YFP 407: Ask YFP: Using 529s for Student Loans & Buying Bitcoin Efficiently


Tim Ulbrich and Tim Baker answer two questions from the YFP community on using 529 funds for student loans and the most cost-efficient ways to invest in digital assets like Bitcoin.

Episode Summary

In this episode, YFP Co-Founder & CEO Tim Ulbrich, PharmD, is joined by YFP Co-Founder & COO Tim Baker, CFP®, RLP®, RICP®, to answer two insightful financial questions from the YFP community.

First, they explore whether it makes sense to use 529 plan funds to pay off student loans. Tim and Tim break down the relevant provisions of the SECURE Act, highlight key limitations and tax implications, and discuss scenarios where this strategy could be beneficial—or not.

Next, they tackle a question about buying Bitcoin efficiently. They compare the most cost-efficient ways to invest, including using various platforms, ETFs, and tax-advantaged accounts like IRAs. They also weigh the pros and cons of each approach, including fee structures, accessibility, and long-term considerations.

Whether you’re considering how to best use your 529 funds or exploring your first steps into cryptocurrency, this episode provides practical, pharmacist-specific guidance to help you make informed financial decisions.

Key Points from the Episode

  • 00:00 Welcome to the YFP Podcast
  • 00:42 Question 1: Using 529 Funds to Pay Off Student Loans
  • 03:35 Options for Overfunded 529 Plans
  • 16:56 Question 2: Buying Bitcoin and Digital Assets
  • 33:24 Conclusion and Listener Reminder

Episode Highlights

”This is not your dad’s 529 plan anymore. What I mean by that is that they continue to make these, I think, more favorable. You have more exit opportunities, if you  will, right, in terms of how these funds might  be used if you run into a situation like an oversave situation, which I would argue is a good problem, right?” – Tim Ulbrich [11:40]

 ”When you buy a spot Bitcoin ETF, you don’t hold the Bitcoin directly.

You just have shares of that fund. But the fund essentially  owns it and you have a partial ownership of the fund. So when you buy it on Coinbase or Robinhood, you’re an owner, right? Your keys are on that ledger. And it’s there for public consumption.” – Tim Baker [19:44]

“ I own Bitcoin both ways. I own it through an ETF, and I own it directly. And part of me is worried that one day I’ll wake up and I’ll hear a story that X, Y, Z was hacked, and all of my Bitcoin is gone. It’s just the reality, right? And that’s one of the downsides of digital assets.” – Tim Baker [20:48]

Mentioned in Today’s Episode

Episode Transcript

[00:00:00] 

Tim Ulbrich: Hey everybody. Tim Ulbrich here and welcome to this week’s episode of the YFP podcast where we strive to inspire and encourage you on your path towards achieving financial freedom. YFP co-founder, COO and Certified Financial Planner, Tim Baker joins me to answer two questions. I. Came in from the YFP community one on whether or not it makes sense to use 5 29 funds to pay off student loans. And another question on the most cost efficient way to buy digital assets like Bitcoin. you have a question that you’d like us to feature on an upcoming episode, head on over to your financial pharmacist.com/ask yfp to record your question or send us an email [email protected]. Alright, let’s take our first question from the YFP community, which came to us via email. Tim, what are your [00:01:00] thoughts on using 5 29 savings as a vehicle to pay off student loan debt? Tim, we were talking before the show, maybe a couple different ways to interpret this question. So what? What are your thoughts?

Tim Ulbrich: I.

Tim Baker: Yeah, and we actually interpret it differently. So, um, you know, I. You know, I, I think I, I was looking at this question as almost like, um, using the 5 29 as like a pass through. So like I, I’m a student loan borrower and I have, you know, let’s just say I have $50,000 left to pay off. You know, one of the things that you could do is I could open a 5 29 and I’ll use State of Ohio, which was where we lived, Tim.

Tim Baker: I could put in for this year, $4,000 in my own name, get a state tax deduction for that, and then, you know, if it grows, great, if not, but I can basically just take that $4,000 out and then pay off, you know, 4,000 out of the 50,000 that I still have, [00:02:00] you know, left to pay. So. That is an option, right? That you, you can, you can absolutely do.

Tim Baker: Um, I think the way that you interpreted, and correct me if I’m wrong, it’s like, you know, you were thinking about it from the, the standpoint of like, Hey, I have student loans, but I’m also saving for my kids’ education. Could I potentially use some of what I, you know, am put in towards the boys’ education for my own student loans?

Tim Baker: And I think that is actually an option as well. Now, the big thing, this was one of the, the big things that. Um, either the Secure Act, uh, in 2020 basically allows for, you can now use up to $10,000 lifetime per beneficiary from a 5 29 to pay qualified student loans. So I, I’ve kind of been on record like to say like, I don’t love the the 10,000 lifetime beneficiary ’cause it’s such a drop in the bucket, especially with the kind of loans that we see, but.

Tim Baker: You know, I think that, I think that cap should be higher, but I would imagine that like [00:03:00] lawmakers are trying to preserve the intended use of the 5 29 and not turn it into like a tax loophole or safe haven for like wealthy families. So I would imagine that’s why, um, it just feels like it’s very inconsequential.

Tim Baker: Um, but yeah, so I think you, I think both of those scenarios, Tim can actually. Like happen, right? So you could say, you know, you, you could say, Hey, this, this, you know, maybe you, maybe, you know, your, your youngest has like the least amount. You could say, Hey, this is now my 5 29. You know, I peel off the 10,000 lifetime amount.

Tim Baker: Apply that to my, um. My own loans and then maybe, you know, recategorize that 5 29 back to your youngest. So I think that’s an option. I, I think what I, what the way I want to answer this question, you know, it’s kind of similar to like, you know, when you leave an employer, like what do you do with your 401k and there’s like a, a myriad of options.

Tim Baker: Like you can leave it, you [00:04:00] can cash it out, you can transfer it to an IRA, you can, you know, roll it over to your current employer. So I kind of wanna look at that. This question this way. So like what are the options if you’ve overfunded a 5 29, um, and let’s us just assume, Tim, that there’s no more school for your child, right?

Tim Baker: So I’m gonna use Olivia as an example. Olivia Baker, great student, great swimmer, she’s a junior Olympian. And the breaststroke great kid. But like, I think the way that I would look at this is, um, if she goes to school. And let’s say, you know, she has money left over to me. The, the, the, the, the number that I’m looking at right now is the magic number for Overfunded five 20 nines is 45,000.

Tim Baker: And I’ll kind of break that down here in a second. So the options that we have with Olivia, so let’s assume she goes through school and maybe she gets scholarships or whatever. What do we do with that Overfund at 5 29? The, the one thing that you [00:05:00] could do is you could change the beneficiary, which is kinda what we just talked about.

Tim Baker: Like, yeah, I could change, you could change it in your name, pay off your student loans, and then change it back so you could change the beneficiary to siblings. So I could, I could change it to Liam. I could change it to Zoe. I could change it. To, uh, grandchildren that might not be here. I could change it to aunts and uncles, my parents, nieces and nephews.

Tim Baker: I could change it to Shea if you decide to go back to school or even myself, like we talked about that. So there’s a lot of, there’s a lot of flexibility. What, what to do with that. Um, this, the second option, which we just talked about is what you, you can use $10,000 to pay down student loans. So this applies to the original beneficiary and each of the symbol.

Tim Baker: And so I, this is one of the things I have to clarify. It’s like I, I think I would be able to use it for myself, but I’m not clear on that. You know, one of the, one of the things I was recent researching it says is fors. So if we look at it from that perspective, then for the Baker family, I see this as like a $30,000 benefit, right?

Tim Baker: 10,000 for Olivia, 10,000 for Liam’s student loans, 10,000 [00:06:00] for Zoe student loans. The other option that also opened up in the Secure Act was. The rollover to a Roth IRA that started in 2024. So you can now roll up to 35,000 lifetime from a 5 29 to a Roth. Um, and there’s some contingence, but that’s where I get the, the 45,000.

Tim Baker: So in my mind, those dollars in all intents and purposes are for Olivia’s education. However, to me, if she has. $50,000 in that account when she’s kind of through school, then I think I would probably leave 40, 45, 10 for potential student loans if that were to pop up. And then 35 to roll over to kind of get started on her retirement saving.

Tim Baker: And then I might take that five. And apply it for Liam or Zoe or something like that. The big conditions here, Tim, is that the, the five 20 for us to be able to roll over to a Roth, the 5 29 has to be open for at least 15 years. So we’re thinking like a long-term play. The rollover is limited to the [00:07:00] annual Roth IRA contribution each year.

Tim Baker: So right now that’s seven. Thousand dollars. So you’d have to do it, you know, um, over basically a five year period, seven time, 7,000 times, five years. Now, those, those limits will be different in the future. And the beneficiary of the Roth IRA must be the same as the 5 29. So there’s some hoops that you have to jump through.

Tim Baker: Um, but outside of that, the two other options that I see, and we kind of talked about this. Um, is you can save for future generations. So there’s no time limit on when the funds must be used. So I’ve always looked at this as like the last resort. So like if we, you know, and that’s one of the big fears, people like, I know about five 20 nines ’cause it’s limited in use, blah, blah, blah.

Tim Baker: In my mind, like if I’m given money to grandkids in the future, I’m good with that, right? Like. It’s a good problem to have. Right? And it’s a great tool for multi-generation wealth transfer for the purposes of education. And then the last one that, which I know you’ve brought up that’s like it’s not the end of the world, is like you can always make a non-qualified [00:08:00] withdrawal and pay taxes and penalty, the 10% penalty.

Tim Baker: You typically pay ordinary income tax on the earnings, plus a 10% penalty on the earnings, um, which is not, again, the end of the world. So to me, like the 5 29 as a. Tool to pay off student loans. Yes. Like you can do that. The, the problem is, is that it’s a $10,000 lifetime limit, but I’m also looking at these other avenues potentially, you know, and, and again, like the 45,000, you know, dollar limit.

Tim Baker: Like I’m, I’m thinking of this as like, if there is money left over. It’s probably because Olivia did something that allowed her to kind of not pay as much for, you know, like, I’m thinking like scholarships, right? So I don’t wanna, I still would wanna reward her. So like, you know, I was just kind of checking our numbers of like what we will project to have for her.

Tim Baker: Um, I think we did this exercise in a previous episode. Um, so I just updated those [00:09:00] numbers and, you know, we’re, we’re about 60, you know, we talked about the one third rule. Right now we’re on track to save about 60%. Um, so for her, the future value of her four year education, um, so she’s 10 and a half now. So really in seven and and a half years, we’ll pay about 175,000.

Tim Baker: We’re on track to save about a hundred, we’ll call it 105. Um. So, but we could, we could get there and she could get a swim scholarship and now we have 105,000. And we’re like, what do we do with that? You know? And I think that’s when we start kind of going down that decision tree of like, let’s, you know, let’s keep that 45 for her for potential 10,000 student loans for, you know, 35,000 in Roth.

Tim Baker: And then potentially peel some of that money off for Liam, for Zoe, for whatever. Um, so I think it’s a great question and kind of, you know, again, we interpret it very differently, but I think there’s, I think one of the, the, the feelings for a lot of parents is like, am I locked into this? And I think there’s just a lot [00:10:00] of wiggle room of what you could do with those dollars.

Tim Baker: Um, and I think we’ll continue to be, you know, opened up and, and flexible. But at the end of the day, I think the very last thing that you could do is just pay the 10% penalty. It’s not the end of the world.

Tim Ulbrich: Yeah, and I think, um, a couple things of reference. Great stuff, Tim. Um, you know, as you were walking through your example calculations for Olivia.

Tim Baker: Yeah.

Tim Ulbrich: reminded me of that episode we did previously, which I wanna make sure we have reference. So that was 360 8. How much is enough for kids college and and the premise of that was we talk all the time about saving for retirement, determining your nest egg. I remember one day, a couple years ago, you had this aha of like, why don’t we apply this same mindset to kids college, right? We have

Tim Baker: Right.

