meeting is scheduled to discuss your goals and dig deeper into some questions you may have not asked yourself about your financial situation or goals.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? Welcome to Episode 088 of the Your Financial Pharmacist podcast. Excited to be here with Tim Baker after we’ve had a series of side hustles represented by the one and only Tim Church. He’s doing a great job with that series, the side hustle series, so if you haven’t listened to those, check those out. Tim Baker, welcome back to the show. It’s been awhile since we recorded. I think — what? The New Year Game Plan back in Episode 081.

Tim Baker: I know. It’s actually crazy, like I think — not to be a broken record, but it’s actually nice to be like a listener and to hear all of these inspiring people come on and just the work that you’re doing and Church is doing on the podcast, like it’s really cool to see. Yeah, things have been good, been super, super busy, lots of things going on. But yeah, excited to be back on the podcast today.

Tim Ulbrich: I’m with you on that one. I kind of like the surprise of like an episode going online and get to see it as a listener and hearing the past couple weeks and being inspired by some of the pharmacists out there doing some awesome side hustle stuff. So we’ve got more of that coming also in the new year. So lots going on in your world and the tax prep, right? So we just did a webinar recently. And tell us more about what’s going on in that arena.

Tim Baker: Yeah, so one of the things that I really was thinking about in terms of like Script Financial and really providing great service to our clients is what are some things that really, we have to work through and really deal with every year? And it’s really tax. So before, you know, obviously, I’m a CFP, and a major component of that is tax, but I really wanted to learn more and look at ways to almost start a tax business as part of this Script Financial. And when the things with the Tims all kind of took off, I kind of set that aside. But I was lucky enough to have Paul Eichenberg, who’s a member of my team, who has experience with tax, become part of the team and really offer that as a service to our clients. So last night, we did our first webinar, our first YFP webinar. And it was great. We had great attendance and just kind of a learning experience for us on the webinar side. But yeah, we’re super excited to roll that out for clients. So when clients work with me, comprehensive is just kind of included in their fees, so every year, we’re doing a little bit of tax prep, which is kind of what we’re going through right now, this time of year. And really, kind of the planning that I’m a big believer in that, hey, halfway through the year, let’s take a look and do a projection and make sure that we’re not paying Uncle Sam too much or getting a refund back or whatever that looks like. So yeah, big changes, but very exciting. And just excited to roll that out.

Tim Ulbrich: Awesome. Yeah, you guys have been doing great work there. Shoutout to Paul, I think he’s doing an awesome job leading that. And for those that are listening that aren’t yet clients, if you want to learn more about that service, YourFinancialPharmacist.com/tax. And as Tim mentioned, that’s both inclusive of the filing part but also the strategy part of looking ahead to say, what can we be doing to maximize the tax situation heading into 2019? So Tim, we’ve got some exciting news to share on today’s episode alongside a discussion we’re going to have on the decision to hire a financial planner. One of the most common questions that we get — and we’re also going to be reminiscing along the way about our journey as we both individually reflect back on all of the things that have happened really leading up to this moment. And I think it’s — to be frank, I’ve been kind of giddy about this because, you know, when you and I met just a few years ago, I feel like really, the culmination of that vision is coming together. And it’s been a really, really fun ride. So before we start getting too sentimental, Tim Baker, let’s cut to the chase. Give us the good news. What’s the announcement?

Tim Baker: Yeah. So the big change is that Script Financial, which I just talked about, which I launched way back when in 2016 is now YFP Planning. So this has kind of been kind of in the works, so Script Financial is now part of the Your Financial Pharmacist brand. It’s just super exciting. I know Tim, like when I think back when we met, you know, via Twitter way back when, I never imagined that it would kind of lead our paths to this, but it just made sense in terms of kind of our beliefs and I think what we’re really trying to do in terms of empowering pharmacists and pharmacy students to really take control of their finances. So whether it is the blog or the podcast or a course or doing your taxes or comprehensive financial planning, which is kind of my bread and butter, you know, we felt like basically having that under one brand and one mantle made the most sense, so I’m giddy as well. I’m super excited about I think where we can really take this and I think with good feedback from our listenership and readers and all that basically YFP subscribers to kind of listen to what is needed and adapt. And I think one of the things that really was a catalyst for me to leave kind of the traditional financial planning firm was, you know, there wasn’t really a lot of planning out there for young professionals or individuals that were dealing with student debt or just cash flow and budgeting. So I think in that same breath, we always want to make sure that we’re adapting to the needs of the community and what’s out there and what pharmacists are dealing with. So I’m just super excited to really get going on this and kind of do this relaunch of the brand.

Tim Ulbrich: Yeah, I’m with you on that. And one of the most common questions we get is, hey, do you guys offer comprehensive financial planning? And for our listeners, here’s the answer. Yes, yes we do. So YFPPlanning.com is the launch of the site. So if you’ve been hearing us talk about Script Financial, Tim’s brand and company, we all are now one entity. So YourFinancialPharmacist.com, you can get there as well or directly at YFPPlanning.com. And I think this really, for me, as I mentioned before, is a culmination of the vision that we had when we sat down at Bob Edmund’s on I-71 in Mansfield, Ohio, and I was actually there with Jess and the boys recently, and I was kind of — I mean, she probably was looking at me like, why are you staring off into the distance?

Tim Baker: Get a little teary-eyed.

Tim Ulbrich: Got a little teary-eyed, I was looking at the booth where we sat and had my boys there, and it was just kind of a cool moment. But just sharing that vision of like, you know, we are so passionate about helping pharmacists in this area, and I think our vision at the time was, hey, everything A to Z. Everything from debt to budgeting to investing to estate planning in all forms and fashions, we want to be involved with pharmacy and helping people along that journey toward financial freedom, which for everyone means something different. And we had this vision that whether you want to come to YourFinancialPharmacist.com and check out our free resources and calculators, which we have a ton out there, or you feel like financial planning’s a great fit for you, we’ve got that all now in one place. So let me ask you the obvious question because I think it’s worth digging in a little bit deeper is, what does comprehensive financial planning mean? Because I think we throw that out there, and the industry, as we’ve talked about before in Episodes 015, 016 and 017, you know, is very different in terms of what you’ll get for that service. So for you and for us, what does that term mean?

Tim Baker: Yeah, I think I look at it as if it has a dollar sign, we’ll work through it. To me, if I’m hiring a professional to help me with my finances, I want someone — I want there to be someone in my corner that has my back, that has my best interests in mind, which unfortunately, the way the industry is set up, that’s not always the case. So I think we’re touching on all of the things that are related to the financial plan, more specifically, things like debt management and kind of your fundamentals and cash flow and insurance and retirement and estate. But there are going to be things that are beyond that, those life events that come up, and I think it’s just really important to have someone that understands what your goals are and kind of understands really the technical piece of the financial plan and point you in the right direction. You know, so much of kind of the old equation or the old guard of financial planning was to push product. Hey, you’re a pharmacist or a doctor, here’s a life insurance policy that, you know, is probably going to pay me a lot of commission or a disability policy or an investment. And I’ll talk to you once a year. That’s not necessarily, you know, the model that we employ. So I think that the idea that a lot of things in life, even in the financial services, is becoming more and more of a commodity. So you know, really what we’re focused on is kind of bringing that life plan that fits the view of what your view of a wealthy life is and have the finances really support that. Typically, most people don’t — they don’t accumulate wealth for the sake of accumulating wealth. It’s for, you know, the fact that they want to retire at age 50 or they want to have this vacation home in the woods somewhere. So that’s really the idea is to connect the dots with, OK, what is a wealthy life? And then how do we get there? And that’s, to me, that’s what fires me up.

Tim Ulbrich: Awesome. Love it. You know, Tim, one of the things that stands out to me is over the Facebook YFP Book Club right now, we’re working through the book, “The Next Millionaire Next Door,” by — we’ve talked about it on this podcast — Dr. Tom Stanley, Dr. Sarah Fallaw, which reminds me of our journey and our beliefs to buck the status quo and complacency that’s out there when it comes to achieving financial freedom and building wealth. And the one takeaway that I remember from this book and the first one that was published back in the ‘90s is that this old equation of high income=success is a myth. It’s a false reality. But so many pharmacists, myself included at one point, really subscribe to this false reality. So tell us more about this old equation and how you see pharmacists kind of falling into this trap.

Tim Baker: Yeah, it’s kind of what they talk about when we talk about income statement affluent versus balance sheet affluent. So essentially, income statement affluent — and I see this a lot where, you know, you have a household that makes $200,000, $300,000, $400,000 or whatever that looks like and have nothing to show for it: have no savings, have credit card debt, and essentially, the money, the household’s like a siv, the money comes right in and goes right out. Balance sheet affluent — and I’ve seen this even with residents who make $40,000 or $50,000 or incomes of less than $100,000 — balance sheet affluent are those people that when the money flows in, it actually sticks. And you’re saving for the purpose of retirement or a kid’s education or whatever it is. So the reality is that you’re spending, you know, for a lot of people, a lot of people will say, “Hey, I wish I could make a little bit more. I wish I could get a 10% raise, and then all of my concerns could be put at ease.” But the reality is and the psychology shows us that most people, their spending rises with really their income. So you know, if I double your salary tomorrow, a lot of people will double their spending. So the old equation is, you know, basically is when you follow traditional advice, you should really enjoy your income and really live for today, and we see that in society as being — we very much live on credit and we spend, spend, spend, you know, car payments, a big mortgage, that type of thing where what we really want to do — and it often leads to things that give us stress, so I’m thinking back to Jessica Louie about clutter and things like that. A lot of it is very near-term, like satisfaction of like, oh, this is awesome. But then we just surround ourselves — and I’ve been this way in my life in the past where I’m like, I just have all this stuff that I really don’t like or want that just causes more stress. So I think, you know, the idea is we want to make sure that we are being intentional. We talk about being intentional with our spending. And develop a savings plan that allows you to allocate dollars for the things that mean the most, whether that is a vacation to the Pacific Northwest, whether that is a vacation home in the woods or a trip to Paris, France. Those are really the things that I think are what I talk about life plan that are more important.

Tim Ulbrich: Amen. Preach it, Tim Baker.

Tim Baker: Yeah.

Tim Ulbrich: Preach. You know, it’s interesting because we just finished up “Rich Dad, Poor Dad,” in the book club, and now we’re reading “The Next Millionaire Next Door,” and that wasn’t intentional, but two very — I don’t know if different is the right word — but just very philosophically — you know, “Rich Dad, Poor Dad,” to me is all about growing the asset line and thinking about real estate and those types of things.

Tim Baker: Yeah.

Tim Ulbrich: And I think that “The Millionaire Next Door” focuses much more on frugality and cutting expenses, both of which are very important. And Jess and I were having a conversation the other night is you put the two of those concepts together, and boom. It’s like, game on, right?

Tim Baker: Yep.

Tim Ulbrich: And I was even thinking back to this old equation, thinking back to 2009, you know, Jess and I had over $200,000 of student loan debt, we had a house with almost no equity, we soon had a growing family to support with the loss of one of our incomes because she was going to be staying home. And we realized that despite all of the amazing opportunities that have been afforded to us, there’s really little discussed truth among practitioners, ourselves included, in this field about how to manage this. And I think many pharmacists listening find themselves in exactly the same boat. And so as you meet with pharmacists or residents or fellows or students, what are some of the most common frustrations and things that you’re hearing from them?
Tim Baker: Yeah, it’s a great question. And typically, when I meet with a prospective client, I’ll lay out essentially three things. And I’ll say, “Hey, Tim,” — you know, typically, when a pharmacist such as yourself comes to speak with me about their finances, they share one of a few things. It could be “I’m overwhelmed with student debt,” or even credit card debt, I’m seeing that more and more, this credit card debt. “I am confused how to properly budget, save and invest in my future.” And that’s kind of a broad, that’s a broader one. But it typically hits for most people. And the last one is, you know, “I’m frustrated by the fact that I make a good income, but I’m not progressing financially.” And kind of this idea of living paycheck-to-paycheck and maybe not enjoying kind of their work because they could be stuck in that work because they need that income, that type of thing. So there’s a lot — and typically, when I kind of go through those pain points, a lot of pharmacists look at me and then they say, “You just described me. Like you’re three-for-three.” So I think it hits on a point a lot of kind of what we’re talking about with empowering pharmacists to really get going on this because you can meander in life and wake up when you’re 45, 55, and really have nothing to show for it. It’s really that easy to do. So I think like part of what we do at YFP Planning now is really, we kind of force you to look at it. We meet quite often, so we almost like force you to really look at that, look at the kind of your current state and make moves to better it. And really examine — we often don’t do enough self-reflection, not just about finances but about life in general. You know, so when I say, “Hey, Tim, what does success look like in five years?” what I often see is, “Wow, that’s a really good question. I never really thought about that.” And then the other things I see, particularly between spouses is kind of like that rubberneck, like I can’t believe that these are the things that you want in five years or that type of thing. And again, it’s hard for us to imagine our five-year-older self, and essentially what I do with clients that if you’re 30 right now, you’re 35, I’m like, imagine when you’re 35 or 40, and put yourself in that place. So I think like the pain points are definitely real, and it’s easy to put your head in the sand and kind of not look at it and just live with it, but I think the sooner that we can kind of get a plan in place, the better. And hopefully, we can do that for you.