Tim Ulbrich: of thumb framework, the third, a third, a third. We’ve talked about that on this show before, Same for kids. College is a mathematical set of assumptions.

Tim Ulbrich: Just like we think about retirement, sure things may change, will change. Markets will kind of do their thing depending on how we have those invested, but we should be able [00:11:00] to plan. In a similar fashion, especially if we’re looking at this over a long period of time, you know, 15, 18 years that we’re, we’re saving.

Tim Ulbrich: So, um, I wanna make sure we reference that episode as well as two 11 when we talked about the ins and outs of the 5 2 9 college savings plan. So I know some of our listeners, especially may, maybe mid, mid-career pharmacists that have some kids that are in high school, a little bit older, getting ready to go to college, perhaps well versed in this topic, but for others that. Maybe younger kids are wanting to learn more about what, what is the 5, 2 9 and, and how might it fit as a priority of investing in the financial plan given all these other things I have going on, right? Whether it be just starting a family, buying a home, saving for retirement, student loans that are hanging around, how might this fit in as a priority with other. Investments and other things, other goals. So make sure to check out that episode as well. you know, one of the thoughts that came to mind as you were talking is like, thi this is not your dad’s 5, 2, 9 plan anymore. What, what I mean by that is we’ve talked at length the show [00:12:00] that they continue as you highlighted just a few moments ago, to make these, I think, more favorable.

Tim Ulbrich: You, you have more exit. Opportunities, if you will, right? In terms of how these funds might be used if you run into a situation like an over save situation, which I would argue is, is a good problem, right? Whether it be because, hey, my kid got a scholarship, they didn’t think they were gonna get a scholarship or, you know, perhaps they decided that it was a different career path than than college and, and now we’ve got funds, we gotta figure out what to do it.

Tim Ulbrich: There are more exit opportunities now than ever, including some of the most recent ones you mentioned, like the Roth. Conversions, and we’ve got a plan and, and there’s certain details that we’ve gotta think about in doing that. Um, but there are more options than we’ve had before in terms of how these funds can be used.

Tim Ulbrich: And of course, everyone’s situation is different. You know, I’m thinking about parents that might have larger families where there’s multiple kids, or the likelihood of more grandkids versus a single child and what that might look like. So everyone’s [00:13:00] situation, of course, is different, but. I wanna reemphasize that because I, I had a conversation just last week, Tim, with a faculty member at a college who was given advice by a non fee only financial planner.

Tim Ulbrich: And so a shout out to the most recent episode we did on five questions Ask when Hiring a financial planner. the advice was, Hey, you work at a university. Your kids could go to the university of which you work and, and go there for free, which could happen and that’s an awesome benefit, but also may not happen. Um, and therefore like, don’t put money in a 5 2 9 and instead buy a whole life insurance policy. And you know, I,

Tim Baker: I’m shaking my for. Yeah, for, for those that are not watching the video, I’m shaking my head. I, I had a, I had a similar conversation where, you know, somebody was talking about a 5 29 and the advisor was saying, um. They were saying two things. They were saying, don’t put money in a 5, 2, 9, and actually don’t put money into your 401k, [00:14:00] put it in a brokerage account.

Tim Baker: Um, or like an IRA and, and I was like, I was asking the, I know this is the tangent, but I was asking the question. I’m like, you know why they said that, right? Like, not to put money in the four five, the 401k, and not to put money in a 5 29. They’re like, no, why? And I’m like, because they don’t get paid on those accounts.

Tim Baker: So you get. Yeah, like they’re held away accounts, you don’t get paid. I mean, advisors can get paid on a 5 29. Um, like when I was prac, when I was practicing my first, you know, job in financial services, there was a Maryland 5 29, but we used the Virginia 5 29 for most of our, our clients. And you know why that was, Tim, is because Virginia 5 29, at least at the time, like it was open to advisors to get to, to set up and get paid.

Tim Baker: So even though the Maryland. Uh, clients weren’t getting the state benefit like we were. We were be, we were benefiting because we could like earn commissions on that. So like, yeah. I mean, [00:15:00] yeah. Not to cut you off, but like, it’s that, that kind of stuff just like makes me angry.

Tim Ulbrich: Yeah, and what was frustrating about that is, you know, we talked about this when we did the episode on five key key questions to ask for hiring a financial planner is, you know, there’s some half truth slash good

Tim Baker: I.

Tim Ulbrich: in there. Like of course, you know, if I were to still be working at Ohio State, my kids can go to Ohio State.

Tim Ulbrich: Awesome. Like, that’s a great benefit, but one that may not happen. You know, they might say, Hey dad, by the way, like. not cool. I don’t want to go to Ohio State

Tim Baker: Right.

Tim Ulbrich: or, you know, whatever would be the scenario. Um, then also, like that doesn’t just mean like, okay, go, go buy a whole life insurance policy instead because I’m gonna earn a commission off of that.

Tim Ulbrich: So, you know, I, I think it was one of those things that there’s still a lot of advice out there that I hear in talking with pharmacists. I know you hear as well, not, not just that related to the example I gave, but that are operating under. of the older rules in construct and framework around 5, 2, 9 plans.

Tim Ulbrich: [00:16:00] It didn’t have the flexibility and options that it might have today.

Tim Baker: Yeah.

Tim Ulbrich: and so, you know, I think that’s something to be aware with.

Tim Baker: Yeah. And I think the last thing that I would, I would just interject here that I didn’t say is that like. You know, if your student gets a scholarship, you can withdraw up to the amount of the scholarship without penalty. You’ll still owe income tax on the earnings. But like, you know, like if, if your, if your kid gets a, you know, a $30,000 a year scholarship to go to x, y, Z school, like, you can take out $30,000 a year without, you know, without, you know, paying that 10% penalty.

Tim Baker: So, again, like it just, you know, there’s just lots of different avenues. To go down to potentially, um, you know, exhaust those funds before you, you know, you get to the point of like, with, you know, making a non-qualified, you know, withdrawal. So, but it’s, it’s a preference, right? Like, you know, I’m just thinking about this whole like, you know, buy a whole life policy.

Tim Baker: It’s, you know, like, Hey, you don’t have to worry about education ’cause you, you know, you work at the university, it’s almost like don’t save [00:17:00] for retirement ’cause you know you’re gonna get an inheritance or something. I don’t know, just it, it’s kind of silly to me.

Tim Ulbrich: All right. Great stuff. I’m sure we’ll talk about kids college more. Um, second question, but, and before I go into this second question, which is around digital assets and, and buying Bitcoin, I wanna reference people, we did a two part podcast series on this topic, so especially for, for folks that. Cryptocurrency digital assets might be more introductory to where this does or does not fit into their financial plan. Make sure to check out those episodes. 3 86 3 87. We’ll link to those in the show notes. We talked about definitions of cryptocurrency, digital assets, some of the origins risks, investment considerations, tax implications, really good comprehensive overview of cryptocurrency, digital assets.

Tim Ulbrich: So great background information. Check out those episodes. Tim, with that backdrop, the question is. What is the best way to buy Bitcoin? What are the pros and cons of using a tax sheltered account versus a brokerage account? And what is a cost efficient way to buy Bitcoin [00:18:00] in a brokerage account using Robinhood versus an ETF?

Tim Ulbrich: What? What are your thoughts here? I.

Tim Baker: Yeah, so very three very different questions, so I’ll kind of unpack them in turn. So the best way to buy Bitcoin, I think this is kind of somewhat analogous to. Like real estate. So like if I’m a real estate investor, you know, I can be a direct owner where I buy a property, let’s say a single family home, and I’m dealing with all of the things, right?

Tim Baker: I have to deal with tenants repairs, contractors taxes, HOAs agreements, things like that, versus the other end of the spectrum, I can just buy. A reit, you know, a real estate investment trust, and that’s probably the most passive way to own a real estate. So a lot of listeners, if you’re not familiar with a reit, you actually might be an investor in a reit, you know, in your 401k or an IRA.

Tim Baker: It’s, it’s a, it’s a very, um. Popular way to invest in, in real estate passively. So if I, if I apply that analogy to [00:19:00] say Bitcoin, you know, purchasing a property directly is kind of like pur purchasing, you know, Bitcoin directly on a platform like Robinhood or Coinbase, Kraken, Gemini. But you’re dealing with a lot of the things and it’s private keys, hot and cold wallets, tax reporting, maybe some worry over, you know, a partial or.

Tim Baker: Permanent loss. So just, just a lot more, even though you’re a direct, you know, owner and there’s benefits of it for that to that like you just have more worry versus like you could just buy the spot. Bitcoin ETF, which launched, I think that was the beginning of last year and it’s probably the most passive way to own Bitcoin.

Tim Baker: So I don’t know if there is a best way. I think if you are more of the keep it simple stupid type of approach, like the spot Bitcoin, ETF is probably the better way. Um. If you like a little bit more of the hands-on then buying it directly I think is. Probably better, right? So when you buy a spot, Bitcoin, ETF, you don’t hold the [00:20:00] Bitcoin directly.

Tim Baker: You just buy sh you have shares or of like, of that fund. But the fund essentially owns it and you have, you know, a partial, uh, ownership of the fund. So when you buy it on Coinbase or, or Robinhood, you’re, you’re an owner, right? Your, your, your keys are on that, on that ledger. And, and it’s, you know, there for public consumption.

Tim Baker: So. Again, like when I talk about real estate, there’s often people that are like, oh yeah, I’m all about it. And then when, when we kind of get into the, the nitty gritty of it and I, I get to the end of like, my presentation, I’m like, if all of this is kind of overwhelming, and we kind of talk about like, you know, um.

Tim Baker: Different, different types of real estate investment. It’s not just like a single family home. There’s hacking and um, just different ways that you can invest in real estate. If you get to the end of that presentation, you’re overwhelmed. I’m like, just buy a reit. And actually, like most of our portfolios, we we’re in real estate.

Tim Baker: Um. I think it’s the, kind of the same, the same way. Because you know, I own Bitcoin both ways. I own it through an ETF and I own it [00:21:00] directly. And part of me is worried that one day I’ll wake up and I’ll hear a story that X, Y, Z, um, was hacked. And like all of my Bitcoin is gone. It’s just something that’s, it’s the reality, right?

Tim Baker: And that’s one of the, that’s one of the downsides of digital assets. So, um.

Tim Ulbrich: a thought here real quick to, to tack on what you’re saying. Um, and not, not an investment advice by any means, but, you know, I look at my portfolio, I’m, I’m interested in some exposure for the reasons that we talked about on previous episodes, but

Tim Baker: Yeah.

Tim Ulbrich: I. I have zero interest in, you know, kind of maintaining that myself, but I respect the people where this is partly a hobby, you know, like they, some people just geek out on like going through the transactions and, you know, dealing with the wallet, you know, stuff and figuring out how all of that, uh, fits in.

Tim Ulbrich: Just like, you know, sometimes people like to take a small percentage of their portfolio and do some individual stock type of trading and track that. So I, I think it’s a little bit of like, know thyself in terms of, [00:22:00] first where does this, might it fit overall in your, your financial plan. And I think, you know, for, for our clients, speaking about them in particular, it’s a great conversation to have your financial planner, with the financial planning team of like, is this something I want exposure to in my portfolio?

Tim Ulbrich: And then if yes, does that look like? Right. And I know you’re gonna continue on in terms of some of the types of accounts as well.

Tim Baker: Yeah. Yeah. I mean, it, it, it definitely is that there’s a lot of people that are like, you know, I’m, I’m at a point now where this is not a gimmick. I think, you know, digital assets are here to stay and, and I think the, the advent of the spot Bitcoin spot, Ethereum, ETFs, that launch is. A logical next step for them.