Tim Ulbrich: And I think just to build on that, Tim, one of the things I see, I’m sure you see it more often that people often come up to me after a talk or ask a question, and they’ll describe that “I really want to pay off my $200,000 student loans,” or “I really want to save $4 million for retirement.” But when I ask that next-level question of why or what’s motivating you or what’s going to keep you going, there really isn’t much thought there, right? And I think that goes to the point of visualization and thinking about not only your why but where you see yourself in five or 10 or 15 years. And what would be the negative impact if you didn’t do this? Or what are you hoping to achieve by doing this? And I think that gets to the point of accountability and coaching. And one of the things that excites me as we think about YFP Planning is that for the past few years on YFP at YourFinancialPharmacist.com, we’ve been providing a ton of information — and a shoutout here to Tim Church, who has done an unbelievable job.

Tim Baker: Yes.

Tim Ulbrich: The guides, the checklists, the calculators, the blogs, the podcasts. But what I’m getting to here is it’s not just about information. I’ve seen this firsthand with Jess and I working with you that I read on this topic all the time, but at the end of the day, if I don’t have an accountability partner or a coach, things may not get done. And you know, there’s a quote out there. It says, “If information was the answer, then we’d all be millionaires with perfect abs,” right? So you know, talk to me about accountability and coaching. And I think often, there’s this misperception that hey, my financial planner’s going to help me get x return on my investments when really, maybe the accountability and the coaching is the more important piece.

Tim Baker: Yeah, I think like when I look at it, you know, I kind of go through like when I more or less explain to a client what we do, a lot of it is kind of touching on the different parts of the financial plan, but I almost say like at the end of it, like crumble all that up and throw it away because really, I think the value that we provide is kind of the ongoing coaching and accountability. The technical side of it is important, but you think about even like in pharmacy, like it’s important that you know your stuff, but a lot of it is adherence, right? You want to make sure that your patients are taking their medication and all that kind of stuff. So like it’s the same thing as like I could give — what I tell clients often is just because life is so busy, I could give you the most well thought out, awesome financial plan. Most people will read it, say, “Hey, that’s nice.” And they’ll throw it on the shelf, and nothing ever gets done. So I think what we try to do is provide some, you know, where we have a client portal and we try to put those tasks back into the client portal, that pings them and reminds them. And really, again, the fact that we meet frequently, we’re trying to always push the ball forward and cross those things off the list, whether it’s getting your will done or insurance in place or setting up this Ally account for the purposes of Paris, France, which I want them to label it as “Paris, France,” even if it sits empty for two years. I don’t care. I want that there, ready to receive money when that happens. So I think that — I think that the accountability is important. But I also put a heavy premium on the objectivity. So you know, if we take you and Jess as an example, you guys view money differently. So sometimes, it’s good to have someone that has an objective opinion that says, “Hey, these are what my thoughts are, and this is my advice.” So I think if you couple the objectivity and kind of the objective approach to the financial plan with the kind of the ongoing coaching and accountability, it’s a deadly combination. And that’s what I think that often falls short with a lot of other advisors, so sometimes I’ll ask a prospective client, “Hey, who ultimately is going to make the decision? Is it you? Is it you and your spouse? Is it you and a Yoda in your life? What does that look like?” And a lot of times, you know, people will say, “Well, I really respect my dad’s opinion.” They have an advisor, and that’s an objection I kind of have to overcome because most of the time, dad’s advisor is not going to understand or really value what we do because dad’s advisor will typically — you’ll pay based on the assets that are invested and then maybe — and if they don’t have minimums like $250,000 or $100,000 minimums, and they will work with a younger professional, then they talk to you once or twice a year. That’s not our model. We’re very different. So it’s not an apples-to-apples approach. So again, I think the coaching and the accountability part is such a big part of that that I think it’s a differentiating factor between us and other financial planners.

Tim Ulbrich: So Tim, hopefully this is a feel-good for you, but as you were talking right then, I just started making a list of all of the things that Jess and I accomplished in the last three months that I’m confident we either would not have done or would not have done as quickly without your accountability and coaching. So I’m sure I’m missing some, but we’re back on track with our zero-based budget, using YNAB, we got the estate planning documents wrapped up, emergency fund is back to full fund after we moved recently, we worked through plussing up our disability and life insurance policies, umbrella insurance policies, we worked through lowering fees on investments, asset allocation of accounts, and setting up our savings sheet with our sinking funds. And even to your point earlier, some of those have a $0 but are a reminder of the goals that we have, right? So we have some real estate goals at $0 right now. That’s not the point. The point is it’s a reminder of the goal that we’re trying to get to and because of that, even at $0, it’s something that Jess and I are talking about. So that’s the power of accountability right there. Would I have done those things did I have the knowledge to do them? Yes. Would I have executed? Maybe yes, maybe no. And that matters.

Tim Baker: Well, it makes my heart happy. And you guys are great clients, so I think that, yeah, I think that it’s good feedback. Now, the 403b that we have in transit, that’s a work in progress. I’ll talk to you about that today. But you know, there’s always things that, you know — and again, it’s kind of like an ebb and flow. So it’s never going to be clean-cut in terms of like, hey, we knocked this out. Things are going to change in life. And imagine like in your life alone, what has changed over this past year, and you’ve accomplished all that, and you’ve been really intentional about that. And I think almost working together has kind of forced us into that. And I think that’s great. And yeah, I think that it’s hard to — so a lot of — it’s hard to quantify that, though. Like how do you quantify? Because at the end of the day, pharmacists are scientists. They’re very analytical, so they want to say, OK, if I’m paying this amount of fee, am I going to get this return? And I put that back on how do you value x or how do you value y? But I understand, like you have to get value from that. But yeah, it’s great feedback. And I think the things that really fire me up are those types of, that type of feedback but also seeing a client — and I have a few clients in mind that come to me with $40,000 in credit card debt, and they pay it off like aggressively, very quickly, so we can move onto the next thing. And we can see the movement in their overall net worth, so where before they were -$200,000, maybe they’re now they’re only -$140,000, which sounds like people laugh at that, but those are real dollars that we’re making moves towards. So I love those cases, and it inspires me to kind of keep going and really be the advisor, be the planner there that is there to back them up and really encourage them and really give them tough love when they need it as well.

Tim Ulbrich: Alright, so Tim, we’ve talked before on this podcast many times about the value of fee-only financial planning. Episodes 015-017, which I referenced earlier, and lots of variability that’s out there in the financial planning industry. So just real brief, fee-only, what is it? And why does it matter?

Tim Baker: Yeah, so I guess in my profession — and I guess I struggle to call it a profession for a lot of reasons, but really, the way that advisors are really identified, so if we have any John Oliver fans out there who does Last Week Tonight, he does a segment on financial advisors and kind of what they are and how they work, and I always reference that because I think it’s actually pretty funny and pretty accurate. You know, essentially, a financial advisor or financial planner, that name really doesn’t mean anything. Unlike a PharmD, an MD, a JD that actually carries weight to it, the CFP has, that’s kind of like an accreditation that you want, a Certified Financial Planner, but essentially, financial advisors, financial planners, are typically categorized in three buckets. You have a commission agent, which in the very extreme example, think of like Wolf of Wall Street. “Hey, Tim, I’m walking in the parking lot, I had this great idea on a stock that I want to sell you or this life insurance plan or this disability policy.” It’s very transactional, and it’s the sale of product. So I’m trying to get my commission and then go. The fee-based world, which this is where I started in the industry before I launched Script Financial was fee-based. Fee-based is basically where you have advice and the sale of product, basically they’re merged together. And anytime that happens, you have a conflict of interest. So in my last firm, I would say, “Hey, client, I could sell you this mutual fund that pays me a 1% commission and a 1% trail or this one that pays me a 5% commission. Or if we talked about term and whole-life, this particular term policy pays me a commission of x and whole-life pays me a lot more,” so anytime that you have — and we see this, Tim, we see this with physicians. So physicians are not supposed to get kickbacks on the medication they’re prescribing because, you know, there’s a conflict there. So it’s the same in our industry, except right now, most of the advisors out there operate in that fee-based world. What fee-only does, and it’s a very, very small subset of financial advisors out there. I’ve heard estimates it’s less than 5%. What fee-only is is basically you separate the advice, the dispensing of advice, from the product. So my compensation comes directly from the client, there’s no kickback or referrals. It’s not through a mutual fund or insurance company. It comes directly from the clients. So I don’t really — I’m not influenced to put a client in Product X or Y. I want to basically — I’m giving them the advice, they’re paying me for the advice, and I’ll put them in products that I think are in their best interest. So the big thing with fee-only is that it follows that fiduciary standard of care, which means that I’m legally bound to act in my client’s best interest versus a suitability care, which the majority of advisors out there where they can actually put their own interests ahead of their clients’. Which is crazy to me that that is actually a thing.

Tim Ulbrich: And I think just to drive that home one step further, if we think about the traditional financial advising model, typically, there’s a compensation based on Assets Under Management, so how much you’ve invested with them or commission from product scales, which often are hidden from view or hourly fees. So in other words, that advisor is incentivized to focus on investing over other options. And sometimes, this means that your goals as the client and their goals as the advisor are not fully aligned. And that is so important for pharmacists to hear that message because as we launch YFP Planning, we talk about fee-only financial planning services, which is what you’ve been doing with Script Financial, that it really bucks that model entirely. And that’s really important for those of you that are looking comprehensively, that I need help with student loans, I need help with credit card debt, I need help with my budget, I need help with home buying, I need help with estate planning and all these other things with investments being one piece of that. But we’re not going to only focus on investments, ignoring the rest of the financial plan. And so I think that holistic model and that pricing incentivizes that comprehensive nature is incredibly important for our clients to be considering, whether it’s us or somebody else, to make sure that they’re looking at a model that’s fee-only, that there’s a right educational credential and that pricing is done so in a way that really incentivizes that advisor to work with you on a comprehensive nature.

Tim Baker: Yeah, and one of the things that frustrates me a bit is, you know, when I’m talking to a prospective client and they’re like, “Well, maybe I’ll go with my parents’ advisor that doesn’t charge them anything,” which is utterly false. It’s so, like, nothing comes free. So you know, typically, what happens there is that they don’t know what they’re being charged, which is a problem. Transparency is a problem in our industry. So that’s a problem. But I think also is the — I think when you work with a professional, there’s almost like a sense that they know what they’re talking about. And I would say by and large, most advisors have no idea what to do with student loans or how to help clients with a budget because it’s just not something, you know, most advisors want minimums of $250,000 in investable assets, so there’s almost this assumption of wealth. So it’s like, “Hey, kid straight out of pharmacy school, good on you. But you don’t need financial planning help,” which is utterly false. It’s just that their model is set in a way that they’re incentivized to go after those that have investable assets. And then really with the student loan piece in particular, I’ve had clients that say, “Hey, I’ve been working with this other advisor, and their advice on the student loans was like, oh, they’ll just take care of themselves. They’ll just amortize over time,” which is like ugh, I just want to scream to the heavens and say, “No, that is terrible advice.” But then they’re also in a whole-life policy or whatever. So it’s just crazy talk.

Tim Ulbrich: Follow the dollar. Follow the dollar.

Tim Baker: Yeah, exactly.

Tim Ulbrich: So talk us through the process at YFP Planning. Where do people begin? And then once they go through that process of trying to figure out is it a good fit for them or not? What does that look like from there?

Tim Baker: Yeah, so it’s a great question, Tim. So I think the best, you know, if you’re listening to this podcast and you’re like, man, I think this works for me, probably the best thing would be to go YFPPlanning.com, and you can actually schedule like a free discovery meeting with myself. And really, this allows me to kind of learn a little bit about you and potentially your spouse, what are the big issues that we’re dealing with and kind of talk through the process and what we do and kind of get a sense of each other to see if we would be a good fit. So you know, if we decide that, we kind of go through a step to kind of get you onboarded. So it could be really the first meeting that we have is get organized. So in the get organized meeting, we essentially look at your client portal. So once you become a client, you get a welcome email that says, “Hey, start linking all of your things to the client portal: your checking, your savings, your student loans, all that.” And what I’m doing is I’m building the first lens in which I’m going to look through to give you advice. So I’m looking at a snapshot of your income and your net worth, and then we also do kind of a 90-day retroactive budget exercise just to see how money is flowing through the household. So that’s really the first meeting. And then from there, we essentially schedule the second meeting, which is the second lens in which I’m looking through is it’s all about the goals and kind of hearkens back to the three questions that we went through with you and Jess. And really, it’s where I learn the most about my clients and really how the client views what a wealthy life is. So we’re going to ask you thought-provoking questions that you probably have not asked yourself. But the idea is to really, based on those two meetings, build a plan in a way that I am helping you grow and protect income and grow and protect your net worth while keeping your goals in mind. To me, that’s the name of the game.