Tim Baker: Like they don’t necessarily have to be wanting to, you know, they don’t wanna deal with hot and cold wallets and private keys. And I completely understand that part of me, what you described is that nerd of like, you know, building, you know, I was invested in digital assets before the, the spot Bitcoin ets, but you know, even, even now, I’m like, eh, should I be doing that [00:23:00] a hundred percent there?

Tim Baker: Now I won’t sell my, I won’t sell my directly held coins, but like I know that there’s risk. If I continue to buy or if I continue to hold them, you know, because of what I just described. So, yeah, just it’s kind of understanding where, where you’re at in that spectrum. So the second question, you know, that was asked is like, what are the pros and cons of using a tax sheltered account versus like a brokerage account?

Tim Baker: And I would just answer, this is like any other investment, right? So like, well, let me just say this, like to, in most cases, the IRA. Um, are, unless, unless it’s a self-directed IRA, you’re typically not holding Bitcoin directly in those IRAs. It wasn’t until, again, the spot Bitcoin. That’s why Ethereum, I. Came out that, you know, the, the general, you know, the broad, um, based investor had access to that.

Tim Baker: So [00:24:00] once those happened, then it really opened up kind of the three main options for tech sheltered versus brokerage account. So the tax sheltered being the tax deferred, which is traditional gross tax free. It’s text coming out. After tax or Roth is tax going in, but you know, gross, tax free, um, and then not tax coming out.

Tim Baker: And then the taxable or brokerage account, which you’re gonna pay capital gains on, right? So, you know, short-term capital gains, if it’s, you know, bought, you know, bought and sold inside of a year and then long-term capital gains if it’s, um, held for longer than a year. So, you know, with an asset that is, that is potentially, um.

Tim Baker: Very much appreciable. I think that’s a word, meaning you buy it and then your hoping that, you know, what’s Bitcoin priced at it right now? Like 93. 93,000 per per Bitcoin. You know, there are some that believe. That, you know, [00:25:00] that it could go up to 250, 400 50,000 per coin, right? So in that case, like something like a Roth would be very, very attractive, if not a traditional.

Tim Baker: And then probably last but not least, the taxable. Now the, the problem with the, the tax sheltered accounts is that for you to access that, do those dollars. And actually spend and consume them. You typically have to be 59 and a half, or there’s a slew of other exceptions, whereas a taxable account, you can access that today.

Tim Baker: Right? So I would just answer this as like any other, um, any other investment. However, if you think that Bitcoin. Will continue to go up and it’s, you view it as a very appreciable asset and something like a Roth is probably the best thing to potentially, you know, pay the tax now, but that asset grows tax free.

Tim Baker: And then when you pour it out potentially in retirement, you know, you’re not having to worry about, you know, taxes then. Um. And then the last part of the question, Tim, was what is the co [00:26:00] the most cost efficient way to buy Bitcoin? So if we go back to the, the, the two best ways to buy Bitcoin, which is the spot, Bitcoin, ET, F, or directly on a PAT platform like Robinhood, Coinbase, Kraken, Gemini, I would say that probably the most cost efficient way would be the spot, Bitcoin, ETF, the expense ratios.

Tim Baker: For those ETFs that are out there, and I think there are, I don’t know, maybe a dozen or so, they range from 0.15% to one point a half percent. So, um, in terms of expense ratio, so this is what the fund takes the et f takes to basically pay their expenses to, to be profitable. So. If you have a hundred thousand dollars in a spot, Bitcoin, e, t, F, and I would say not to have that unless you are very, very, very wealthy.

Tim Baker: Um, you know, a hundred thousand dollars if you’re [00:27:00] paid paying 15 basis points or 0.15%, that’s $150 per year versus a. On the, on the higher end, one, one and a half percent is $1,500 per year that that fund takes, um, to essentially, you know, uh, allow you to have exposure to Bitcoin. Um, if you compare that to platforms like, um, the ones I mentioned, typically the way and every platform has a different price strategy, but typically the way that they price for kind of the smaller trades of said coin is that they charge a spread.

Tim Baker: Um, so, so if you’re buy-in, typically the spread is, um, what the coin is priced at, plus maybe half a percent. And it varies from platform to platform of what you actually buy it at. Um, so if, if, if Bitcoin is, is selling at. You know, 93,000, I might be buying it for 94,000. So you, you, you, you [00:28:00] purchase it on a spread, and then you also sell it on a spread.

Tim Baker: So again, the, the, the, the counter of that is, is true, but then you’ll also also pay typically a transaction fee, or it’s kind of like a commission. So on top of the spread, you’ll pay a, a flat fee. So that can be as little as like a dollar to $2, $3, or it can also be a percentage of what you buy. Um, like I said, every platform is gonna be different.

Tim Baker: Some are gonna be a little bit better than others. Um, you can actually like pay a membership fee, you know, at, at some of ’em to like get better pricing, but you’re paying a membership fee, right? So, um, there’s lots. So I would say just in, in general, even though you’re not holding the coin directly, it’s probably more cost efficient to hold it in a spot.

Tim Baker: Bitcoin, ETF. Than paying the transaction fees of holding the coins directly and the, and the, and the spread. Um, now the greater the volume, so if you’re, if you’re trading [00:29:00] many, many thousands, if not hundreds of thousands. That decision gets, you know, it’s a little bit ’cause because the big difference between like an expense ratio, you pay like an ongoing, like every year you’re paying that with a commission or a spread fee, you pay that one time.

Tim Baker: Right? So that’s, that’s a big difference. Um, so that’s something to consider as you’re thinking about cost efficiency.

Tim Ulbrich: Tim, I’m looking at, uh, the fees for some of the spot Bitcoin ETFs, to your point, ranging from 0.15. So I’m looking at. Options like, uh, the Bitcoin MIDI trust, um, I see some in the 0.2, 0.25 range. Point two, something like the Bitwise, Bitcoin, ETF, all the way up to 1.5, the grayscale Bitcoin trust. That’s a huge range. what is it No different than any other? Range that we look at when we talked about before on the show is, is does the same apply here? That you know, you’re gonna see a big range of fees and, and there’s a question that we have to assess [00:30:00] of like, what am I

Tim Baker: Okay

Tim Ulbrich: fees?

Tim Ulbrich: Why, why such a big spread on these, on these Bitcoin

Tim Baker: It’s a good question. The gray, the grayscale, um, from what I understand has been around even before like the, the grayscale Bitcoin trust that’s priced, its, uh, ticker symbol GBTC and non-investment advice. Um, my belief is that that was around even before the spot Bitcoin ETFs. Um, so I think they changed something when the.

Tim Baker: Like those came online, um, to kind of be like in the same bucket. But those were a thing. I don’t know if they were a mutual fund before, but they were, they were a thing before, like all of these other options came on, and I’m not sure why they’re priced so high. I, I, you could make a case that these types of funds, you know, and then Grayscale came out with the Bitcoin mini trusts, which I didn’t even know.

Tim Baker: Like that was a thing, like when these first launched, you know, the, the spot [00:31:00] Bitcoin, that wasn’t, that’s a newer fund. So I think they’re trying to be more competitive in the space, and I completely honest, I don’t know what the difference is between those two. Um, you know, we, we used two of these in our portfolios.

Tim Baker: Um, and part of it is because, like the, the one company we use is because that’s is all they do. Like they’re experts in digital assets. And I’m not saying like iShares or Fidelity are not. Um, but this is, you know what, this is their main, you know, um, business. This is the remain offer. And so, um, I’m not sure, but I, I, I think you could make a case because of how specialized and really how new these are that.

Tim Baker: You know, these are a, a bargain, and I’m not saying the one and a half, but I’m saying, you know, the 0.15 to, I’d say, you know, 25 basis points. Yeah. And I think, again, it’s competitive market. There’s lots of dollars that float into ’em, especially in the, you know, when they first launched, um, [00:32:00] you know, our expense ratios.

Tim Baker: Um, you know, even with some of these in our portfolios, typically 0.0 5.06. So super competitive and I think super low cost. Um, so I think something special. Typically, the more specialized the fund, typically the higher it is. And this is pretty, pretty dang specialized. So I, I view this as, even though it’s an ongoing cost, it, it gives you all of the things that we talked about that, you know, like you don’t, if I’m, if I hold one of these, like I’m, I’m not having to worry about.

Tim Baker: Cold wallets and security and things like that. This company, and they typically have themselves, and then there’s, they, they typically partner, like I know one of these funds actually partners with Coinbase to kind of do the, the verifying and all the things that they, they have to do per, I believe the SEC, um, and everything, from what I understand from most of these funds, all of these, all of the Bitcoin that they hold is in a cold wallet, meaning it’s off the internet, you know, it’s kind of in cold [00:33:00] storage, you know, which, which really, really.

Tim Baker: Lessens the, or eliminates the ability to like hack it, you know, to like, for someone to get in and steal it. Um, so all of that kind of worry and things that I have with the coins I hold directly, I don’t have that with, with these funds. So I would say for what you get for the price, I think it’s, it’s pretty good.

Tim Baker: Um, so yep.

Tim Ulbrich: Great stuff, Tim. And again, to the listeners episodes 3 86 3 87, we did a broad overview of cryptocurrency, digital assets. Make sure to check those two episodes out. We’ll link to those in the show notes. Thanks so much for listening. Have a great rest of your week.

 

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YFP 393: Ask YFP: Growing Your Income & Saving for Kids College Savings


YFP Co-Founders, Tim Ulbrich and Tim Baker answer two listener submitted questions about growing income and saving for your child’s college education.

Episode Summary

In this episode, Tim Ulbrich, PharmD and Tim Baker, CFP tackle two listener submitted questions. Cory from Arizona seeks advice on how pharmacists, in addition to cutting expenses, can increase their income to achieve their financial goals. Amanda from Minnesota, inquires about 529 college savings plans and balancing it with other financial priorities.

Key Points from the Episode

  • [00:00] Introduction and First Question
  • [00:40] Strategies for Pharmacists to Increase Income
  • [04:40] Diversifying Income Streams
  • [06:03] Entrepreneurial Ventures and Non-Traditional Income
  • [07:31] Importance of Salary Negotiation
  • [11:51] Investing for Passive Income
  • [13:48] Next Question: Saving for Child’s Education
  • [14:47] Understanding 529 College Savings Plans
  • [19:56] Balancing Education Savings with Other Financial Goals
  • [26:30] Conclusion and Resources

Episode Highlights

“ The more specialized or niche that you are, the more attractive or the more you can, you know, kind of demand, from, like, a salary perspective.” – Tim Baker [1:19]

“I love the idea of, like, growing top line income. Right? That excites me because. If you can figure a model out you could potentially uncap your income. That’s exciting.” – Tim Baker [10:43]

“ If we can have a North star of what’s the desired output, we can then backtrack into  what do we need to be saving today based on a set of assumptions. ” – Tim Ulbrich [19:39]

Links Mentioned in Today’s Episode

Episode Transcript

Tim Ulbrich: Let’s jump into our first question, which comes from Cory in Tucson, Arizona.

Hey YFP crew, how can a pharmacist grow their income? With a high floor, low ceiling profession like ours, finding ways to increase money coming in may be of interest given there is only so much frugaling you can do. And if I frugal anymore, my wife and kids just might revolt. Thanks, and no pressure, you just might save this household.

Tim Ulbrich: Corey, thanks so much for taking time to submit your question. Tim Baker, what are your thoughts?

Tim Baker: Yeah, so I was thinking about this from the pharmacist angle. Versus like, how can I make additional money where you could sell things, recycle, donate plasma? Anybody can do that. But I’m really thinking about this from the pharmacist angle.

I kind of think about it. in really two parts, the first part being where my feet [00:01:00] are and what I’m currently doing. And then what is outside of what I’m currently doing? You know, if we talk about diversifying your income streams or exploring entrepreneurial ventures. So I think the first part is, if you’re a pharmacist and XYZ organization, you know, and again, this is going to be dependent.