Tim Ulbrich: So Tim, I’m guessing some are thinking, can I just do all of this myself? So what is your answer to that? Because I know for you, fit is very important in terms of the right fit for you, the right fit for the client. So what is your response to that?

Tim Baker: Yeah, I think, you know, I think the answer is that you can. You absolutely can. And there are a lot of people that kind of more of a DIY approach. And Tim, I would probably put you as a more DIY, especially before we first met, but I think once you start working with someone and you can kind of see the power of kind of the ongoing coaching and accountability, it almost kicks that into second gear. So I think you can. I think my view on that is, you know, I’m a financial planner, and I need a financial planner because, again, I need someone to objectively look at Shea and I’s situation and say, hey, we come from very different places in terms of money. These are our goals, how do we get there? So I get it. Pharmacists are very smart. They’re very analytical. But you know, even if you’re going to play a sport, you’re going to workout, typically, you have a trainer or you have a coach that kind of looks at your situation and looks at it from that third-party viewpoint and say, “Hey, brass tax, these are things that I think you’re doing well at. These are things that I think we need to improve upon.” So I think that you can. I would argue that what we do across the board with tax — so the slide that I put up last night was the average pharmacist will make $9 million, and $6 million will flow through your accounts. What’s at stake is really the $3 million that typically is eaten up by tax. How do we be as efficient with that as possible? You know, I’m analyzing an individual’s 401k now, and their expense ratios are like 2.67%, which is crazy. Like it’s crazy. So with a little bit of adjustment, we can really lower that substantially. And over the course of their lifetime, we’ll save probably hundreds of thousands of dollars, not an exaggeration.

Tim Ulbrich: Maybe more.

Tim Baker: Maybe more. And again, that’s not a guarantee or anything, so nothing like that. But like, it’s those types of things that either you — the audience, you guys are trained as pharmacists, you’re not really trained to look at some of these things that I do every day with clients. So it’s just that other, maybe more technical piece of it to really look at. And again, I think kind of the high-touch that we are with offering the tax and the cash flow and budgeting piece is I think a really differentiator between us and maybe the other guy.

Tim Ulbrich: So to our listeners, regardless of whether you choose to explore YFP Planning, I want to offer up a challenge to you that is two questions. No. 1, what are you going to do in the next 30 days to change your financial situation? And No. 2, what’s the first step that you’re going to take towards your wealthy life? Because everyone we’ve talked to, myself included, constantly says, “I wish I would have started earlier,” right? And when I go talk with students and residents and I talk with faculty and pharmacists and preceptors, the one thing they say is, “I wish I would have started earlier,” or “I wish I would have learned this information sooner.” So Tim, let’s wrap up here. Just give us a little bit of background on the YFP Planning team — I know it’s a team that’s growing — and what our listeners can expect as they engage with us as a group.

Tim Baker: Yeah, so I’m super fortunate enough to have a good team that surrounds me. Like I mentioned, Paul who was on our webinar last night, he is essentially my go-to. He’s basically Director of Operations and Tax. So he handles all of the tax returns internally. Frankie, who’s my assistant, she does all the behind-the-scenes work that sets me up for meetings and follow-up and all the things that are crucial to kind of push the financial plan forward and helps me with that. And Tom, who’s my assistant advisor. And all Tom does is work on cash flow and budget. He’s a super nerd, he likes that stuff.

Tim Ulbrich: Super nerd.

Tim Baker: Super nerd, yeah. So I’m so happy to have them as part of my team. And of course, you guys in terms of helping the firm grow and Caitlyn, who does an excellent job with the podcast, all integral parts of the team. But I think like as we — and Tim, I was thinking about this, like you know, the other day, I’m like maybe we should have like a career section on our website. Because I think that we are growing, and I would love to be able to have maybe jobs out there that maybe would be interesting to the YFP community. But I’m excited. We’re looking at bringing on a paraplanner in the coming weeks and just to add additional backup. And I think as we grow, one of the things that we’re really — and we talk about this a lot, kind of the three Tims — is making sure that our brand is — we want to make sure that what we represent and what we believe in is kind of is shown amongst all of our team members. So I’m just excited about, you know, really the rebrand and I think where we’re going to take this going into 2019 and beyond.

Tim Ulbrich: Absolutely. And to the point you made about the careers piece, we’ve got some exciting announcements coming out, looking for some writers that are passionate about this topic.

Tim Baker: Yes.

Tim Ulbrich: We welcome and value other perspectives. And then also, we’ve been floating around the idea of a student internship. So if there’s any students out there listening that are nerds on this topic, we’d love to hear from you. [email protected]. And we’re hoping to make that a reality here in 2019. So to the YFP community, as always, we appreciate you joining us each and every week. And we’re excited to be on this journey alongside of you. And if you’re not yet a part of the community over at the Your Financial Pharmacist Facebook group, check it out. That group every day inspires me as they’re challenging, helping one another, motivating one another, sharing success stories, looking for encouragement. So again, that’s the Your Financial Pharmacist Facebook group. Tim, it’s been a lot of fun, as always, with this episode and the journey, and looking forward to an awesome 2019.

Tim Baker: Same here.

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YFP 087: Student Loan Updates with Travis Hornsby

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Student Loan Updates with Travis Hornsby

On this episode of the Your Financial Pharmacist podcast, Tim Ulbrich interviews Travis Hornsby, Founder of Student Loan Planner and Chief Student Loan Planner. Travis shares student loan updates and talks about his journey starting the Student Loan Planner, the most common mistakes he sees pharmacists making with their student loans, the pros and cons of student loan refinancing, what legislative changes he anticipates will happen and the one step you can take today if you are feeling overwhelmed with where to go next with your student loans.

About Today’s Guest

Travis started Student Loan Planner in October 2016 after helping his wife and her friends figure out their six figure student loans. He used to be a bond trader, so he took his Excel heavy skill set and built models for how to save money paying back student debt. When he and his wife tackled her debt from med school, there were not a lot of resources out there for professionals like her. Most of the sites that did exist just wanted us to refinance so they could earn a commission.

Summary

Travis Hornsby, founder of Student Loan Planner, talks all things student loans with Tim Ulbrich. The Student Loan Planner has saved 1,500 clients a projected $80 million over the lifetime of their loans.

Before launching the Student Loan Planner, Travis worked as a bond trader for one of the world’s largest companies. However, he wasn’t excited about getting up for work in the morning. He sought early retirement, traveled the world, and met his now wife who had a lot of medical school debt. Travis used his experience with Excel to model paying off her student loans and did the same process later for a lot of their friends. This experience paired with his realization of how little or bad advice is given for paying off student loans led him to create his Student Loan Planner business.

Travis provides insight and updates for different loan repayment options and reminds those with pharmacy school student loan debt that they have a lot of options.

First, Travis discusses the Public Service Loan Forgiveness program (PSLF). He shares that a lot of people are getting the story wrong about the history and working of PSLF and thinks that in the future, borrowers taking this path will be grandfathered in to complete the program, even if the program has changed or doesn’t exist anymore.

Travis also discusses the return of investment of the pharmacy degree and that it’s important to take your focus off of debt and think about your broad financial goals, as this can aid in determining which repayment plan to chose. He also speaks about the refinancing market and how to know if that’s the option that will work best for your situation depending on your debt-to-income ratio. Travis talks about the benefits of the “refinancing ladder” and that you are able to refinance your loans multiple times.

He also gives advice to those that may be feeling overwhelmed by their debt. Travis shares that it’s important to determine what your goal is, whether it’s to get your student loan balance to zero or for your loans to be forgiven. This will help you determine which path to take and allow you to plan out how to repay your loans.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Travis, welcome to the Your Financial Pharmacist podcast!

Travis Hornby: Great to be here, thanks for having me, Tim.

Tim Ulbrich: Yeah, I’m excited to have you on and talk all things student loans and excited to be able to pick your brain as somebody I view to be a leading expert in this space and hear more about the work you’ve done at Student Loan Planner and also talk about this topic, this behemoth that is student loans, the impact on pharmacy graduates, what you’re seeing with your clients and the future of student loans. Specifically, we’ll talk a little bit about loan forgiveness, refinancing and other things that I know our listeners are in tune with or want to learn more about. And Travis, I have to say, I was reflecting as I was going back, preparing for this episode. I think it was just over two years ago I heard about your journey, we had a phone call, got a chance to talk a little bit about the vision of what we each were working on. And it’s been incredible to watch what you have been doing over at Student Loan Planner, so congratulations on the work that you’ve done.

Travis Hornby: Thanks, and you know, great work as well, educating pharmacists and making them more financially literate. It’s badly, badly needed. So really grateful for Your Financial Pharmacist being out there. We’ve got very similar positive missions to try to help people as a community, so it’s exciting to talk.

Tim Ulbrich: Absolutely. And before I ask you to talk a little bit more about your journey of starting Student Loan Planner, I want to make our audience familiar with the work that you’re doing if they’re already not, so StudentLoanPlanner.com, and you have saved over 1,500 clients a projected $80 million over the lifetime of their loans. And we’ll talk a little bit about how you have done that. And the website, again, StudentLoanPlanner.com, is an incredible resource: up-to-date information, you’ve got the blog, you’ve now got the podcast we’ll talk about here in a little bit, calculators, quizzes. Your calculators are phenomenal. Is that you building those? I mean, that’s amazing if you’ve been building those calculators.

Travis Hornby: Yeah, you know, I did build it. That’s my background, I was a bond trader for one of the world’s largest investment companies, and you know, the career path is keep your head down, make a lot of good trades, you’ll work your way up to being a portfolio manager, and that’s a wonderful career path. It’s a very numerative career path, but it just wasn’t for me. It wasn’t what got me up in the morning, really passionate and excited to go to work. And I’m a big believer that no matter whether that’s in your field that you initially chose or whatever it is, you should try to seek it out. And so for me, that kind of led me to trying to do early retirement. So I actually quit my job at 25 and traveled the world for a little bit and then ended up dating this woman who had a lot of student loan debt, my now wife. And she had a lot of debt from medical school, and so I was thinking, well, you know, I’ve got all these Excel skills fresh out of being a bond trader. I should use these to model it for her. And I did. And then she told me to tell all her friends about it because they were in the same boat. And then we had friends when we were up in Philadelphia that were in a bunch of different graduate programs, and I found that the math was applicable to their situations as well. And then I thought, wow, this is a lot more fun than making rich people richer. Not that that’s a terrible thing because a lot of big investors are mom-and-pop type people, and that’s a noble goal, but it just wasn’t something that made me super excited to help people that already had figured out their financial issues.

Tim Ulbrich: So Travis, what were you seeing at the time in terms of — you mentioned your situation with your wife and the journey that you guys had paying that off, and you’ve kind of brought your experiences together as a bond trader. You had this desire of kind of doing something you are passionate about. What did you see in your own journey as it related to paying off student loan debt and achieving that vision of becoming debt-free? And why were you then passionate about spreading that onto others?

Travis Hornby: Sure. So a lot of your pharmacists that are listening to this that work at not-for-profit or government employers will really feel the pain here, will really feel our pain. So my wife worked at a not-for-profit employer when she was in residency and in fellowship. So she had a bunch of credit towards loan forgiveness. And then at about year 7 or 8, you know, in terms of the numbers of years toward the 10 that she needed to get public service loan forgiveness, she submitted all the paperwork after I made her realize that hey, this is a thing, you should really apply for this, you should be eligible for this and then we should be able to just cap your payments out on the IBR plan for the last two or three years of it when you’re attending, and we should be able to get $100,000 wiped away. And so I submitted all the forms, and then Fed Loan came back to us and said, “You don’t have any credit on half of your loans. And on the other half of your loans, you only have three years of credit.”

Tim Ulbrich: Classic, right?