And I realized that. The more specialized or niche that you are, the more attractive or the more you can, you know, kind of demand, from, like, a salary perspective, we know this through, like, board certification and things like that, Tim. So it could be that right.

And, you know, our niche is working with pharmacists on their financial plan. If I go back in time and, you know, I commented on your posts on LinkedIn about you, shifting away from academia to go to YFP. And I was thinking about my own journey. And like, when I was launching script financial, which is now YFP, you know, I could have said, Hey, it’s Baker financial advisors, but I don’t think that would really speak to anybody except for myself.

I think being niched, in [00:02:00] any type of profession can be really helpful, for your career. And I think about this, and we’ll talk about a little bit in the 2nd part of this question of, building, a brand when I think of, oncology and pharmacist, I think of, a particular person.

Kelly Carlstrom, if I think of, geriatrics, I think of a particular person functional medicine. I think of a particular person. If you can distinguish yourself, as the, thought leader in that particular niche. That can lead to other, opportunities to make income.

So it could be specialization. It could be pursuing leadership positions or additional opportunities within your organization, to make additional income. And I think the other probably more obvious thing, Tim, that a lot of pharmacists, maybe aren’t great at is just negotiation.

Right? So If you kind of look at a traditional financial plan, it’s kind of where you’re at. What’s the balance sheet? Where are we going goal set in it’s fundamentals like a savings plan, cashflow and budget and [00:03:00] debt. It’s investment retirement, looking for more of the longterm stuff.

It’s wealth protection, insurance planning, and a state planning. That’s essentially a financial plan. But one of the things early on, in my career at script and then YFP was. Really talking about sour negotiation. And I think what I was seeing that there was a lot of meat left on the bone with regard to this transaction, so to speak.

So, you know, I would talk to a pharmacist and then say, Hey, good news, Tim. I just got a new job or. Whatever it is, and I would say, great, like, what did you counter and it would be like crickets, right? And I think the response that I would typically get is like, I didn’t, I didn’t count.

I was just happy to have a job. And I’m like, I totally get that. I totally get that, but I think having some tools to be able to advocate for yourself in those moments. And it’s not just when you change jobs, I would argue that you should have those conversations.

Really, at a minimum, [00:04:00] anytime that you’re talking about your review, if you get reviewed, twice a year, once a year, that type of thing. I think if you can develop some of those tools to advocate for yourself, you put yourself. In a better situation to grow your income as per the question, and it’s often a missed opportunity where it’s kind of uncomfortable.

Maybe it’s a little yuck that we feel greedy that we don’t necessarily. Put ourselves in a position to make the most that we can. So from the, where are we at perspective, you know, pursuing leadership positions, potentially specialize in, and negotiating your salary. Those are 3 things that if I’m a pharmacist, I’m saying, hey, those things I should do.

 I think the other. Two things, diversifying income stream, entrepreneurial stuff there. I kind of lump those together. So it could be, you know, part time or per diem work. I know I talked to some pharmacists. They’re like, I want to earn income. But then when I’m like, well, why don’t you pick up an extra shift?

They’re like, they want to strangle me. And I understand that. But I also would say here, Tim, I [00:05:00] think some of the trap that pharmacists fall into is. Any additional income has to be on par with what I make as a pharmacist, and I would push back on that. So as an example, if you make 70 an hour as a pharmacist, like any additional money that you make has to kind of be, on par with that.

And I think that doesn’t necessarily play right. So I would put that as and again, it’s a trade off, right? 

So I think you got to have to figure that out and what’s a good number there. So it could be part time or per diem work. It could be consultant. It could be MTM. It could be, you know, just working with long term care facilities or clinics, medical writing.

We’ve had clients that have been really successful at that could be teaching or precept in freelance work that kind of falls into the medical writing or drug information resources, that type of thing. So I do think that there’s lots of opportunities out there. It’s just matter of, like, [00:06:00] finding them and kind of getting into a rhythm of, okay, this is worth my time or it’s not, 

other things that could be something like, hey, you take a bold move and you open your own pharmacy. I think there’s a lot of innovation to be had there. I know there’s a lot of pharmacies that are open and they’re kind of operating outside of insurance. It could be to start a consultant business.

It could be to develop a product or service. I know we’ve talked to some of these fellowship programs across the country, and we’ve seen pharmacists that in fellowship, are developing a product, that is really exciting. And it could be, something that’s more non traditional whether it’s building a personal brand, content creation, trying to, start a blog, monetize it, a YouTube channel.

Public speaking, which I know can be somewhat tough. Sometimes, we give that away for free. And that’s, the system in which we’re in, or writing a book. Obviously, you have some experience with that creating courses. I think there’s a lot of things out there. To potentially do, and try and I think the goal here is to figure out what is the goal for this additional income is to pay down a debt. Is [00:07:00] it to retire early?

Is it fire? Those types of things. And if you can kind of align again the things that you’re passionate about, and monetize it, that’s great. But that doesn’t always like work out, right? We know that sometimes we just got to pay the bills and that’s the focus. So, again, thinking about this from a pharmacy perspective, that’s kind of where I took it.

But there’s a million other ways. I think you know that you could potentially earn additional income. That’s kind of more or less non pharmacy related.

Tim Ulbrich: And I’m glad you took that approach to him, right? Because, you know, if we open up the doors beyond pharmacy, of course, we get into things like real estate, right. And other types of opportunities, which are certainly possibilities, but I also love that you asked a really important question at the end of your answer there, which is like, what are we trying to achieve?

What are we trying to accomplish? Because I think as Corey alluded to in his question, there can be a frugality fatigue that can happen. You know, over time, we often talk about cutting expenses, cutting expenses, cutting expenses, and certainly that can help us as we’re trying to achieve any goal, whether that [00:08:00] be putting extra towards savings, whether that be paying down debt.

But there’s also the income side of the equation, which is what we’re talking about here. And of course you put both those together and really good things, you know, start to happen, but what is the goal? What are we trying to accomplish? And I think in this discussion. Because you bring up a really interesting point that, you know, when you talk to pharmacists that are looking for extra income, it’s like, Hey, how many professions are there where you’re making 70 bucks an hour, you can just go pick up extra shifts and they’re like, Tim, I don’t want to go pick up extra shifts.

And it’s interesting because then it’s like, all right, tell me more. And they’re spending 

hours upon hours upon hours and not earning nearly what they could in picking up extra shifts. And, and I say that not out of judgment out of that, but out of, you know, What that tells me is, well, maybe there’s something here just beyond the dollars and cents, like, is there an interest or a passion, or, you know, I really just want to kind of tap into a different creative side of this work that maybe I’m not getting or feeling in my everyday work.

And, and all of [00:09:00] a sudden the conversation changes a little bit of like, sure, there’s a financial aspect, but maybe there’s also some type of, you know, purpose or creativity outlet or something of what are we trying to accomplish? What are we trying to do? Through earning additional income and diversifying these streams.

Tim Baker: Yeah. I, I, I think, uh, another, you know, point to that. Cause if people talk about, oh, you can get paid to do your passion. That’s a great thing. One of my first entrepreneurial endeavors was like, I was second grade and I got really big into like drawing different Garfield and things like that.

And I started a shop and I had all these orders. And then I got behind track, you know, I was charging like a quarter for every drawing. And then it became like a job. I’m under this deadline to get these drawings out. And I’m like, man, I hate Garfield. I don’t like Bart Simpson anymore.

I kind of became like a passion of mine kind of became a job. And that was like, you know, a kind of a core memory of mine of like, man, I don’t want to do something like that again. So that it can have negative consequences, but [00:10:00] yeah, I mean, like. I think a lot of people are like, yeah, but what about, you know, what about my student loans?

You know, I have to make additional money to get through that. But I’m like, well, maybe there’s a different path, you know, maybe, looking at, you know, where you work and you can do something similar from a for profit to a nonprofit that kind of allows you to work smarter, not harder. 

That plays. So, you know, there’s probably a question. We probably need to go a question or 2 or 3 deeper on Corey’s question again. If we were in kind of a client planner type of environment to kind of get to the core of that, but as an entrepreneur, I love the idea. You know, everyone talks about, oh, we have to cut expenses.

I love the idea of, like, growing top line income. Right? That excites me because. If you can figure a model out you could potentially uncap your income. That’s exciting. But often takes a lot of work in iteration to figure out what that is. If we’re talking about it from a business perspective.

Tim Ulbrich: a few resources to that we have in this area that we’ll link to in the show notes. I want to [00:11:00] make sure folks are aware and they can dig deeper. We’ve got a blog post that goes back a while now. 19 ways that pharmacists can make some extra money just to get the ideas going. On episode three 88 recently, I interviewed four pharmacist entrepreneurs.

That are doing very different things and a couple of them, still working, full time in their pharmacy jobs while they pursue their businesses, wide array of different types of experiences and how they have monetized their clinical expertise. So check out that interview. I think it can stimulate some ideas.

And then finally, we’ve talked about salary negotiation before on this show. We’ll link to that. I think that’s an incredible resource and you articulated well. It’s a skill that often we don’t have, maybe aren’t comfortable with, but that might move the needle more than anything we’re talking about here.

Especially when we think about the compound effect of that.

Tim Baker: yeah, and probably something to also interject him, you know, obviously, I’m a financial planner. So maybe someone’s like sitting here listening and thinking, like, why isn’t him talking about like, invest in for like passive [00:12:00] income? 

But sometimes I talk to prospective clients that are like, hey, I want to invest for passive income. And I need it like next year and what I would say is, is that typically when you’re investing for income, you’re typically doing that over a lifetime of investing where you’re, you know, we will take the 4 percent role.

Right? If you manage to accumulate a million dollars in an investment account from a retirement planning perspective, the rule of thumb is, if you take 4 percent of that or 40, 000, that, portfolio can. Last for 20, 30 years or longer. In that case, it’s less about appreciation of stock mutual fund ETF prices and more about safety in principle. So you’re not taking as much risk. The income, the dividends, the interest payments are creating that 4 percent of that 40, 000 for you to live off of.

So obviously it takes time to do that. Now there are certain [00:13:00] examples. Where it doesn’t take that long, you know, it could be closely held stock or something like that. And those are, certain situations where people have access to buying into a privately held company or a small company, things like that.

But typically, you know, a, hey, I want to invest for passive income is a long term play. It’s, you know, I’m trying to grow these dollars as much as possible to then eventually turn that faucet on and live off of that. And I’m not saying people can’t do that in a shorter time frame, but typically, you’re doing this in conjunction with putting money into your 401k, your IRAs, other things, and then also, looking at a passive play.

That’s typically, decades , in the making 

Tim Ulbrich: Good stuff. Alright, let’s move on to our next question, which comes from Amanda from Brainerd, 

Minnesota. 

Amanda: Hi, YFP. My name is Amanda and I’m from Brainerd, Minnesota. My husband and I welcomed our first child this year, and we are wondering what we need to know about 529 [00:14:00] college savings plans, and if there are good strategies for saving for our child’s education while still meeting our other financial goals, like saving for retirement and paying off our mortgage.

Tim Baker: I kind of would start with the question is like, what’s the goal? Right? So, you know, oftentimes when I ask this question, it’s like, I don’t really know, or we don’t really have a goal. So, is it hey, I want to get my kid through 2 years of school, 4 years of school, you know, is it masters doctorate is a public private in state out of state.

I think probably kicking the tires on, what that looks like is important. And, I think there are a lot of people that are apprehensive of 529 plan. So, just to kind of define what a 529 plan, it’s a tax advantage savings plan design to encourage savings for education costs.

There’s typically 2 types. You have a college savings plan, which is an investment account that grows tax deferred with withdrawals that are tax [00:15:00] free for qualified expenses. And there’s a slew of qualified expenses that were more narrow when they first came out that are become more broad, as years go on.

And I think it’s going to continue to do that. You also have, a prepaid tuition plan, which is typically a lot less popular, but this allows you to prepay tuition at today’s rates for, participating schools for the future. And, you know, there’s pros and cons, of each, but I think typically people go into, the college savings and they’re more familiar and comfortable with, okay, I’m saving for education, 

retirement in my 401k. So the big draw here is the tax advantages. So at the federal level, earnings grow tax deferred and withdrawals are tax free for qualified education expenses at the state level. Many states offered tax deductions or credits for contributions if you use your state’s plans.

And there is a slew of, you know, states that offer tax benefits for, you know, using their own plans, their states [00:16:00] that doesn’t matter. You can use any plan and then there’s states that don’t have income tax. So you don’t really get a benefit. And then there’s states that are kind of more, um, we don’t care if you.

Put money in a 529, you don’t get any benefit looking at you, California, Delaware, Hawaii, Kentucky, North Carolina. So the thing about this is like, you get the benefit at the state level, kind of on the front end and then on the back end, you typically get the benefit at the state and the federal level.

I think what often happens is that people let the tax advantages kind of drive their contribution amounts. And it’s not necessarily a terrible thing, but it can be, especially like, if you’re over saving, or potentially under saving. So I think, again, looking at. What is the goal? We’ve talked about previously, Tim, the one third role and that’s kind of what my family does.

What Shane I do for our 3 kids. I think that’s important to know. We talked, qualified education expenses, tuition fees, room, board, books, supplies, equipment, you can use it for student loan repayments, apprenticeship costs. I think the other thing that I would say is not all 529s are [00:17:00] created equal.

Thank you. So research and plans, we did this with Ohio one where we’re like, Hey, it’s, rated at one of the better plans in the country. But if I compare that to like, are like how we manage money at YFP, it’s more expensive, right? Um, so you want to compare plans from different States, depending on where you’re resident, what plan to use.

You want to look for plans that have low administrative and investment fees. Um, you know, that have a kind of a diverse investment, options, understand what the contribution limits and when you get the benefit, you know, being able to understand who owns the account. So like I have three accounts for my three kids.

I am the account owner and they, the three of them are beneficiaries. You can change beneficiaries. So if Olivia decides not to go to college, I can use that money for Liam. or Zoe. In the future, you know, I don’t, I think sometimes people get worried that like, if there isn’t an out, what do I use that for?

So like, I don’t have a problem with, you know, given that to a relative, a grandkid, that type of thing. So, but at the minute, at the end of the day, like if you decide to get the money out, it’s a penalty and you pay tax, right. So it’s not the end of the world, I think for the most part, if you think your child is going to go through [00:18:00] some type of training post high school, it’s a good vehicle to use.

Um, You know, obviously there’s risks, you know, when, when, anytime you invest any money, you know, there’s no guarantee that you’re going to get a return, understanding, when you get penalized for pulling out, early and what that looks like. So those would be the highlights Tim, in terms of a 529, maybe a coin flip is maybe a little too much, but it’s typically 50 50 where people are like, yeah, I’m all in on a 529 and there’s probably another 50 percent that are apprehensive. So again, I think asking those questions of, like, what’s the goal? You know, like, what do how do you view this money?

And going from there is really important, but there’s a lot going on here, right? In terms of, the type of plan, how you invest it. How does that what’s the glide path of those investments over time? What are the fees? Multiple kids, you know, there’s a lot of new rules with, you being able to transfer it over to a Roth in the future and all those things.

So there’s quite a bit at play here with regard to this decision, but I think it is a valuable bucket to use. If you [00:19:00] have, a solid belief that your child is going to do some type of, training or education post high school.

Tim Ulbrich: Yeah, let me throw out a couple of resources, Tim, for those listening that want to dig deeper. And then I’ve got a couple other thoughts I want to get your input on. So we have a blog post, seven things to consider before starting a five to nine plan, that goes in a little bit more depth along what Tim was saying, and then not too long ago, we did an episode three 68, how much is enough when it comes to kids college.

Right. So we think about that question often in terms of retirement. I don’t know if we think about that same question when we think about kids college and to your point about what’s the goal? You know, you mentioned the third, a third, a third rule. We talk about that in that episode, but if we can have a North star of what’s the desired output, we can then backtrack into what do we need to be saving today based on a set of assumptions.

And that’s helpful if we back up though, just a minute, you know, to my experience and there’s no judgment, out there because I felt this myself is. When people go through their own journey of incurring a lot of student loan debt and the pain that can come with that, I think that leads [00:20:00] to a tendency to want to maybe either over save or not prioritize these in the way that maybe objectively you would, right?

And so I think intent is good, but, you know, if I went through my own journeys, I did a paying off a couple hundred thousand dollars of debt, naturally, I’m like, I don’t want my kids to ever have to go through that good intent.

Tim Baker: The other way, too, where it’s like, hey, I

Tim Ulbrich: No, you’re going to go,

Tim Baker: Yeah, I’ve seen that. And that might be a

Tim Ulbrich: that’s a

Tim Baker: pretty even split as well. You know, it’s like, hey, it’s just it’s kind of the rite of passage. But yeah, I’ve seen it both ways where it’s like, hey, I don’t want my child ever have to experience that.

But then also, like, I had to so. 

Tim Ulbrich: Yeah. And I think where this can come into context with planning is we can try to more objectively look at this. So for example, if someone’s listening and then they fall onto the side of, Hey, I went through this. I don’t want my kid to go through this. You know, we might then have a tendency to put some of these steps out of order.

We think about some of the baby steps of the financial plan, getting the emergency fund set up, making sure we eliminate any high interest rate, credit card debt. Making sure we’ve got the base of [00:21:00] our own debt repayment plan. Not to say we have to be debt free, but at least have the plan of where we’re going, making sure we’ve got a base of our own investing strategy and thinking about the future.

And so does the 529, if it fits in, depending on your goals and vision for your own kids, then the question is where, right? Where does it fit in with other things? 

Tim Baker: Yeah, and I think what you’re alluded to is this need for some people, you know, I’ve gone through that debt journey to overcorrect, in the face of their own plan. Right? And, you know, what a financial planner will say, eloquently will be like, hey, Tim, you can take a student loan or your child can take a student loan.

You can’t take a retirement loan. So there could be a world where you. Forego your own retirement and you’re really working on the 5 29 and then when they go to college or you’re using that and kind of the income that you’re earning at that time and then you’re impoverished in retirement and your kids have to take care of you on [00:22:00] the back end instead.

So again, that’s kind of an extreme example, but yeah, I think again, we always talk about intention here, right? And I think sometimes, you know, we talk about this with invest, invest in, sometimes emotions can really, wreak habit in a well laid plan. And, you know, I think emotions are important. 

You know, hey, I would sleep a lot better at night if our emergency fund was X instead of Y do it. Right? I think though that, education is 1 of those gray areas where it’s like, I know I should be doing something here, but I don’t really know what it is and dependent on my own experience, I’m going to overcorrect or not address it at all.

And you have the opportunity to do so and do it in a meaningful way. Again, I think it’s one of those parts of your financial plan that is important. And maybe, you know, it goes along the, hey, put your mask on first before you put on your child’s mask, the airplane example. But it’s [00:23:00] worthy of examination.

Tim Ulbrich: Yeah. In my experience, Tim tells me that the emotions in the math, which I firmly agree are both important. They’re not independent variables, right? So, you know, when, when you took, me through the kids college savings calculator, answering the question, how much is enough when you can get to the granularity, sure.

It’s based on a set of assumptions and those assumptions can change, will change potentially, just like we talked about with retirement, but when I can look at it and say, okay, I’ve got a five year old, A nine year old, a 12 year old, a 13 year old. Here’s what we have for each of them saved today based on let’s assume, you know, four year in state public tuition.

We’ve got a great university in our backyard here. Go Buckeyes. Um, so we’ll, we’ll use that for assumptions and, and we’ll look at certain, savings rate of returns and other things like, and we’d start to distill it down to, okay, we want to pay a third. Are we ahead? Are we behind? Are we on track?

And then what would it mean monthly? To get on track with where we want to be like that type of analysis [00:24:00] can inform the emotions. Meaning that, you know, I can be looking at this thinking kids college. I don’t know. We’re just kind of throwing money at it. I know we need to be saving.

Are we there? Are we not there? Like that’s unsettling. And I think the math can help inform that

Tim Baker: yeah, it’s the same kind of analysis that we go through with, you know, um, retirement, you know, this is a little bit more of a tighter schedule because you’re typically looking at 18 ish years versus like a 30 year career. But yeah, it’s the same thing. And what I always kind of. You know, I, I, I go back to my first job and, you know, in financial planning, you know, we would say, Hey, client, Hey, Tim, you need 2.

65 million for retirement. And then we kind of go on to the next thing and you could literally see, their eyes gloss over because if you’re 10 plus years from retirement. It doesn’t connect, so going through that analysis, whether it’s retirement or education planning, it could be incremental things like, Hey, save 75 more for this kid and you should be fine.

Put this lump sum that you have. And then [00:25:00] save 50 more and you’d be okay. Right. Or, let’s tweak some things here. You’re really conservatively, invested right now and you still have. 12 years until they go to like, let’s modify that. So it’s taken those, and this is just financial planning and, it’s taken those large problems and then basically, breaking it down to what can I be doing today, this month to affect change.

And again, like, it’s not always going to be perfect, but I think with education planning in particular, like. If I, you know, if I can get to, like, if my full, solution is to pay a third to do the 33 percent role and I’m at, you know, 29%, maybe I have to reach into my pocket a little bit more in, like, when, when my kid goes to college, or they have to take a little bit of a more of a student loan.

But like, it’s, it’s we’re right there. Right? And I think a lot of people, they throw up their hands are like, ah, this is too big of a problem. And they just. Yeah. Keep on keeping on and they don’t really, again, they don’t analyze where they’re at and, you know, where they need to go.

Tim Ulbrich: Yeah, I think as we talk about all the time, it’s taking these unanswered questions that are constantly swirling in our mind, right? These unclosed loops [00:26:00] that are causing some of the stress anxiety, getting them written down on paper and then developing a plan. And sometimes that plan means to what you said earlier, we only have so much money in a given month, right?

So it might be that, Hey, we wish we could do more than we can do in the moment. But that clarity can come from. All right. We’ve thought about these things. We’ve written them down. We prioritize them. And now we’re beginning to work towards them. A lot of momentum can really come from that. 

Tim Baker: Right. 

Tim Ulbrich: Great stuff. Again, thank you to Corey and Amanda for taking time to submit your questions. And if you have a question, we’d love to hear from you. We can address it on an upcoming show. You can send us an email info at yourfinancialpharmacist. com. You can also. Submit and record your question by going to yourfinancialpharmacist.

com forward slash ask YFP. And if you’re thinking about strategies, whether it’s to grow your income or save for kids colleges, we talked about on this episode, perhaps you’re thinking about, are you on track for retirement, maybe getting your estate planning documents buttoned up as I just heard from someone this week, or building a more tax efficient financial plan at YFP, we have a team of the only certified financial planners that work with pharmacist households all across the country.

We would love to have a conversation. With you where you can learn more about our services. We can learn more about your situation and determine if there’s a good fit to do that. You can book [00:27:00] a discovery call by going to yourfinancialpharmacist. com. And you’ll see on our homepage and option to schedule that call.

An important reminder that this podcast is provided for informational purposes only. And is not intended to provide and should not be relied on for investment or any other advice, information to the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial product.

For more information on this, you can visit yourfinancialpharmacist.com/disclaimer. Thanks so much for listening. Have a great rest of your week.

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YFP 368: How Much is Enough for Kids College?


Tim Baker helps parents navigate saving for their child’s college education, from projecting costs and balancing goals to 529 plans.  

This episode is brought to you by First Horizon.

Episode Summary

Most parents desire to contribute toward their child’s college tuition; however, knowing how much to save and plan for can be a bit of a moving target. How much is enough to save for college?