Travis Hornby: Yeah. I was just blown away by this. I said, how is this possible that you’ve made all these payments based on your income for seven years and you have almost no credit for a lot of your loans and barely any on the other half? So I thought that was just absurd, and so I ran the numbers again to see, well, pretend that she gets the full three years of credit on everything, what does that mean for the rest of the PSLF path? Should we count on this or not? And her debt was small enough, you know, thankfully, that we just decided that the projected savings, there might be like $20,000 or $30,000 left over at the end of the 10 years, so we’re just going to refinance it and pay it off really quickly. So that’s what we did. So we paid off her $124,000 of med school debt, which is, you know, very low compared to a lot of people that I talk to. And we’re very blessed that it wasn’t very high, but at the same time, it’s really crazy because it should be the injustice of this whole system going through this personally because her parents were first-generation Americans coming over here from Hong Kong and then Canada. And they really sacrificed and put tons of their savings into her med school to try to help her come out with less debt. And if she’d only had better guidance, she not only could have had her parents keep a lot of that money, but she could have paid even less of it back if she had had that information early on in the process. So I thought that was just so outrageous that one, the cost was already so high for medical school. But second, that she got such bad advice from that same medical school that caused her to be kind of taken advantage of by the loan services, just the fact that cost us five, even six, figures. I just thought that was terrible, and I didn’t want that to happen to anybody else.

Tim Ulbrich: I love that you took your personal pain and obviously, you know, nobody wants to go through that, but taking that personal pain and turning it into good and teaching others. And I think as I follow your blog, I weekly kind of follow, I think you’re an incredible teacher of taking what is a unbelievably complicated subject — probably one we both agree is unnecessarily complicated — and really breaking it down in a way that people can understand and really take a step back to say, what is the best student loan repayment option for my personal situation? And I know coming out of school, similar type of a journey, as I look back, I could have went Public Service Loan Forgiveness, I could have refinanced, didn’t know what either of those were, didn’t have the education, didn’t have the tools. I couldn’t tell you what was subsidized, unsubsidized. I couldn’t tell you IBR and PAYE and REPAYE. I didn’t have any idea any of that knowledge. And I think that’s a consistent theme we see with lots of pharmacists, I’m sure you see with your clients, and being able to break that down and as you work with people one-on-one to say, hey, based on your situation, this is really what we think is the best path forward I think is incredible. So that’s been fun to watch your journey and see that grow along the way. So let’s talk while we’re in the moment of loan forgiveness, let’s talk about that for a minute because I think there’s so much swirling right now about Public Service Loan Forgiveness. We’ve talked about it on this podcast on multiple occasions. In Episode 018, we talked about maximizing the benefits of PSLF. Episode 078, we just recently talked about whether or not pursuing loan forgiveness is a waste. And so much news swirling around about, you know, at 99.x% of applicants being rejected and you know, is this something as a new pharmacist graduate that might actually be viable for me or not? So give us the lowdown on what’s going on with loan forgiveness. Is there any new news out there? What should recent graduates be considering as they potentially pursue this path?

Travis Hornby: Yeah, that’s a great question. So the listeners that are planning on loan forgiveness or afraid that they might not get it, they first need to realize historically what happened with this proram. So this program was around since 2007 on the books but functionally, it really didn’t exist until like 2009. And in earnest, it didn’t exist until 2010. And the reason is because you had FFEL loans before 2010 that were basically loans issued under an old loan program. So before 2010, when the government took over all student loan lending and created everyone had to use the direct loan program past that point. Prior to that point, you had this FFEL loans, which are basically bank loans that are backed by the government. And those loans, because you can think of the banks being the ones that actually hold the debt, obviously they wouldn’t want those loans forgiven, right? And so the government essentially gave them basically allowed the banks to not have to deal with the PSLF thing for those loans. And so when 2010 rolled around, then everybody started getting direct loans by default without having to do anything special. And everybody had access to things called Income-Based Repayment that people could sign up for without having to be a PhD-level expert in Department of Education bureaucracy. So a lot of people look at these statistics, and they get really depressed. But the problem with that is that you have to look at what happened 10 years ago to understand why so few people are getting approved today. And that’s a very hard thing to do and explain in a quick 800-word article on CNBC or something like that. So that’s the problem is a lot of people are getting the story wrong because yeah, like it was almost impossible to have loans that qualified in 2008 and 2009. That’s why you’re only seeing people that basically went to like one-year Master’s degrees that documented everything perfectly, they got super, super lucky being the ones that are getting approved right now. And so for that reason, I don’t personally believe that we’re going to see any large-scale forgiveness for PharmDs until about 2023. I think that’s when we’re going to see the first cohort that had been on an income-driven program for, you know, 10 years consistently and actually has a full slate of PharmD debt that they’re going to get forgiven. So a lot of the people out there that are pharmacists, you know, don’t expect any shocking news until then.

Tim Ulbrich: And you actually recently talked with — or I can’t remember, you might have blogged about it — a real, live person who actually had loan forgiveness, right? I mean, they do actually exist.

Travis Hornby: They do. Yeah, it was great. She sent me an email — that’s one of the best parts of having a student loan blog and just being super focused on that alone is, you know, I got this long email from this person who was like, this is my story. Feel free to use it. And I was like, absolutely. I’ll take you up on that. So I wrote a blog post about it, and she only had $19,000 from a very short, abbreviated degree program in like 2008 that just happened to be from one of the right schools. Because they had direct loans prior to 2010, but it was very limited. And so this person just happened to have the right kind of debt, she had signed up for the wrong kind of program, but she followed the TEPSLF rules, the Temporary Expanded PSLF rules, precisely. And she ended up getting loan forgiveness, and it was amazing. She even got refunds for all of the payments that she made that she shouldn’t actually have to make based off of her payment count. So that’s really amazing. Like anybody that’s worried about not getting PSLF needs to probably read that article because it shows you that not only are they going to cover it and give it to you, they’re also going to give a literal refund for all of that money that you pay that you shouldn’t have had to pay. So that’s the most amazing program that you can really think of in terms of if you can actually get it.

Tim Ulbrich: So one of the questions I probably get most often, Travis, is what is the future of this? And what certainty, if any, what’s the political climate? And obviously, none of us have a crystal ball, but as you’re in this each and every day in the weeds, I mean, do you foresee major legislative changes coming in the future? And if so, should there be any security that people feel in terms of being grandfathered in in terms of when those rules may be changed?

Travis Hornby: Yeah, so the thing that people need to realize is the way that the U.S. government works is the grandfather people in, and they make changes on a long-term basis. So a perfect example for this is social security. Social security, whenever they need to fix the program, they don’t cut benefits for people that are currently retired because they don’t want to make people super angry at them in the short term. So politicians is the “them” that I’m talking about. So what they do is instead, they just gradually raise the retirement age over time. So if you talk to people that are looking at social security, their retirement age goes up by like I think it’s 2 months every year or so for the next x amount of years until it hits 67. So something similar like that’s going to happen, I think, with PSLF. I think that it’s very, very expensive, this program. People have no idea how expensive it’s going to be from the taxpayers’ perspective. So I do expect it to get phased out eventually. I think that you’re going to a future Congress realize that it’s way, way more expensive than they thought probably in the early 2020s, and then I think that they’re going to probably curtail it or eliminate it, but they’re going to eliminate it for future borrowers, and they’re going to eliminate it for people who start graduate school after a certain point. So it’s going to be real interesting to see what grad programs do. I would imagine they’ll probably try to enroll a lot of people early. You know, so they can get access to this. But yeah, I do think it’s going to end at some point in the next, say, 5-10 years. But I think it’s going to end for people who have never taken out yet. So I think that the PSLF promises that are being made now will be continued to be paid out well into the early 2030s.

Tim Ulbrich: Awesome. I’m going to switch gears for a minute here and talk about the ROI of the pharmacy degree. You’ve blogged on this topic, and we’ve talked about it here. We’re in a landscape that is shifting. We’re hopeful, I think, as those that love the profession we’re going to see this shift back, but obviously supply-and-demand, and actually just yesterday, I got an email from somebody in the YFP community talking about they’re a fourth-year graduate, getting ready to go out into the market, they’re worried about the market being saturated, salaries are decreasing, and they’re basically looking at between salary reductions and a reduction in the number of hours, planning on a base salary somewhere around $85,000. And the question being, what can I, what should I be doing to plan financially for that? And I think historically, the message that I felt and many others have felt that don’t worry about the student loans, you’re going to have a great income. Well, that story is changing. So as you’re working with clients, Travis, specifically your pharmacy clients, are you seeing this trend? Are you seeing the shift? And what are some of the things that you’re trying to help them think about in terms of intentionality of student loan repayment? Maybe being strategic about finding an employer that qualifies for loan forgiveness, refinancing, how does this shifting ROI of the degree in the job market impact their plan to pay back student loans?

Travis Hornby: Sure. So the average pharmacist client that we’ve had has had about $214,000 of student loan debt. So that’s obviously a multiple of what the first-year starting salary is. If you were going to talk about the average income being $85,000, then in terms of the average that we’ve seen, that would a debt-to-income ratio of about 2.5, 2.5 times income. So generally, what we tell people is if you have a debt-to-income ratio that’s above 1.5-to-1, and this is at a family level, then that means that you probably need to go for loan forgiveness, you know, in some fashion. Basically, what you need to realize is that if you try to refinance this thing, it’s kind of like walking in front of a train. If you’re making $85,000 a year, you have $200,000 in debt, you’ll have to pay $2,000 a month for 10 years. So that’s about a third of your take-home pay going to debt. That’s really not that sustainable.

Tim Ulbrich: For 10 years.

Travis Hornby: For 10 years. That’s really not a sustainable or a smart decision. And that’s not anything, that’s not a mean statement, that’s just reality of math. And you could pay the debt back, but if you do, then you’re not going to be accomplishing things like saving for retirement, saving for your kids’ college, you know, buying a house, like doing all these other financial goals that are really important. So one thing that I like to tell somebody is take your focus off of the debt from a really zoned-in level and start thinking more about, you know, what are your broad financial goals? And how does that fit into your debt repayment? So for example, if somebody has $120,000 in pharmacy school debt and they are one of those lucky folks who does get a full-time job at a CVS in maybe a rural location making $120,000-130,000 a year, yeah, sure. Refinancing can make a lot of sense. And paying it back in five years and doing a refi ladder where you start with a 10-year, refi to a 5-year later, you know, and getting rid of it as fast as you can, that’s a great decision. But when you’ve got an $85k type of income, I’m assuming that this person’s not working at a community hospital or an eligible not-for-profit. So that’s one of the biggest misconceptions that I’ve run into with pharmacists is they’re not aware of the other loan forgiveness. So the IDR loan forgiveness. And that’s going to be more and more important for pharmacists. You know, one thing that I think is fascinating is $85,000 is still an amazing salary. That’s still really good compared to your typical person that’s going to go work for a corporation and make $50,000-60,000 a year. And if you’re working 32 hours a week for that income, that’s exceptional. And the reality is I think we’re going to continue to see, you know, this decline in salaries because of the acceptance rate of pharmacy schools is so high overall. And so I think for a person who’s in pharmacy school now, you think about this from a positive perspective is the worst case scenario, your debt is a tax. It’s a percentage of your income. And so if you lose 10% of your income to student loans, and that’s your cost — I know you have to put a couple hundred dollars away for a tax bomb one day — then that $85,000 income can actually be pretty attractive. And to take it a step further, you know, how many people out there can go earn a $50,000-60,000 a year job or salary, rather, working 20-25 hours a week? Not a lot of people.

Tim Ulbrich: Yeah, I think that’s great insight. And we’ve talked before on the show, and I want to emphasize it again because I don’t think we talk enough about what we call non-PSLF forgiveness, or the other PSLF forgiveness. And I think you’re spot-on with this debt-to-income ratio, if that continues to trend in the direction we’re seeing it trend, that option is going to become all the more important as when you evaluate. And I also would add to that, Travis, and we’ll talk here fo a minute about refi, but as interest rates are climbing, obviously, that changes the math a little bit on the refi. And I like the example that you used of pharmacists coming out, maybe they have a lower debt load than the average, so maybe $110,000-120,000. Maybe they’re making $120,000-130,000, they’ve got one of those full-time jobs that’s paying a decent salary, well then obviously, paying them off or refinancing looks very different than somebody maybe who has $250,000 of debt and they’ve got an $85,000 income. And to Tim Baker’s credit, one of the things he talks a lot about, and I appreciate his external view into the pharmacy world is that we typically don’t think about career advice in the sense of seeking something like a qualifying employer for loan forgiveness, right? We often are thinking about it specifically on the type of pharmacy practice that you’re interested in, salaries have been relatively equal since I graduated in 2008. You aren’t seeing huge discrepancies from one area to another. But we are starting to see that trend happen. And I think now, a very important consideration is if you’re somebody that has an extremely debt-to-income ratio, then really that choice of employer and potentially being able to pursue Public Service Loan Forgiveness is going to be a viable option. So Travis, as a follow-up to that, what are the trends you’re seeing in the refi market? It feels to me that six or 12 months ago, even maybe a year or two years ago, the math on that was very lucrative because of where interest rates are. And I feel like that’s tapered off a little bit as interest rates have come up. What have you seen in terms of the clients that you’re working with?