Tim Baker, YFP Co-Founder and Director of Financial Planning, lays out the financial roadmap to help parents navigate the complexities of college savings. Tim emphasizes the importance of prioritizing college savings, projecting future costs, and balancing these savings with other financial goals. He also breaks down the benefits of starting early and making consistent contributions to make the goal more attainable.

Learn more about education savings options, including 529 plans and Coverdale education savings accounts. Tim also shares the ⅓ rule for funding college education that listeners may find make the reality of saving for their child’s future education more attainable. 

This episode is brought to you by First Horizon.

About Today’s Guest

Tim Baker is the Co-Founder and Director of Financial Planning at Your Financial Pharmacist. Founded in 2015, YFP is a fee-only financial planning firm and connects with the YFP community of 12,000+ pharmacy professionals via the Your Financial Pharmacist Podcast podcast, blog, website resources and speaking engagements. 

Tim attended the United States Military Academy majoring in International Relations and branching Armor. After his military career, he worked as a logistician with a major retailer and a construction company. After much deliberation, Tim decided to make a pivot in his career and joined a small independent financial planning firm in 2012. In 2016, he launched his own financial planning firm Script Financial and in 2019 merged with Your Financial Pharmacist. Tim now lives in Columbus, Ohio with his wife (Shay), three kids (Olivia, Liam and Zoe), and dog (Benji).

Key Points from the Episode

  • Saving for kids’ college, prioritizing investments, and mortgage options for pharmacists. [0:00]
  • Saving for kids’ college, varying opinions on approach. [2:13]
  • Prioritizing investing for kids college amidst other financial goals. [6:05]
  • Financial planning for education costs, including 529 plans and other options. [11:13]
  • Education savings options for kids, including 529 plans and UTMA/Coverdale accounts. [15:41]
  • 529 college savings plans with potential tax benefits and flexibility. [21:08]
  • Saving for college, including 1/3 rule and assumptions. [25:23]
  • Saving for college using 1/3 rule and financial planning tools. [30:02]
  • College savings for a 9-year-old girl, with current balance and projected needs. [34:39]
  • Saving for children’s education expenses. [38:39]
  • Saving for college and financial planning with a certified financial planner. [42:56]

Episode Highlights

“So your retirement should come before your children’s college tuition. There’s no financial aid in retirement, and there’s still a good amount of that, you know, for your kid’s schooling.” – Tim Baker [9:54]

“The further we go in the future, the more uncertainty. But we can make some educated guesses and conjectures. Again, it goes back to the whole idea of, it’s more about planning than the plan, because life happens, things change.” – Tim Baker [13:36]

“Saving for your kid’s college is just like your retirement. It’s like when I say to clients, hey, you need $2 million to retire, you are looking at me like I have 2 million heads. It’s a big number, way in the future. The same thing holds true with education. It just feels more than what it actually is.” – Tim Baker [43:01]

Links Mentioned in Today’s Episode

Episode Transcript

Tim Ulbrich  00:00

Hey everybody, Tim Ulbrich here and thank you for listening to the YFP Podcast where each week we strive to inspire and encourage you on your path towards achieving financial freedom. This week, Tim Baker and I revisit saving for kids college, a topic that is top of mind for both of us in our own financial plans. Before we answer the question how much is enough when it comes to saving for kids college, we discussed the priority for investing, including where kids college savings fits among other goals, and the differences between common vehicles that are used for saving for kids college. Let’s hear a message from today’s sponsor, First Horizon, and then we’ll jump in our discussion of how much is enough when it comes to saving for kids college. 

Tim Ulbrich  00:40

Does saving 20% for a down payment on a home feels like an uphill battle?  It’s no secret that pharmacists have a lot of competing financial priorities, including high student loan debt, meaning that saving 20% for a down payment on a home may take years. For several years now we’ve been partnering with First Horizon, who offers a professional home loan option AKA a doctor or pharmacist loan that requires a 3% downpayment for a single family home or a townhome. For first time homebuyers, has no PMI and offers a 30 year fixed rate mortgage on home loans up to $766,550 in most areas. The pharmacist home loan is available in all states except Alaska and Hawaii, and can be used to purchase condos as well. However, rates may be higher and a condo review has to be completed. While I’ve personally worked with First Horizon before and had a great experience with Tony and his team,  don’t just take it from me. Here’s what Emily from Prattville, Alabama had to say about her experience with First Horizon: “Clear communication and excellent guidance from Gail and Cindy throughout the entire process. I greatly appreciated the fact that everything was digital, because I’m allergic to paper, the ability to upload inside everything digitally made the process very efficient, which I prefer. This was by far the best mortgage process I have experienced. This is my seventh when counting refinances.” So to check out the requirements for First Horizon’s pharmacist home loan and to start the pre-approval process, visit yourfinancialpharmacist.com/home-loan. Again, that’s yourfinancialpharmacists.com/ home-loan. 

Tim Ulbrich  02:13

Tim, it’s good to have you back on the show.

Tim Baker  02:15

Good to be back, Tim, how’s it going?

Tim Ulbrich  02:16

It is going well, this is gonna be a fun one. We’re discussing a topic that is top of mind for both of us in our own financial plans. I’ve got four kids 12 and under, you’ve got three kids nine and under. And we’re in that prime window where saving for kids college is getting real, right? We look at our older children and say, Hey, that’s not too far off. And it really begs the question, are we on track? And I don’t know about you. But for me, it feels like early on when the boys were much younger, younger it was this concept of hey, let’s start putting money away. And we’ll worry about that later. Worried about that later is right now.

Tim Baker  02:55

Yeah, life comes at you fast, right, Tim? So, you know, a lot of a lot of people, you know, they might say, hey, I’ll get to that, or, you know, I talk to prospective clients all the time and it’s like, yeah, I really want to, I really want to put money away for my kids college. And I’ve been thinking about it for a while. And, you know, I’m like, Well, how old is your son or daughter? And it’s like, oh, they’re eight? You know, so how long did you think about this? For eight years. So it is one of those things that sometimes that’s true, that holds true for retirement too, Tim so, you know, it’s it’s one of those things where the sooner you bet, you know, the sooner you do it, the better. You know, it makes, it makes the amount that you are, you know, your what you’re trying to do easier to kind of achieve. So, yeah, we’re right in the thick of it and and hoping that, you know, the cost of college, you know, doesn’t continue to kind of inflate at what it has in the past. But you know, no control over that, obviously.

Tim Ulbrich  03:48

Yeah, and we’re going to talk about that specifically because when we get to the part of trying to determine how much is enough, we got to make some assumptions on what is going to be the cost of college into the future. Now for those that are listening, that have kids that are butting up against college, we know what those numbers are going to be or likely be. But for those that have kids that are much, much younger, trying to project out 15, 16, 17 years, what college costs may look like, can certainly be more more challenging. Tim, I want to get your perspective on what seems to be a varying philosophy around saving for kids college. I recently published a poll on LinkedIn asking individuals how are you approaching saving for kids college and there was over 260 people that responded and here Here are the results. 30% said that they plan to fully fund their kids college. 61% said they plan to partially fund and just shy of 10% said you know what? They’re on their own. Kids got to figure it out on their own. So when you hear that and interactions you’ve had with clients and anything surprised you there?

Tim Baker  04:54

Um, I am surprised, I am a little surprised. I feel like, I feel like the 60% of like the partial would have been a lot more. Like that would have been closer to like 80. And they may be like 10 and 10. On, you know, the they’re on their own, or I’m going to do 100%. So that that’s probably the only thing. Because yeah, I talk to clients all the time. And it’s, it’s, it’s, it’s those three things. It’s like, Hey, I went through this. So my kid has to go through it, I went through this, I never want my kid to go through it. And then that in between of like, I want to provide something but I just don’t know what that is. So little surprised by the percentages, honestly, how big of a sample size was that?

Tim Ulbrich  05:37

Over 260 people. So pretty large group that responded. And there was a couple of comments that I think really, you know, drive home some of the differing opinions, and everyone obviously is there on their own journey. One person said, quote, they want to partially fund they referring to the kids, they need to have skin in the game. I’ve also heard of parents giving their kids cash directly for any scholarships they get. That’s a neat way of incentivizing working hard for them. Someone else said, Hey, would love to fully fund, but also need to look at my future and retirement. We’ll talk about that here in a little bit as it relates to the priority of investing, and how we want to think about kids college among other competing financial goals. So we’re going to break today’s discussion into three parts. Part one is going to be just that we’ll talk about the priority of investing, where might kids college fit into the broader part of the financial plan? Certainly, this is not investing advice, but some considerations there. Part two, we’ll talk about the common vehicles. And we’ll spend the most time on the 529 plan. And then part three will really spend time answering the question how much is enough. And I’m excited about that part because this is a piece that we haven’t drilled down into the details as much as the other two and for reference will link to these in the show notes. But we have talked about kids college previously, on the podcast, episode 195, we talked about how to save for your child’s education, and Episode 211, we talked about the ins and outs of the 529 college savings plan. So again, we’ll link to those make sure to check those out for more information. Tim, let’s start with that first part, which is the priority of investing. And I’m gonna go back to the comment that you made that, you know, for some people, especially when they came out with six figures or more of debt, you know, I’m thinking about my own journey of a couple $100,000 of debt, there can be a reaction of, hey, I never want my child to have to go through that either at all or something along those lines. And therefore, I’m going to start shoveling money into kids college savings accounts as early as possible. And not necessarily think about, you know, where that might lie in context with my own retirement savings or emergency funds or other parts of the financial goal. So it begs this question of where does kids college savings fit as a priority as we think about other investment vehicles or options? So what are your thoughts on that?

Tim Baker  07:56

Yeah, so, you know, I’ve had these conversations where people are like, I really want to get started and, you know, save for Jonny’s education or whatever. But you know, we’re looking at $25,000 in credit card debt, right. So not something that should be a high priority. We have to get through the consumer debt. So obviously, like, if we talk about the baby steps, we want to make sure that consumer debts in check, Tim, we want to make sure we have a proper emergency fund. Still a lot of people don’t, you know, come to the table with that. And that’s something that we have to work on. And what is a proper emergency fund? Where should we put it? It’s not an investment. Those that are based on I think, are the the big things, I’d be looking at it. You know, I think beyond that, you know, I think what most people would agree is shift into retirement and looking at what that looks like, you know, do we have a match? At least get the match? And then I think based on that, and again, I would be doing a retirement projection and a nest egg projection, I’d want to make sure that like some of the wealth protection stuff is sure enough, like, do you have the proper life insurance disability, that we have the state planning documents in place, all that kind of stuff, to then get back into the conversation of okay, what’s the next step after this? So a lot of people again, and the analogy that I like to use is like when you’re on the plane, and, you know, they say, Hey, if we lose cabin pressure and the mask come from, you know, that’s a really crappy situation, that’s not going to be fun. But put your mask on first, right? Put your mask on first before you you, you know, handle your your kids. So that’s going to be the same when we’re talking about retirement and an education plan. So your retirement should be should come before your children’s college tuition. There’s no financial aid in retirement, and there’s still a good amount of that, you know, for your kid’s schooling. We might get to a point Tim, where we’re not going to see the money flow as much for you know, for college loans and financial aid and things like that could be a real thing. reckoning that’s happening. However, I think there will always be alternatives, whether that That’s, you know, community college or trade schools are things that you can do that or at least get started. So that, to me is the big thing. I think when you get into the nuance of, of retirement, you know, the question I would I would ask to that person that clients like, are we on track for retirement? And if we are, obviously, like, let the money flow from an education perspective. If we’re not, that’s where I would want to, you know, and I think what a lot of people to Tim, they, what they do is, it’s not even really a question about what bucket they should fill. Part of it, part of what drives us is the tax benefits related something like a 529. So in Ohio, you can get up to $4,000 per student, regardless of filing status that is per year off of your Ohio State income tax. So a lot of people see that be like, boom, that’s what I’m going to do, or I want to get a portion of that without kind of doing the ABCs of where that should go. So I think outside of the match, I would say get the match. But then there’s probably a little bit more nuance in terms of like, okay, how do we then go from here, in terms of, are we putting more into the retirement? Are we are we putting more, are we starting to kind of, you know, flow monies into education planning.