Travis Hornby: Yeah, I mean, a few months ago, that was definitely the case. It’s gotten a little bit better because the 10-year Treasury yield has declined a little bit again with a little bit of uncertainty in the economy and the government shutdown, China’s economy being a little bit slower growth than expected, so I think that the refi opportunity will exist for at least probably the next few years. I’m not sure if it’s going to go completely away. I don’t think it will because, you know, a reminder for folks that when you borrow in school, it is tied to what the government’s borrowing cost is. So you know, eventually, if interest rates keep rising, you will also feel it in your student loans that you’re taking out while you’re in school. You know? So last year, Grad Plus was 7%. This year, it’s 7.6%.

Tim Ulbrich: Ugh.

Travis Hornby: Yeah, so even though you might not be able to refi to like a 4% or 4.5%, you know, if you can still refi to like 5-5.5%, and you’re having to borrow at 7.5% or 8% or 8.5%, like that’s still savings, you know? But yeah, the refi market, I think the one thing that I’d like people to know more of — and we have a similar philosophy too on how we hook people up with the refi deals because you guys obviously have a lot of great bonuses on your site — and the thing to do is to refinance multiple times. So I did a survey of our readers, had almost 1,000 responses, and only half of them knew that you could even refinance more than one time.

Tim Ulbrich: Yeah, we see that a lot too.

Travis Hornby: Yeah. So for example, like you can refinance for — say you’re one of those people making $130k and you have $120k in student loan debt, well, you don’t want to do a five-year because that payment’s going to be over $2,000 a month, and what if you lose your job? What if you want to move? What if you want to work part-time or something like that happens? So that’s a very common feeling. And so rather than jump right into a five-year, what you can do is you can do a 10- or a 15-year where the payment’s around $1,000-1,300 a month, something like that, and you can pay extra. So you can pay maybe $2,000-3,000 a month to really knock the debt down. And then once you knock the debt down a bunch, then you can refinance it again and maybe cut your 4.5% or 5% rate down to maybe a 3.5% or 4% rate with about the same monthly payment by refinancing to a shorter term. So that’s called a refi ladder, and a lot of people don’t understand that. And that’s something that could save people money. I will say this, though, the refi thing, I don’t want people to get super focused on the refi thing because that will save you several thousand dollars, it really can in terms of interest costs. And if you pay down your debt faster than you would otherwise, it could save you tens of thousands. But loan forgiveness can save you hundreds of thousands in certain situations. So that’s why, you know, you’ve got to be real careful also about not making extra payments. One problem that I see people make or one mistake that I see people make — I’ll give you an example. I had a buddy who was a community pharmacist at a hospital system, and he was paying on the standard 10-year plan. So he was paying on $200k of debt about $2,000 a month, you know, instead, he could have been on the Revised Pay As You Earn plan, and he could have been paying about like $690 a month. So you know, saving almost a little over $1,300 a month, and he was eligible for Public Service Loan Forgiveness.

Tim Ulbrich: And maxing out a retirement account and all of that jazz, right?

Travis Hornby: Yeah. And then he could reduce his student loan payment even more. So and that’s the PSLF example. You know, the flip side to that is a pharmacist who wants to have a family, work 20 hours a week, wants to have more time for hobbies or whatever that reason would be. And then that person can pay, you know, say $400 a month working part-time. And then you just have to make sure you’re prepared for that tax bomb when it hits in 20-25 years.

Tim Ulbrich: So I hope the students that are listening, hopefully one of the take-home messages you’re getting as you’re hearing Travis drop lots of wisdom here is knowledge around this topic is obviously going to be able to influence a decision that could save tens if not hundreds of thousands of dollars. So using this time, you know, before you graduate, before you go through the grace period, to really identify for your personal situation, taking a step back, looking at all of your financial goals, looking at the type of job you’re going to pursue, residency, no residency, all these variable, debt-to-income ratio, and coming up with the best student loan repayment option is huge. Refi ladder, Travis, I like that. I know the concept, we talk about it. We talk about that idea, but I think you should brand that. So I haven’t heard that term used before.

Travis Hornby: Yeah, I should trademark it, right?

Tim Ulbrich: Absolutely.

Travis Hornby: I got a lot of zingers here, you know? I mean, yeah. There’s all kinds of weird things that I’ve learned doing this that you wouldn’t think about unless you’ve really had a lot of cases. So I’ve done over 1,000 plans personally. I think that’s more than anybody else in the country. I’m not positive, but I think that is. And you know, advised more than 330 million myself.

Tim Ulbrich: That’s incredible.

Travis Hornby: Yeah, so that’s pretty bad because that tells you how much debt it out there, you know?

Tim Ulbrich: Well, you’ve got $1.what? $1.4 trillion more to go? Something like that?

Travis Hornby: Yeah, exactly. So I mean, so one example is something called the breadwinner loophole, that’s another one of my weird terms I’ve come up with. So for example, a pharmacist in California might be making $90,000 a year, maybe she has a stay-at-home spouse, and that spouse makes nothing. And she’s eligible for Pay As You Earn. Well, in community property states, you can file separately for taxes and equally distribute income. So you can equally distribute income based on community property rules in these certain states. There’s like nine of them. And then you can basically have instead of an income of say $90,000, her income would be $45,000. And because you equalize the incomes, you also eliminated most of the tax penalty from filing separately as a married couple. So that’s an example of just some random thing that, you know, we realized probably a year into doing this that people could do since the payments are based on your adjusted gross income. And you know, we’ve not received any guidance on this yet, but it certainly seems like this is a legitimate way to approach repayment in these nine specific community property states. So that’s another one of these random things that you wouldn’t really think about unless you do this all day, every day. So that’s one thing that I like about our focus is we really do focus just on people that have $50,000-$1 million of student loan debt. Really, our primary client is in the $200-500k range. But you know, it lends itself for having a deep specialty level of expertise on something that’s very complicated. You don’t have to worry about getting the broad financial plan together, the insurance or things like that. That’s somebody else’s job.

Tim Ulbrich: Tim Baker, that’s your job. Yeah.

Travis Hornby: Exactly, yeah.

Tim Ulbrich: What are, Travis, some of the most common mistakes that you’re seeing pharmacy graduates make as it comes to their student loans? I mean, I’m sure there’s a ton of them. After you do enough of these, you start to see some I’m guessing repetitive things that are happening over and over again that our listeners can be aware of.

Travis Hornby: Well, for your pre-pharmacy listeners, there’s a whole bunch of schools that have opened up to basically take your money. And that’s why they exist. I mean, that’s just my personal opinion. But you know, you have like high-quality schools, you know? Like UNC or like Ohio State, that’s where you’re at, right, Tim?

Tim Ulbrich: Go Bucks. Yes.

Travis Hornby: Yeah, so maybe University of Florida. I mean there’s pharmacy schools that have been around for a long time that are high quality that even if you have a crash in the profession are not going to be going anywhere. But there’s a whole bunch of new schools that I won’t mention any by name because you know, I don’t love getting served lawsuits, but you know, basically there’s schools that were initiated that are private schools that were founded in the past, you know, 5-10 years I would say are automatically suspect. It doesn’t necessarily mean it’s a bad school, but you want to be very careful. And from a student’s perspective, if you’re going to go to these places, you just have to realize that things could potentially not end well if you go to one of these programs that has a high acceptance rate. So I would actually ask the school to give you their acceptance rate data. I would ask them to tell you what their average salaries are for graduates in writing. And I would actually do some due diligence and actually ask them in a very assertive manner for these statistics that you deserve to have prior to making this decision. Now, if you already have the debt, then I think that your perspective has to be a positive one. There are, like I said — you don’t even have to actually be a pharmacist, which is kind of crazy. These income-driven repayment plans apply whether or not you’re unemployed or making a bazillion dollars as a CEO. So it doesn’t matter that you become a pharmacist, even if you graduate pharmacy school. So from a mental health perspective, don’t feel trapped, even if you have $200,000, $300,000, $400,000 of pharmacy school debt. Do not feel trapped. You have so many more options than you think you do. And if you want to go make 50% more than the median household income in America, you can do that, even in a big city and live a pretty decent life. You’ll have to live on a budget, you’ll have to be a little careful with your expenses. It’s not as good as it used to be, but you’ll certainly make a good living. And so I would just say in terms of student loan mistakes, I mean, it’s a little broad, but I guess I just want people to know that the biggest mistakes you can have is not having a plan and sticking your head in the sand.

Tim Ulbrich: Amen. And if I could echo that, that’s the one thing we’ve seen, Travis, is the wandering through graduation into new practitioner life of not having an intentional plan. We’ve already highlighted and we don’t need to beat it further that that can cost you hundreds of thousands of dollars. And that example you gave of I think you said it was a community pharmacist friend of yours that went through a 10-year standard repayment, paid the maximum payment for 10 years, that was my situation. You know? And I think that as I look back on that journey, a little bit of knowledge would have saved me a ton of money along the way. And I want to also add, you know, your advice for the pre-pharmacy student I think is incredible because the reality is not all schools are created equal. And a lot of this data you can go out and look up in terms of what’s the board pass rate? What’s job placement like? What is the application acceptance rate into the College of Pharmacy? What’s the residency placement rate? And obviously, you know, there’s ranking that are out there, but they don’t represent many of the factors that are going to be most important to you as a graduate of a pharmacy school. So great stuff there. Travis, my last question for you is that my guess — just knowing our audience — is that we have lots of our community listening that’s feeling stuck with their student loans, feeling paralyzed, maybe feeling overwhelmed, don’t know where to start. What’s one piece of advice that you’d give to them that they can begin to get over that hump of feeling stuck or overwhelmed?

Travis Hornby: One piece of advice would be look at what your payment is. If you think that your payment is too high, take a look at Pay As You Earn or Revised Pay As You Earn and try to figure out whether or not your end goal is to go for full repayment and get to $0 in terms of the debt you owe, or if it’s to go for forgiveness. That would be the first big decision somebody has to make. So if you could at least figure out whether or not you need to go for forgiveness or repayment, that will help a lot because a lot of people, you can tell that in their actions, they don’t really know. They’ll throw an extra $200 at their highest interest rate loan when they have it, they’ll make a $5,000 one-time, lump sum payment to the smallest loan to get rid of it so they feel better psychologically, and that’s very, very indicative of just having no plan and no strategic direction at all with your loan repayment. So I would say that’s one piece of advice. One thing that I’d say is I forgot to say this when you asked student loan repayment mistakes. There’s a lot of residents out there who probably listen to your podcast.

Tim Ulbrich: Yeah.

Travis Hornby: The residents need to be on one of these income-driven programs while they’re still in residency.

Tim Ulbrich: And not deferring.

Travis Hornby: Yeah. A lot of people don’t realize that, but if your goal is to eventually pay your debt back, Revised Pay As You Earn can get you thousands of dollars in interest subsidies from the first month that you start paying on it. So if you’d like to have $5,000-10,000 less in debt by the end of your PGY1, PGY2 years, then get onto the Revised Pay As You Earn if your plan is to eventually pay the thing off. If your plan is not to eventually pay it off, you’re kind of unsure, then you might look at Pay As You Earn as well to try to build up credit for forgiveness. But that’s one mistake that I see people make all the time that I think people will continue to make because, you know, the residency programs are not as organized with as much detailed information for loan management as I think a lot of the human medicine physician type residency programs are because they’re a lot older and more resources are behind them. So that’s one thing that I’d say for your residents listening, but yeah. The big kind of direction, you know, you have to figure out if you’re going for full repayment or forgiveness. And that’s the big fork in the road, and that determines a whole bunch of the recommendations that we like to give. So like one thing we do is we figure that out for people or which path we think they should go down.

Tim Ulbrich: Yeah, great advice for residents. And I probably see — the most common situation I see is deferment during residency, which for those that are thinking loan forgiveness, obviously deferment does not equal a qualifying payment, number one. But two, as look at the income-based repayment plans, then you know obviously depending on how that’s calculated, you know, there’s this automatic assumption that I can’t afford any payment. Well, do the math. Sit down and figure that out. And obviously, you’re going to begin to make that progress toward whether you’re going to pay them off and refinance them or whether you’re going to eventually pursue loan forgiveness. So Travis, obviously StudentLoanPlanner.com, our listeners can learn more about the work that you’re doing and the service you provide. Also, it’s my understanding you recently launched a podcast, the Student Loan Planner podcast. I’m assuming that’s available on iTunes, anywhere that you can find podcasts: Stitcher, Google Play, Spotify, etc. Beyond StudentLoanPlanner.com and the podcast, what’s the best place that our listeners can go to learn more about you and the work that you’re doing?

Travis Hornby: I would reach out to us, [email protected], and myself or somebody from our team will reach out and tell you what we think you’re dealing with and whether or not we think that you’d be a good fit for our services or not. And then if you want to just read more about pharmacists in particular, if you go to our blog, StudentLoanPlanner.com/blog, on the right hand side if you’re on a desktop, you’ll see our categories that we’ve written articles on, so there’ll be a pharmacist category that you can click and read everything we’ve ever written about pharmacy school and pharmacists. And it’s quite a lot at this point, so take a look at that if you’re looking for some free resources.
Tim Ulbrich: Great stuff. Travis, on behalf of the YFP community and the YFP team, thank you so much for taking the time to come on today’s show and looking forward to more collaborations in the future and having you back on to provide some more education to our audience.

Travis Hornby: Thanks for having me on, Tim.

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YFP 081: New Year Financial Gameplan

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New Year Financial Gameplan

On episode 81 of the Your Financial Pharmacist Podcast, Tim Ulbrich and Tim Baker talk about a New Year financial gameplan to kick off 2019 the right way. Tim and Tim discuss 5 financial moves you should be making to ensure you get this year started off the right way.

Summary

On this episode, Tim & Tim dive right into 5 moves to make in your New Year financial gameplan. First on the list is setting financial goals by starting broad. Before digging into the numbers, ask yourself, what would define a successful 2019 financially? After taking some time to answer that and see how it fits with your year, you can bring it to a tangible level. This leads into the second financial move of New Year, new budget. YFP recommends following a zero-based budget. Tim Baker suggests going through your assets and liabilities and then doing a 90 day retroactive budget exercise. There you can view line items, track your expenses and see your spending. After, you’re able to see what your leftover amount is in savings. From there, you can use a savings allocation worksheet to prioritize additional goals, savings accounts, etc.

New Year tax filing and planning is the third financial move. Find a safe spot to collect all tax information and data. Often times, it’s helpful to work with someone who has an objective opinion on your financial situation. Ultimately, you need to find the best way to be proactive in your approach to taxes (DIY or using a tax prep service). The fourth financial move is to tidy up the important parts of your financial plan. This means revisiting or establishing an estate plan, insurance (life and disability), emergency funds, beneficiary information, investments, and making sure your legacy folder is current. The last financial move is to surround yourself with community that keeps you accountable and motivates you, like the YFP community.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? Welcome to Episode 081 of the Your Financial Pharmacist podcast. Well, we have officially turned the page on 2018, are recovering, likely, from the financial hit that can be the month of December, and are ready to take 2019 head-on. We wrapped up 2018 by talking about 10 financial moves that you should make prior to the year’s end. So if you didn’t yet, check that out. Go back and take a listen, it’s not too late. So here, we are shifting our focus into setting your financial game plan for the new year. But before we talk through these financial moves we believe you should take to kick off the new year, Tim Baker, I believe we have a big congratulations to you and Shea that is in order. Give us the good news.

Tim Baker: Yeah, well, Merry Christmas, Tim. Happy New Year. Good to be back on the podcast. Yes, Shea and I got — we got engaged over the holiday.

Tim Ulbrich: Yay!

Tim Baker: Finally asked the question. So yeah, that’s really our good news. We’re really excited.

Tim Ulbrich: Awesome. Excited for you guys and what lies ahead.

Tim Baker: Yeah.

Tim Ulbrich: So wanted to make sure the community was aware of that good news as we head into 2019. So let’s do this — five financial moves that we think you should be making in the new year. No. 1, probably no surprise, setting financial goals for the new year. So Tim, when I think of this, I like to start broad and kind of think about what our goals and aspirations before you really dig into the numbers about what exactly do I have available per month and we get specific and measurable and all that. So why don’t you and I just talk broadly about 2019 in terms of things that are top of mind for us individually. We’ll obviously ask the listeners to do the same. So for you, 2019, I like to start by thinking of this question in terms of what would define a successful 2019 financially? So what’s top of mind for you and Shea?

Tim Baker: Yeah, I think the big thing for us is like we’re starting basically to gut our house. And so that’s a major financial I guess stressor for us. So we’re trying to cash-flow as much as we can for kind of some of the incidentals so we’re not putting those into our mortgage. So that’s really our big one. So right now, we’re in the process of moving everything out of our house a couple doors down and get that process going. So I think beyond that, which again, is a big thing, it’s really going to be about making sure that our emergency fund is where it needs to be kind of post-move. I think really, monitoring creep in terms of our spending. So that’s a big one I think everyone deals with. So I think the house is going to really kind of rule the day in terms of our finances. We’ve both agreed that because we’re doing this major undertaking, we’re going to kind of do a little bit less in other areas like vacation and things like this because, you know, we really want to make sure that our house is where it needs to be and we’re not really kind of dipping into those, the waters of being house-poor and cash-poor. And I think another big thing for us is like as our family grows, looking at something like an au pair, I know we’ve talked about that in the past and basically being able to have enough money month-to-month to basically support that. So those are the two big things financially that we’re looking at and really, kind of it’s pre-planning for the house and then basically after we get into it. So how about you, Tim? Like what does that look like for you?

Tim Ulbrich: Yeah, you know, Jess and I have been obviously working with you on this. But I think for us, we made the move to Columbus in early October, new job started in November. I feel like right now, the dust is finally starting to settle. But I think we underestimated the impact of that transition, just both a little bit financially but even just emotionally, the impact on family and that what’s involved in a transition like that. So I feel like for us, it’s a lot kind of a reset back to some of the behaviors we had in terms of budgeting, goal setting and really getting a new foundation with new job and new differences of income and taxes and all of that and kind of getting back to norm. The other thing that’s top of mind for us is we have two cars that both have about 130,000 miles on them. So we haven’t done as great of a job as we would like — I mean, obviously, they’re paid off, which is good news, no car payments. But we’ve got to be thinking ahead either maintenance and/or purchasing new cars. And we just got slapped with a big, you know, about $2,500 repair bill on one of them that I think has brought this to the forefront a little bit for us and really being intentional about making sure that shouldn’t be an emergency, right?

Tim Baker: Right.

Tim Ulbrich: We kind of know that’s coming, and we need to at least plan for one if not both of those. And then the other thing is we have some aspirations around purchasing a first rental property in 2019. So we are super excited/nervous/fearful/insert emotion, you know, when it comes to that. And I’m binging on BiggerPockets, as many of our listeners know, and I think that’s really helped get me fired up. But one of the themes I keep hearing from so many of those that are on that show is, you know, it could be easy to kind of write the script of fear when it comes to real estate investing. And you know, you want to take risk. But it should be calculated risk. And I think I tend to probably think that that risk is greater than it is and wanting to really jump in and make that a part of our financial plan in 2019. So I think starting, as you kind of heard Tim and I talk through those in broad terms, what we didn’t do there is we didn’t put numbers to them yet, right? We didn’t put a date to them. And while we can’t put them yet into our budget, we’re going to get there here in a minute. It’s the beginnings of a conversation, either with you and your spouse and significant other, or maybe it’s just you alone about what would a successful 2019 look like? And take some time and answer that question and have fun answering that question, dream a little bit. And I think, Tim, for me, there’s this balance of doing this between not settling but also being aspirational on some regard, right? I think it’s easy to kind of look at things the way they were and say, OK, I’ve only got $100 a month, and I’m going to settle into what was. And I think it’s good to push yourself and to challenge yourself to think creatively about how those goals can be achieved. But obviously, you don’t want to be unrealistic either. So as you begin this conversation with clients around goal-setting, how do you do this? What direction do you take?

Tim Baker: Yeah, I really think of it as more of like a life plan. And we use the financial situation to really support that. So you know, when I ask a question of like — so when we do kind of like a success timeline, and we say — this is what I do with new clients is like, OK, if we get in our imaginary time machine, it’s December 27, 2018, and we go ahead two years, and we go to December 27, 2020, what does success look like? And really have them visualize that in that sense. So we kind of start there. But I think like most people, they say, is it financial success? And I’m like, I’m just talking success in general, you know. So to me, if it’s about exercise or personal development, to me, that has to be built in there because oftentimes, like that requires some type of like financial — I have a lot of clients that — and this used to me back in the day — they would spend a lot of money on races and traveling to different places to run half marathons or even like personal development courses or things like that or books or whatever. So to me, that’s all part of it and having a bucket of money set aside. So I think I don’t really separate the finances from I guess kind of the overall goals because to me, they’re very much intertwined. And it’s funny too because I get a lot of clients, like especially when we first go through this — and I know it happens in my household — but when we first go through this, I’ll ask a question of one of the spouses, and the other spouse is kind of like, you know, craning their neck and they’re like, I can’t believe that’s important to you or that’s even a thing for you — you know, good or bad, but it’s like, we don’t take the time to verbalize these things. And I know in our household, I feel like we often have the same conversation, but we come to different points of understanding. And then time erodes that. So I think writing it down and getting it on paper too is a good thing because our memories fade and even if we’re — I think we do a pretty good job in our household of kind of talk through where we want to go, but sometimes, you know, there’s two parties to that conversation. And sometimes, we just remember it differently or how to go about it. So I think just having the conversation with yourself and really your significant other, if that’s your case, is the first step because — I don’t know about you, Tim, but like I just have a lot of things running through my head, and to verbalize them and get them out onto paper is probably the majority of the step that needs to be taken. So I think that’s where having an objective third party just say, “Hey, these are questions you probably won’t ask yourself. I’m going to ask them, I’m going to get the heck out of the way, and we’ll just see where this takes us.” I think that’s important.

Tim Ulbrich: Yeah, and I want to echo that. I think you did a great job — you have done and continue to do a great job of that with Jess and I. And we’ve talked before on the podcast about episodes 032, 033, where you walked us through some of those big dream questions about your why. And that’s a little bit about what we’re talking here. I mean, a little more granular on a year-long basis, but obviously, even before you think about 2019, I think what we’re encouraging you to do is think about the long-term vision. What is the end goal? What are you trying to achieve? Why are you trying to achieve it? And then you back into what needs to happen in 2019 that’s going to help you get there and making sure you’re prioritizing things appropriately. I know one of the mistakes I have made, Tim, and I know many others have made as well, is we tend to want to start with the budget. And I think that’s difficult, especially with a spouse or significant other. One, because it’s hard to know where you are trying to go to if you haven’t yet defined what are those goals and what you’re doing. And I think it instantly brings in some points of contention, and you’re focusing on the weeds and the numbers. But I know for Jess and I, we can sit down and we can have these conversations and we can dream big and then kind of back into reality and get on the same page. The budgeting process — I’m not going to say it’s easy, but it becomes easier because we’ve already talked about the goals and aspirations that we have together.

Tim Baker: Right. And a lot of people have the opposite problem is that they do the goals, but they never look at the budget because I think they’re afraid to. And that’s very common as well. So you know, I think at the end of the day, it doesn’t have to be perfect. And we would like to connect the dots to, you know, in terms of like what’s past behavior? How is money flowing through the household? To OK, can we account for every dollar that’s going to every goal? And sometimes, that’s just not reality. And that’s fine. But I think what it does is when you introduce all of these goals, whether it’s the home purchase or a vacation or you want to buy a car in the future or whatever that is or upping your retirement game, money is a finite resource, so when push comes to shove and we’re looking at, OK, where is this extra money going if there is extra money — and hopefully that there is extra money — then that’s when we really talk about prioritization and OK, what do we focus on first? What is most important? So some people don’t get to that step because it’s just, it’s too overwhelming for them or the “b” word is so — it’s like ash in their mouth. But I think a measure of kind of looking at goals and aspiration and a measure of practicality of OK, how are we actually going to back into these things is good. And again, you know, I think also having — some people, when I work with them, they’re like, well, tell me what you think I should do. And I give them my opinion based on my thoughts and I think the tone of the conversation and what’s important to them, but I also, I sprinkle in kind of, “This is what the textbook says too. And this may not be the best thing for you,” but I think those are good things to kind of talk through. And a lot of this is just, again, out in the open, talking through the issue. And then I think that brings clarity. If you’re kind of a one-person show or if you’re married and you’re basically calling the shots by yourself, maybe your spouse is not as engaged in the process, to me, you can get in your own head. And you really — not that you lose your way, but I think fleshing things out with an individual, whether it’s your spouse or someone else, is super important.