Tim Ulbrich  11:13

Yeah. And what you’re sharing right there to me is such a good example of the benefit, one of the benefits of comprehensive financial planning. Because at the end of the day, we only have so much income to work with, hopefully, we can increase that income. We can only cut our expenses so much, and we’ve got a certain amount of cash flow, that we’re going to be able to assign to different financial goals, right. That could be building up an emergency fund that could be paying down debt, that could be a real estate purchase, that could be put money in a 529, that could be retirement savings for the future. And so we’re left with this decision of, hey, I’ve got all these balls potentially, to juggle in the air. How am I going to do that? And then what order? Second to it depends, probably the most common thing that we say on this podcast is you can’t make decisions in a silo when it comes to the financial plan. We’ve got to be able to take a step back and look at all the different factors so that we can see, okay, well, if I pull this lever, then what’s the impact of this part of the plan? Right? Because by pulling that driver putting money in a 529, that means we’re not probably doing something else. And are we okay with that or not? Okay with that. And if we project that out, what does that mean, for us in terms of achieving our financial goals? The other thing I would mention, and I know this episode is not focused on what we think is the future of higher ed. But because I spent over a decade in that space, I feel the need to comment, like, when you talk about something like the contraction, potentially, of access to financial aid and student loans, man, you’ve got to believe that if that were to happen in the future, there would be a significant shift in the business model of higher education at large, right? It’s already on the brink, I would say of some level of disruption, if that’s not already happening. And if there’s less resource going into the system, what does that mean, in terms of what the actual infrastructure looks like? The degree offerings, the supply and demand. So I think that is a relevant comment because one of the lingering questions behind all of this, especially for those very, very young kids is, what will this model look like in 15 to 20 years? What will the cost be? And that we need to know, or at least project out to some level to be able to do some assumptions? 

Tim Baker  13:20

And sometimes with uncertainty, Tim, like, we can do one of two things, you know, it’s like, Well, I haven’t seen people do this with retirement, it’s like, I don’t really even know. So they maybe they over save? Or perhaps they just kind of throw their hands up there. And like, okay, whatever I have, I have. So, you know, it is a little bit you know, the further we go in the future, the more uncertainty we have, again, we can make, make some educated guesses and, and conjecture, but again, it goes back to the whole idea of, you know, you want to be you want to, it’s more about planning than the plan, because life happens, things change. And the reason I’m kind of, you know, distracted, like, I’m looking at my numbers, Tim, and we’ll go through this later, but like the numbers for like, Olivia is four year like, they went up from the last time I talked to talked about it. So I’m like, Oh, I gotta update these numbers, because they’re a little bit out of date. And what that means is, like, when I looked at these last month, the inflation numbers associated with education were higher than what they were a month ago. So the tool that I’m using was updated. So I’ve kind of updated my calculator to kind of back into that. So like, it’s planning now again, like for Olivia, who’s going to turn 10 This year, I still have eight years to kind of, you know, plan and figure this out, which makes it easier. The closer we get, obviously, you know, when she’s 16 We’ll have a little bit more of a picture of what education looks like but a whole lot less time to kind of change and plan you know, plan for that. So yeah.

Tim Ulbrich  14:48

So let’s shift gears and talk about the common vehicles. Again, we’ve covered this a little bit on previous episodes that will link to in the show notes, but there are various options out there right when it comes for saving for kids college everything from 529 plans which we’ll spend the majority of our time on, to the Coverdell Education savings accounts, UTMAs, Roth IRAs, heck, you could just open a brokerage account and save that way if people wanted to do that, but there’s clearly some pros and cons to these accounts and perhaps why the 529 has risen to the top for many, as you know, I guess if we get picked the most popular among this group, so tell us at a high level about those common vehicles that are out there and then we get into the 529s more specifically. Yeah,

Tim Baker  15:30

So the Coverdales, and the like the UTMAs and UGMAS are very similar. These are just custodial accounts that are like brokerage brokerage accounts, but they have the minor’s name on there. So the reason the Coverdale is aren’t as popular anymore, it’s because the amount of money that you could put in per year was like two or $3,000. I’ve actually I’ve never I might have seen one Coverdale account in my career in financial planning, so I don’t see them very, very often, the UGMAS and UTMAS, I see more often and actually have one for all three of my kids. And then all of my nieces and nephews is kind of my, like my nephew, Timmy just turned 10 yesterday. So I put money into as you know, he’s, he’s he lives out in Oregon, so I don’t see him as much I don’t really know what he’s into from a from a gift perspective. So I just put some cash into that. And the big thing for that, it’s like, I’m managing the account. I’m the, I’m the guardian on the account, once they age, once they reach the age of majority. So in certain states, that might be 18, other states that might be 19, or 21, that money is theirs, right? So so that for me is going to be a gift when all of my nieces and nephews and my kids like turn that they can use now they could use that for school. But they could also use that for something else, right? There’s not the strings attached like a 529 has where you have to use it for qualified education expenses. So with my daughter I’ve talked about it could be for school, it could be she’s talking about a gap year, I’m like, How do you even know what a gap year is you’re nine. It could be it could be to start a business, whatever that is so and that, and that, for me is a little bit more of a in your face vehicle for me to talk more about money on a long term basis, like right now we talk we have allowance and we have a save, spend and gift, this is kind of in the next thing. So that is a powerful tool, but not necessarily not necessarily just you know, for the purpose of education. Now, the big thing with that is like when they go to spend that money, capital gains tax is going to be a big part of that. So you have to you know, and that’s the same thing with, you know, like a brokerage account, if you’re just managing that for your kids, but their kid’s name isn’t on there. The other one that a lot of people will use is the Roth IRA, because you can take out the basis, you know, tax free penalty free. So you could use a Roth IRA, again, you could use your own Roth IRA, if your kid has like income, you could set up their own Roth IRA. So there’s a little bit of nuance there in terms of how you how you use that. I know a lot of people will use a Roth IRA, just because they don’t like the restrictions of the 529 just being used for qualified education expenses. So that’s something that people could use, I don’t personally use that, like I feel very comfortable with a 529, I feel very comfortable that the it’ll continue to continue to expand in terms of what you can use it for. So that really leaves a 529 in terms of vehicle. So the 529, Tim, is it’s a think of it as like a retirement account, except for education. So you can put after tax dollars in there, it grows tax free, you might get a state income tax deduction, like I mentioned, you can get $4,000 per beneficiary per year per person per beneficiary, in the state of Ohio. Every state’s going to be different, some states don’t have anything, some states have very generous, all all 529s are not created equal. So like you’re just some of them are gonna be really great. We were actually looking at the expenses the other day, and we were surprised that Ohio is a little bit higher than we thought. So you have to be cognizant of that. So you put the money in there, it grows tax free. And then if it’s used for qualified education expenses, which is typically tuition, fees, books, supplies, equipment, room and board, computer or like peripheral equipment or software, internet, that can all be you know, kind of, you know, part of that distribution. So, just like in a in a retirement account, you are kind of saving for, you know, 18 years or 10 years depending when you start so you have that accumulation period, and then that the accumulation period typically in retirement might be 10, 20, 30 years as you know until you until you die if you’re it’s typically four six, maybe eight years depending on what your goal is, you know from from an undergrad to, you know, masters, etc. So, that’s the big thing you put the money in, you invest it, a lot of them have target date funds, a lot of them you can you know you can pay the S&P 500. They grow the that tax free. And again, just to kind of reiterate that is, you know, when you buy when I buy XYZ ETF for my daughter in her in her UTMA account, we buy it at 100 shares, or $100 per share when she goes, You know, when she’s 18. And she’s now cashing that out, maybe that portion of her investment is $400 per share, which is great. But we have to pay the $300 per share capital gains and is going to be long term capital gains on that gain that we have. In the education account that you don’t have that. So that’s one of the benefits along with the state. So the UTMA, and the Coverdale gives you in the brokerage account gives you more flexibility in terms of what you can use it on. But there’s tax consequences, that’s the string. And I feel comfortable Tim, and we can talk about that a little bit more that there are enough outs for me from a 529, you’ll feel comfortable, you know, put in a good amount of money and into that to you know, to have for education, expenses. And if Olivia doesn’t need it, maybe my next kid or even grandkids.

Tim Ulbrich  21:10

Let’s talk about that flexibility for a moment. Because I do think that that is the probably the number one objection. Right. And and, you know, you mentioned the tax differences for those who choose to stay in a savings, you know, UGMA, UTMA or another type of custodian brokerage account. So the way I think about the 529 is this is like a Roth for college, right? It’s after tax dollars going in, it has the potential to grow or lose, right? Anytime we talk about investments and we can lose, but growth, hopefully long term tax free, then we could pull it out use it for qualified educational expenses, which there’s been an expansion of over the last decade or so. And that’s what I want to talk about flexibility because I agree with you. I think there are several things that maybe in the sense of of 529s were more restrictive that they’ve expanded upon. So right you think about what is considered to be a qualified educational expense, that would be one area that comes to mind. The expansion several years ago to allow these to be used for K through 12 private education, that’s a second one I think about. And then more recently, would be the Roth conversion opportunities, which is the third one. So it feels like all signs are pointing in the direction of more flexibility, not less when it comes to the 529s. 

Tim Baker  22:22

I think I think eventually, one of the things that got kicked out, was at the very at the very last minute with the Secure Act 2.0 was like homeschooling like that’s not that’s not you can’t use funds for homeschooling. I do think that, you know, again, like when I started advising people on 529s is back in the day, like you couldn’t use a 529 dollars to buy like a laptop for college. Like that was a restrictive thing. And they’ve they’ve improved upon that. Right now, like before, you couldn’t pay if you had, if you had money in your 529, you couldn’t take that money out and pay off a student loan without a penalty. Yeah, they they changed that now, it’s still restrictive. Like, it’s, I think it’s a $10,000 maximum limit, which is silly, in my opinion, just just use that that’s what it’s for, is that kind of, you know, minimize education expenses, like pay off the loan. Yeah, to your point, the Roth was a big thing that they put in and, and there’s, there’s a lot of, there’s a lot of hoops you got to jump through it has to it has to be open for at least 15 years or longer before you can move those dollars from a 529 into a Roth, right? The last five years worth of contributions are ineligible, right. So like, if you’re, if you put that if you put dollars in at 18, you have to wait until you know they’re past 23 to move those dollars over and the maximum lifetime transfer to a beneficiary is capped at 35,000. Which again, I also think is silly. 

Tim Ulbrich  23:49

Might change. We’ll see. 

Tim Baker  23:50

Yeah. And I think they will, I think I think there’ll be again as as I think it’ll adapt it more as like, if higher education looks a lot different. I think they’ll adapt that. They’ve shown that they will be able to and again at the end at the end of the day for me, Tim, and again, not everyone’s going to think this. But like if my kids don’t need it. Like I’m going to cascade that down to Liam to Zoey and if Zoey doesn’t need it. I’ll probably just let it ride for a grandkid. Or, or grandkids. So to me like I don’t, I’m okay I’m okay with that. Like I don’t need I don’t need to go to like, you know, every kid equally or or even my kids can kind of go down a generation. Not everyone’s okay with that. I had a I had a couple last week, Tim, that we talked about education hadn’t started anything and right off the rip they’re like I don’t want to do a 529 and I said like keep your keep your mind open. And part of it is like the tax, part of it is like are you okay with you know, everyone’s everyone’s like, I don’t know if you know, my kids are going to college, you might be different. We’re just all that’s all like fair, right? So it’s yes, we’re you know, a lot of us are open needs, when they’re one they’re toddler, who knows what they’re gonna grow up to be? But for me, you know, I think and again, I’m not looking at 100% solution. So I don’t necessarily need hundreds of 1000s of dollars, like, you know, if I was doing 100% solution. So this is kind of I look at this as kind of a coupon, you know, for future spending from the from the aspect of college tuition.