Tim Ulbrich: So I think for those that are listening and say, “Alright, Tim and Tim. I’ve got it. Goals are where I need to go,” and are looking for a tangible follow-up to do here, my recommendation would be go to episodes 032, 033, where Tim Baker and I talked through with Jess and I some big questions on finding your why. Ask yourself those same questions. If you listened to Episode 079, we had Nick Ornelia on. He actually talked about going through that process himself and how powerful and impactful that was. Then, begin to back into 2019, what are some of the things that you have as goals, based on that bigger picture of purpose and why and what you’re trying to do. And then get down to the tangible level. So we’ve all been taught in school, when you have goals, they need to be specific, measurable. They need to realistic, they need to be time-bound. And we talk about in “Seven Figure,” the book, “Seven Figure Pharmacist,” also adding a why to that. So if you’re somebody that says, OK, I’ve got $150,000 in student loan and I want to get that paid off in five years, you actually add a date to that. So by what date would I like to have that paid off? And what’s the reason why I want to do this? What else am I trying to accomplish, which obviously provides some of the motivation along the way. Once we get to this level where we have 2019 goals, we have some dates, we have some aspirations, we have exactly what we’re trying to do numbers-wise — so for example, for Jess and I, you know, maybe we say by December 31, 2019, we want to have $20,000 saved for our car sinking fund — now we can begin to then get into Step No. 2, which is making those goals become a reality through the budgeting process. So Tim Baker, No. 2 here is a new year, new budget. And so you know we’re big fans of the zero-based budget. For those that need a budgeting template, head on over to YourFinancialPharmacist.com/budget, and you can download and Excel sheet, and we’ll kind of walk you through what we’re going to talk about here. But we really believe Step No. 1, as we begin thinking about this transition from goals becoming a reality through the budgeting is tracking expenses. So talk us through where people can get started with tracking expenses to begin to calculate what are they working with each month to fund these goals.

Tim Baker: Yeah, so there’s a lot of different tools that you can use to really, whether it’s Mint or YNAB or Giveaway, like there’s a lot of things that you can use. There’s a free resource on my website, Script Financial. Basically, what it does is you link your accounts, it builds a dynamic basically balance sheet, so you can see all of your assets, all of your liabilities, and then you actually can look at to see how based on what you’ve connected, whether it’s credit card or checking account, you can see how money is flowing in and how it’s being basically categorized across the various, whether it’s housing or loan payments or whatever. So those are really a good way to kind of get baseline data. I think what often happens is when people look at, you know, the budget process exercise, you see it with people that are training for races that are kind of haven’t done it, they want to get off the couch and run a marathon right away, and sometimes they end up hurting themselves or quitting. And what I really implore clients when I kind of first work with them is our process is to kind of go through the balance sheet and say, “OK, these are all your assets. These are all your liabilities,” get a nice picture of where everything is and what it looks like. And then we do that 90-day retroactive budget exercise where the idea is if you have $10,000 coming in in income, so this is basically your take-home pay, as we walk through and we looked at how much money, we kind of have an idea on what our average is. So in the tool, it shows you, on average over the last three months, you spent $400 on your cat Snuffy. And then for a lot of people, they’re like, “Oh, that’s not good.” So I say, “Well, what’s a good number?” And they automatically want to say it’s $100. But maybe that might not be the reality. So sometimes we go chalk, meaning we take the average. But sometimes they’ll say, “Well, it’s kind of an outlier that Snuffy had surgery,” or whatever, so a realistic number is maybe $200 a month. So the idea is as we go through all of those line items, if $10,000 is coming in, and we have $9,000 that’s going out, in a zero-based budget, essentially what that tells me is that we have $1,000, more or less, to play with in terms of whether it’s increasing money that we’re putting towards loans or there’s basically a line item that is savings. So we might look at that $1,000 and say, “OK. Half of that we want to put towards, per month, we want to put towards maxing out our Roth IRA,” which is what the $500 times 12 months, that’s $6,000. That would max out your IRA. And maybe the other money goes for a different goal. So I think the exercise itself kind of shines a light on how money is flowing through. So on the flip side of that, Tim, you know, if we add up all of those and realistically, the number is typically more conservative because we just have leakage and things that we don’t really account for in that process. If $10,000 is going out, then it means one of two things. It either means that we’re eating into our savings or we’re running some type of credit card debt, and we’re basically running a deficit with our spending. So I think just getting a snapshot of where we’re at is important. And then a lot of those from there, it’s tracking your expenses. And again, like to me, one of the things that I preach is that it’s a two-sided equation, so I always try to impress upon clients to think of other ways to make income, grow the top line, because you can really only cut so much. And again, in this day and age, it’s always good to have alternative income streams than just like the W2 income that’s coming in. So things like that I think are important as we’re kind of going down the path of how to properly fund these goals.

Tim Ulbrich: Yeah, and I love hearing you talk through — I mean, I think what this does if we merge steps 1 and 2 here — 1 being the goals, 2 here being the budget — is that you start with the goals in mind and then you work into, OK, based on the last 90 days, what do I have available? And you start to merge the two of these together. And I think what typically happens — I know it happened for Jess and I as we just did this last week with you — is that you get to your goals and your aspirations, and then you get to the reality of what is there. And you say, “I don’t like that reality,” right? So there’s not enough monthly income that’s not being spent on expenses, that’s freed up to put toward our goals, so we either now need to grow the top line, cut the expenses, or both, right? And then you start to really get into the questions of, what can I cut? Or how can I grow my income? And as you mentioned, it’s on both sides. So I think this merging of the goals and the budget really helps not only put it into reality, but it also helps drive some of the motivation to be able to achieve these goals. So I think the next step here — and you alluded to it a little bit — is this idea of what you do with your clients, which I love, is a savings allocation worksheet.

Tim Baker: Yeah.

Tim Ulbrich: So once we kind of begin to think about the goals and then we do this 90-day retroactive tracking of expenses, we now get into putting these into a category of what goal, how much am I trying to achieve? What do I need per month to get there? What can I do current versus what do I need to be doing? And then prioritizing those. So talk us through that process and how you do that with clients.

Tim Baker: Yeah, so I found that there was like a disconnect between kind of these steps. So one of the things I developed is this — I call it the savings allocation template. And it’s essentially like all of my clients have one. And it’s really just an Excel sheet. You know, it’s funny, like all of these pieces of software that are fancy, like I find that more and more I use kind of my own homemade thing. So essentially, what it is is it’s basically a spreadsheet that kind of shows what are our primary everyday spending accounts. So for some people, it might be Bank of America or USAA or whatever that is. And essentially, that’s where all of the money flows through. And then sometimes we have like a backup account just to make kind of a buffer. And then we have our emergency fund, which is that deep storage where we never touch. And then we might have like retirement accounts that are more for long-term savings. But then we have these, kind of these tweener accounts. And really, these are what we’re talking about in terms of like sinking funds. So most people — I think if you’re doing it correctly, in my opinion — are going to have things like a home maintenance, a car maintenance fund, a gift or a holiday fund. So a lot of people, they’ll say, “Hey, Tim, I do a really good job 11 months of the year, but then Christmas rolls around, and I blow my budget out of the water.” So typically, my question is, “Well, how much do you spend during the holidays?” Say for simple math, the answer is $1,200, then I say, “OK. In January 2019, this month, let’s set up a sinking fund. We’re going to call it ‘Gift, Holiday Fund,’ whatever, and every month from January 2019 to December 2019, we’re going to fund $100. So by the end of that month, or by the end of that year, we have $1,200, so essentially replicates spending. And really, we’re not getting into credit card debt or anything. But that money is there. So the idea behind the savings allocation sheet is to kind of get everything on one page and then it shows kind of the location of the account, what the monthly contribution is, so this is kind of what we’re talking about now — so typically, this is blank until we figure it out — what the current balance is, what the target is, what the source is — this could be paycheck or it could be moonlight shifts, or it could be Airbnb, which is kind of like what I talked about in the past with our travel fund — and then the description of what it’s actually for. So the example that I give for our travel fund, I said, “Hey, Shea, my buddies, we’re going to Vegas for a bachelor party. I really want to use the travel fund.” We look at the description, she’s like, “Sorry, bro. That’s for family vacations only, so you’ve got to find that money somewhere else.” But it keeps us honest, and it keeps us on the same page. So our car maintenance fund is for, you know, car repairs, oil changes, tires. For our home fund, we have the things that we know we need to spend money on in the future. And I think another field that I would add to this is, you know, we have kind of the current balance and the target. So if your emergency fund, it needs to be $20,000, and you have $15,000 in it, and you’re funding it $1,000 per month, then you essentially have five months until it’s fully funded, if you’re running at a clip. I think getting that on paper too, I think one of the things we talked about last time, Tim, was, OK, if we contribute to the emergency fund at this clip, it’s going to take us three years to fund it. Is that acceptable? So I think if when we look at it in that context, then you’re going to say, “Well, no, not really. It’s not.” Or you might look at it differently and say, “Yeah, that’s fine. We have cash there, and we’re building it up over time.” So I think that’s the piece. But it’s amazing, like we talk about kind of the small wins, and I think sinking funds are a big thing, but I think actually looking at this — and I equate it to almost like the debt roll down method in reverse. So we talk about when a debt is paid off, we basically roll that payment into the next one. So same thing, it’s like when our target balance is achieved, and in that example I gave you, you had $1,000 that’s going into the emergency fund, then essentially, we free up that $1,000 to now fund your travel fund or whatever it is. And I think that’s when we kind of talk about priorities. Do we do a lot of one thing? Or do we do a little of a lot of things in terms of spreading the dollars out?

Tim Ulbrich: And I think, again, just to reinforce for our listeners to not underestimate the power of writing down your goals and how you’re going to achieve them. I just pulled up right now the allocation worksheet you and Jess and I were working on, so we have things on here like additional giving and gifts, like you mentioned, vacation, home improvement fund, emergency funds, car sinking funds, different retirement accounts, and then we have the 529 accounts for the boys, real estate investing, paying down home early. And after we prioritized them, which is another step of this process, I see here a bunch of areas that it really pisses me off that we’re not able to contribute to these right now, right? Because of other things we’re trying to do. And so I think there’s that motivational factor of, OK, what needs to change? What do we need to do to make these a priority and make them happen? And obviously, there’s patience there as well. And so the next step of this is once you have your goals and once you have this allocation worksheet and you have the budget set and you prioritize these items, you then begin to put these on automation, which is what we’re talking about here with the sinking funds. And so I would point our listeners back to Episode 057, we talked about the power of automating a financial plan and we have some more detailed information there. OK, No. 1 we talked about is setting goals for the new year. No. 2 is new year, new budget. No. 3 is a new year tax filing and planning for 2019. So in Episode 070, you and Paul had talked about kind of pre-planning for the tax season. And so here we are, January, and for me, there’s really two buckets that we’re thinking about is what we need to do to file 2018 returns and then obviously, the strategic planning for 2019. So what should our listeners be thinking about? Here we are, January 2019, and what they need to do in terms of filing and probably the most common question we get here is what are the pros and cons of DIY, TurboTax, versus hiring and working with a professional on this.

Tim Baker: Yeah. So I think the big thing is as tax documents come in, you know, basically having a safe spot, a known spot, to basically gather all those and collect all those. I think that’s the big one. There are still things that you can do between January, this month, to April 15 that can affect your tax bill. So I think understanding that is important. So you know, right now, I think it should be about data collection, looking at where we’re at. But then as we kind of transition to alright, now we’re ready to file, what’s the best step? So for some people, it might be a TurboTax. It’s fairly easy. Now, the changes in the tax code makes the tax picture a little bit different. It’s supposed to be easier. It’s supposed to be a lot easier, but I think it’s about the same as far as what I’ve looked at and what I’ve read in terms of the new tax code. But again, it’s the same thing with goal-setting and a lot of this stuff is sometimes, it’s worth an objective opinion. And I would say the big win with Paul with a lot of clients that we’ve had is, you know, actually looking at — you know, we’re talking about midway through last year — looking at if nothing changes midway through, “Hey, client, you’re going to owe $6,000, $8,000, or we’re going to get back that amount of money.” And both of those things are not necessarily optimal outcomes. A lot of people — for some people, it is, because if they get back $6,000, it’s really the only way they can save, unfortunately. But that’s really a tax-free loan to the government. And on the flip side of that, no one really preps for or prepares for a large tax bill to Uncle Sam. And it happens if residents are moving from a residency salary to a regular pharmacist salary or life event changes, baby, increase in income, home purchase, a lot of these things can move the needle. So again, like we preach being proactive with this. And I think what we want to do in really this time of year is start the process of filing, especially if you’re going to get some type of return. File early, and then look ahead for 2019 and say, “OK. What are the things that we can do to affect change so we can be as efficient with the money that we’re sending Uncle Sam.” So for some people, it’s going to make sense to DIY it. And that’s more than OK for some people, especially if they have multiple states or things like that, it makes sense to kind of slow down and say, “OK. Tax permeates everything. What’s the best way to plan for this and be proactive in the approach?” And I think that’s the difference is I think the act of filing taxes is very transactional, it’s very reactive. But I think the planning piece can make it a lot more pleasant if you kind of get in front of it and make sure that you’re doing what you need to do to better your tax situation.

Tim Ulbrich: Yeah, and I think that’s a goal we have for our community and audience is to really shift the mindset from just the filing, the transaction, to actually the strategic planning around taxes, you know, being intentional with the individual situations that everyone has and really — obviously, we’re not trying to deviate the tax code in any way, shape or form but really trying to look at all things considered, all those variables you mentioned, what can we be doing in advance of next year’s filing to be strategic to maximize the individual plan for each and every person? So really, thinking much more proactively about taxes than I think reactively.

Tim Baker: Right.

Tim Ulbrich: So I would point our listeners to YourFinancialPharmacist.com/taxprep, where you and your team with Paul offer a service to both do the filing as well as kind of looking ahead to the strategic planning of the new year. Alright, No. 4 here is a bucket of things that I’m calling tidying up the not-so-sexy but oh-so-important parts of your financial plan. So Tim, what are some of the things that our listeners heading into the new year probably often may not get the same attention that maybe student loans or saving for retirement, but some of the foundational, maybe more of the defensive things people need to be thinking about if they haven’t yet done putting a plan in place for 2019 to get it done?

Tim Baker: Yeah. I think you hit it on the head, Tim. I think it’s so much of the defensive things that don’t get the sizzle that things like, you know, the controversy over PSLF or the student loans because it’s a main pain point or investments, Roth conversions, that type of thing. It’s really about setting yourself up for good defense. So like I have a lot of prospective clients that came in the door, and they rattle off a bunch of things that they want to achieve or accomplish. And when I ask the question of like, “Do we have an estate plan in place?” which is super important because you own a house, you have kids, and the answer is no, then I need to impress upon them how important that actually is because what we don’t want to do is we don’t want some judge in the state of Wisconsin, Ohio, Florida, wherever it is, basically deciding who’s going to be guardian for your kids or how your body’s going to be treated in the event of incapacity or how your affairs are going to be handled in death. So it’s not something that is sexy or that we like to talk about, but it’s also typically one of the things that we don’t know what we don’t know. So I like to elevate that. To me, that’s where I think a good planner kind of elevates that. And I think that’s, again, it kind of goes back to one of the things that you said, Tim, is we worked together for a long time, and we get around to investments because, you know, most people, there’s other things that we need to tackle before we hit the investment piece. And I think this is one of the things too is, you know, yeah, I got it, we want to do Roth conversions, we want to make sure that the 401k is properly allocated, all that stuff. But if you kind of fall into those buckets — especially if there’s kiddos involved, having a proper estate plan is super important. So that would be the big thing, and some employers offer this as part of employment that you might pay a little bit more for legal, but I would definitely recommend talking to an attorney. And I know you and Jess talked to the person that I work with, and I think it was a big win for you guys. But I think that would be No. 1 is looking at that and making sure that we’re good in that regard.

Tim Ulbrich: Yeah, and just to build off of that, we did. We just finished up that work, we’re reviewing the documents right now. And I had gone the DIY approach a couple years ago and really underestimated the power and the value of the conversation. Again, third party, different viewpoint. You know, Jess and I may be thinking about it one way, him asking questions, getting us to think about the different documents, and even some nuances and implications around life insurance policies and where other things go and how assets are handled and establishments of trusts and all those things that I would have never gathered through a template form. So I think that’s one that, you know, maybe for many people feels overwhelming, not only the topic in and of itself, but just the some of the legalese and working with somebody and all that. But I think it’s a good goal for many of our listeners to think about in 2019 if they haven’t yet done so.

Tim Baker: And at the end of the day, it’s really not about you. And the next things that we’re going to talk about is also not about you. You know, when you’re talking about estate planning, this is really about your family, your survivors. And a lot of people, it’s like, well, I won’t be here, I don’t have to really worry about it. But again, if you have a family to look after, I think it’s important to get this right and spending a little bit of money I think is well advised. So I think the next part of this, you know, some other not-so-sexy but oh-so-important parts of the financial plan would be your insurance game, you know. And again, I think that a lot of advisors will lead with this because, you know, a crappy permanent insurance or disability policy can pay a lot of premiums and typically, you know, I see a lot of people that don’t necessarily have what they need or they’ll over buy or whatever that is, but I think at the end of the day, looking at do you have enough term to basically cover what you need to cover? And again, if you have dependents, that’s going to be better. From a disability insurance where we’re talking about insuring the income that you earn, when you have dependents and you’re at the stage of life where you have spent a lot of time, energy, blood, sweat, tears to get the PharmD, you want to make sure that you protect that. So if it’s a simple calculation for life, which could be 10-12x your income to get that policy in place, so maybe that’s a $1 million term, which is cheaper than you think for — I kind of use, we talked about the rule of 30. For a 30-year-old who buys a $500,000 30-year term policy, it’s about $30 a month. So a lot of people think that’s a lot more. And then disability policy, you probably want something that is own occupation, which means it covers for your occupation. And you want something that’s around 60% of your gross monthly income. So a lot of people, again, they overlook this. And you know, this is as important as some of the other things that we’ve talked about, the investment, the emergency fund, all that kind of stuff. And then that’s the next thing is really — is your emergency fund up-to-date and current? So Tim, you said you mentioned kind of life changing, moving to Columbus, we re-assessed the emergency fund, and we saw, OK, we probably need to plus it up a little bit. Same for our household. I love to just watch that money sit and get its 2% from Ally every month. Like it’s a beautiful thing. But you know, do we have enough cash reserves for the unthinkable to happen and be good with that? And then in terms of some of the other things, you know, updating beneficiary information on your investment accounts — do you have a primary beneficiary? Do you have a contingent beneficiary? And make sure that’s current. And to circle back to the estate planning stuff is, you know, is your legacy folder, is that current? Is it even in existence? And basically talking through with loved ones about, “Hey, this is if something were to happen to me, this is my LastPass account. This is where you look for everything.” And make sure. Because again, a lot of people think it will happen to someone else, but at the end of the day, the odds are is that this will happen to one of our listeners, and it’s important to be prepared for that.

Tim Ulbrich: Yeah, and if you haven’t heard us talk about that on the show before, legacy folder, that’s a play off of Dave Ramsey’s content. He talks about this in Financial Peace University, having all of your financial documents, insurance policies, birth certificates, investment account logons, you name it, in one place where people or whomever, one person, knows where that is in the event that you need it, whether that’s spouse, significant other, or obviously extended family. So we have a document, YourFinancialPharmacist.com/legacyfolder that is a list of things that you may consider including in there. And Tim, just to put a bow on this and kind of wrap up the things you had talked about, I think for those that are listening and say, “Estate planning: check. Life and disability: check. Emergency fund: check,” it’s really going back and asking the questions, if you already have those in place, to your point, are they up-to-date? And do they align with your current financial situation? So I know, for example, I mentioned Jess and I have the estate plan, we kind of looked at that and said, “Yeah, we did it. But we didn’t really do it as well as we could have or should have.” And it didn’t represent, I think our current status of our family, and it probably won’t again in three years, and we’ll have to update it. Life and disability is one that we’re working with you on right now to say, “OK, when we purchased a life insurance policy three years ago, our financial situation, our family situation is very different.” And so we’re at a point now of needing to kind of up those policies. Same with the emergency fund that you mentioned. So really going back and looking to say, “Are these policies representative, are these parts of the financial plan representative of current status of what’s going on?”

Tim Baker: Yeah, and I had a prospective client ask me this and actually became a client. They basically said is like, “I kind of understand how you work through the financial plan. But then like what do we do after that?” And it’s like, you know, is there work to do? And I was like, “Well, you know, if you look back two years and what you were doing two years ago, is that different than what it looks like today?” And inevitably, it’s like yeah. So the beauty of the financial plan — to nerd out a little bit — is that it’s fluent. And life happens, so I feel like asking the question, like does this make sense today is valid across all part of the financial plan. And for some people, you know, they’re going to move from the accumulation phase of, say, their 529, they’re saving for little Johnny’s education, to actually the distribution phase, which looks a lot like retirement in terms of like how can we set up a plan, you know, your kid’s in middle school, high school, and make sure that we know exactly what we’re paying for college down to the penny and how we’re going to fund that. And you know, it sounds — you know, a lot of people kind of get stuck in the here and now and where we’re currently headed, but we forget how much life changes over time. Even in your case, Tim, when we talked about, when we looked back at kind of your goals, some of them made a lot of sense. But then you had a lot of things change as well. Again, I think that’s where it’s good — and I even have problems with this in my life — but it’s good to kind of slow down and ask the questions like, “Do we like where we’re going? Does this still make sense?” You know, has something basically come up that’s now more important? And then really adjusting the plan accordingly. So and that’s one of the reasons I’ve been on my soap box — that’s really the reason I like to work with young people is that you can come in completely scattered or in a tough spot, but I think the fact that we have time to really right the ship and get the plan going is a beautiful thing. So.

Tim Ulbrich: And if those listening, you know, maybe you have a question about life and disability, emergency funds, all these things we’ve talked about, taxes, you know, we have so many resources on the website, YourFinancialPharmacist.com. We’ve got guides and calculators and links to previous content. So head on over there, search the topic that you’re looking for, and if there’s not something there that you’re looking for, let us know. No. 5 and finally, you know, probably the quickest one that we’ll talk about but maybe the most important is surrounding yourself with community that one, keeps you accountable and two, motivates you to learn and better yourself financially each and every day. So we’ve talked before about the YFP Facebook group, and our challenge for those of you that are listening that are not yet a part of that group, number one, it’s free. Number two, there’s multiple conversations going on each and every day: people posing a question, something they’re struggling with, a win that they had. Please join us in that community. I think you’ll find it incredibly helpful and valuable just to stay sharp when it comes to your own financial plan and what you’re working on. And number two is obviously when it comes to accountability and finding somebody that can motivate you and help you learn, of course, the comprehensive financial planning services. So Tim Baker, we’re of course proud to be partnering with him, ScriptFinancial.com. You can head over to that website, schedule a free call, see if it’s a good fit for you. And Tim, from what you’ve seen working with clients, whether it’s accountability and community with a significant other, a spouse or a planner or some other form or fashion, I mean, how important is this aspect of accountability and community?

Tim Baker: I think it’s huge. You know, I think when I start with clients and we do kind of a wealth building survey, which is built on kind of “The Millionaire Next Door” and the research that was done there, you know, pharmacists grade out very highly in things like responsibility, but from an accountability measurement or like a focus measurement, sometimes they don’t — or a confidence measurement, sometimes they don’t. And that’s where we kind of lose the way. So again, my job in essence from a behavioral standpoint is to kind of nudge you in the right direction. And sometimes, it’s just as easy as bringing up the savings allocation, kind of the goal and the success timeline and saying, “OK. Where are we at? And where are we going?” And you know, I love the community that we’re building because I think it was — I know I heard it through Tim first, I think he stole it from someone else — Tim Ferriss is the author of “The 4-Hour Workweek,” is that you’re the average of like your five closest friends or things like that, something like that. And I think when you surround yourself with people or community that are like-minded, in essence, or are cheering each other on to kind of change their situation, I think that’s where you really start to see action. So that can be a community, working with your spouse, it can be working with an advisor. But at the end of the day, I think the accountability is such a huge piece of it. And I often say to clients, like you know, “You guys can look up how to do a Roth conversion, what you need an emergency fund and where, but at the end of the day, I think it’s that objective voice in the room that says, ‘Does this make sense?’ and ‘Is this still important?’ And if it is, where’s the money? Where’s the bucket? Where’s the resources to say that it is imporant and we’re going to see it through?” So yeah, I think it’s probably the most important part of the financial plan is really pushing it forward and being accountable to what we’ve laid out.

Tim Ulbrich: Absolutely. We’ve talked before, it’s not — the x’s and o’s are important, but what is more important is the execution, which comes down to accountability and community and upping your financial IQ. And I’m feeling that right now, I mean, we’re finishing up a book club in the YFP Book Club Facebook group on “Rich Dad, Poor Dad,” and it’s been to facilitate that, but even seeing the conversation, you know, we’re one month in, and I think like we talk about the compound growth of your investments, there’s a much more or equal significance of the growth of your financial IQ that can happen through reading a book each month or every month or whatever that the cumulative effect of that, you cannot underestimate that. So I hope you’ll join us in the YFP community if you’re not already a part of that group. And before we wrap up today’s show, just another reminder about our first giveaway of the year. We’re doing three yearly subscriptions to the budgeting software, YNAB, again, standing for You Need A Budget. Head on over to YourFinancialPharmacist.com/giveaway to enter that contest today. As always, we appreciate you joining us for this week’s episode. And if you haven’t done so, please leave a review of this show in iTunes and make sure to subscribe, whether that be in iTunes or whatever podcast player that you get your content each and every week. We’re grateful for your listenership, and we look forward to joining you again next week. Have a great rest of your week.

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