Tim Ulbrich  25:23

Yeah, and I think too, the other scenario to consider is, you know, when you talk about keeping options open, it’s like, what is the worst case scenario? It’s a 10% penalty, right, when we look at non qualified withdrawals. And the other thing I would add to the discussion, which by the way, nobody wants to pay a 10% penalty. So let’s be clear. But I would add to the discussion that there has also been an expansion beyond the what we think of the traditional four year degree, right. Trade school, certificate programs, apprenticeships like so I think we’re, that’s another example, we talked about flexibility. And I think, you know, for a lot of people, it feels like in the circles of discussions we have with other families of age around our boys about higher education, it seems like the trades is coming up more and more, as there’s some clear demand and in certain areas. So again, keep the options open. And as you begin to think about what what this looks like for you and your family, certainly there are options out there. And if you do look at the five to nine, we’ve got a great resource on our on our blog, seven things to consider before starting a 529 plan. Or if you already have one open, it’s a good refresher. We’ll link to that blog on the show notes as well. Tim, let’s shift to part three, as I mentioned in the beginning of the show, I’m excited about this. We haven’t really talked about this at length beyond the educational part of where does kids college savings fit and the priority of investing? What are the options available? And part three here is all about how much is enough? Now, just like we talked about when it comes to saving for retirement, same question we got to answer here and shout out to you in the planning team, you’ve built a really cool resource and calculator that we use with our clients that we’ll talk through at a high level here to really answer this question of as I’m saving for my four boys. I’m not flying in the dark, hopefully, because we can put some assumptions in place and determine how much is enough based on those goals? And ultimately, am I on track? Am I not on track? And what should we be doing each and every month to get on track? If that’s the case of where we’re heading? So it feels like Tim, the first step in being able to answer this question of how much enough is to figure out what the goal is? What the goal is back back to the poll question. Right, we started the episode with is, what’s the plan? Is it cover all expenses? Is it a partial fund? Is it a no fund, which I guess we could end the episode right there if that’s the case. But if it’s a partial or full fund, at what level? And we’ll talk about the third, a third, a third rule here in a moment at what level the funding is to be desired, is an important assumption we have to make in these calculations, correct? 

Tim Baker  27:52

I mean, and again, I think a lot of people, it probably is, I’m trying to think, you know, of all the hundreds, if not 1000s, of meetings I’ve had with with clients and prospective clients over a lot of people are like, I don’t know, I want to save something. What is that? And there’s, there’s, there’s a little bit lack of like structure there. It’s rare, where people are, again, it’s going to be on the tails there where it’s like, I’m not worried about at all or like I want to do 100%. So I think in the absence of that structure, it’s just a conversation of like, okay, like, like, here’s a framework. And that’s what we talked about the 1/3 rule, here’s a framework does that sound like? Because the beauty of the 1/3 rule, or at least the way you think about it, is you’re talking about what can I do today, but then you’re also pushing it off to tomorrow, because part of like, your funding is going to come in like future earnings. But then also there is that skin in the game, which I love. I think having skin in the game with this decision to go to college is huge, or even like, you know, giving money to your kids for college is huge, because we’ve seen how wasteful is probably not the correct term, but like how wasteful it can be. When you’re looking at schools out of state, private, when you’re, you know, maybe jumping around in majors, I think having some type of you know, some type of realization that like, Hey, you’re going to be on the hook for some of this. And obviously, pharmacists know this very well, is needed. At least that’s the way that I look at it. So I think in the absence of any type of structure, I think introducing that 1/3 rule is important. 

Tim Ulbrich  29:32

Let’s talk about that rule because I think that if we use that as the baseline, you can adjust whatever you want, right? We’ll talk about the three buckets and we’re gonna assume a third, a third a third, but you know, it could be 40% 20% 40% Right. So once you understand the concept, I think from there you could determine Hey, do I like that? Do I not like that and what adjustments you want to make. So walk us through what that third rule is. 

Tim Baker  29:55

So off the rip, a lot of clients we like they look at the look like what their education costs. And they’re like, no, like, like, this is impossible. If I have a couple dollars, you know, that can, you know, rub together, that would be great. But when you kind of break it down, it’s, it’s not as bad as it as it looks. So like the 1/3 rule basically looks at, okay, when your child goes off to college, the sources of that a paying for college is going to really come from three places. A third of that a third of the of that is going to be come from, like, we say, past income or past savings. So today, in 2024, I’m saving out of my paycheck into my kids 529, and it’s going to grow. So that’s the 529. It could be a Coverdale it could be a Roth, you know, whatever it looks like but it’s, it’s you’re doing something today to spend in the future, just like we talked about with retirement savings. The other bucket the another third comes from what I would say current income. And again, this is this would actually be future income, but like when Olivia is 18, and she’s looking at colleges in, you know, eight years, I’m hopefully still working that YFP, I’m making money, and I’m part of the part of that tuition bill is going to come from the cheque that I’m receiving in eight years. And then the last bucket. And the last third would would be that skin in the game, it would be that outside outside funding, where this is going to be grants, scholarships. And last but not least, loans. So this is where you know, and again, we we talked about it with our kids that they’re going to have some money, but we don’t let them know what that is. My parents were like, you’re on your own. And then they helped us like later it was kind of like a surprise. So we kind of talked about it, but they don’t necessarily know what they’re getting. But that’s those are the three buckets. It’s what you’re you’re saving and investing for future college expenses. And then when your kid is in college, using your your part of your paycheck to pay for tuition. And then the last third coming from grants, scholarships, and student loans.

Tim Ulbrich  31:57

Tim, we’ve had several, I think, at least a couple I can think of episodes we featured where pharmacists have really worked, you know, throughout school, sometimes really aggressively to help pay down. Now, you know, if you’re working at $15-$20 bucks an hour, you can only make such a dent and a couple $100,000 of debt. But that has been a significant contributor to minimizing the debt that they’re having to borrow in any given semester. So in that case, when you think about a child working, would you put that in the final bucket? Or where how do you how do you think of that portion?

Tim Baker  32:33

I would put it in the in the final bucket. Again, I think it’s kind of like their skin in the game. It’s like, Hey, you could you could not be a great student and not get anything or you know, I know a lot of people, there’s money to be out there for you know, we just gave out our first scholarship, you know, obviously on the back end for YFP Gives. But there’s a lot of people that don’t take that, you know, go through that legwork. You know, Olivia’s goal, she wants to swim collegiately that’s her big thing right now. And she just missed her JO time yesterday by a couple of seconds. So she’s, she’s, she’s doing well. And again, I think for her, I think my wife would love it if she got a scholarship for that. But I’m like, you know, if happens, great. If it doesn’t, but to me, it’s a little bit of their, their participation in this whole process, because it is a lot of money. You know, when we look at the numbers we’ve go through, if we kind of go through this calculator, the numbers are staggering, right. And like I just said, like, when I was looking at it, you know, as we were jumping on here, the the four year instate for Olivia went up, you know, when I looked at it last month, and I guess they’re just refreshing their their numbers and then in the tool that I’m using, but you know it, these things go up. So I think having a plan in place is is is the way.

Tim Ulbrich  33:44

So with the third plan of the third rules, a framework of where we get started, obviously everyone can adjust that accordingly. Talk us through then the calculation and how we ultimately get to this point of Hey, are we on track? Are we not on track? Or what do we need to be doing each month to get on track? 

Tim Baker  34:04

So I’m using a combination of our financial planning tool called Right Capital and kind of a calculator I built. And part of it was because I wanted to kind of adapt it to the 1/3 role. So I rely on the calculator really for or the financial plans will really for the likely in the inputs I just, I just looked at so in the tool, you can say hey, I want to send my kid to a two year commuter, a four year in state, a four year out of state, four yearr private school, you can actually put in the school that you want or you can I think it’s hard unless you’re right right up against it. So we we put in a four year in state so like, hey, Ohio State’s right down the street, that would be great. So essentially like when I’m looking at Olivia so Olivia was born on Halloween of 2014. Today’s the 15th of July 2024. So her current age is 9.7 so she’s almost a 10 year old, I think she would say she’s, she is a 10 year old. So we’re saying that at 18, she’s gonna go to college. So what that leaves is essentially 8.3 years before she’s got to move out and get out, and I can turn her bedroom into a man cave. Which she doesn’t like that joke.

Tim Ulbrich  35:18

Second whiskey storage unit.

Tim Baker  35:20

Exactly, exactly. So 8.3 years is our accumulation. That’s what’s left of our accumulation. So we make some assumptions about asset allocation. So in my calculator, I put in like an 80%, equities, 20% in bonds right now, she’s all equities, we have a lot of time. But as we get closer, we’re going to be, you know, to avoid sequence risk we’re going to be more conservative when we get to that five ish years. So maybe when she’s 13, 14 15, that’s when we’ll start to really kind of get more conservative until we until we have to spend it. So I’m using kind of a blended, you know, she’s not, she’s not 100% equities the entire time. So I put 80/20, you know, we use, so that real rate of return is about 4.6%. So that’s kind of some of the, you know, if I change that to 90/10, or 70/30, it would change the calculus. So the input that I was changing, you know, that I was mentioning, when I looked at this last month, a four year in-state for her would be $183,653. 

Tim Ulbrich  36:26

With room and board?

Tim Baker  36:27

Yes. So that’s the need. So in what that means is in, I think right to the end, like today, it’s something like $28,000. But when they extrapolate that out 8.3 years in the future, that’s what’s going to cost that $28,000 With the inflation times four years. So that’s where we get the $183,000. So just as an example, my son, who is five years younger than Olivia, so Liam is five will be five next month already. His four year instate will be $234,393. So it goes from $183,600, to $234,400. Four, and then I don’t have Zoe’s calculated, but her four year end state is $284,900. So $100,000 difference between my oldest and my youngest, there’s essentially a 10 year gap for that between them. But that’s, that’s significant. And that’s why like, we’re hoping some of this changes. But that’s the number that I’m using, you know, to kind of say, Okay, this is what I this is what we need. So, if I were to fully fund it, if I needed to fully fund it, I would essentially need $183,000 in eight, eight years. Or you could say 12, and I’m still, you know, saving during that, but typically, that’s not how it works. So currently, currently, today, Olivia has, I guess it’s called a share. That’s right. So currently, Olivia has $28,629. So and we’re we we put in not quite the $4000, we put in $300 a month or $3,600 per year. So we’re on pace to save $103,000. So if you look at that, I need 183 we’re on pace to save $103k. So that our our percentage now was we’re on track to say 56% of her college. Now, that’s not 100%, which is not our goal, but it’s also a lot higher than the 33%. So like we there’s some delta there. So you know, so I kind of break down if we did want to pay 100% percent, you know, what we would need if we, for us to be on pace to save for 100%. To get to that $183k, I would need $67,634 today. I don’t have that I have $28,000. If I if I lost all the monies in her 529 today, I would essentially need to be saving or investing $1,260 for the next 8.3 years to get to that to get to that 183,000. So because I have that, it’s actually I need to increase my essentially increase my savings from $300 a month to $854 per month to get to that. Now obviously, that’s not something that we want to do. So and then I had the same thing broken down for the 1/3 rule. So 33% of 183,000 is $61,212. So again, when you break it down like that, I’m like that’s actually not that bad. $61,000, like that’s doable. Now, the conversation I had just had with Shay when I ran this was she’s like, well, we should should we start saving less and I’m like, essentially, like the argument could be you could save less or we could we could kind of stick to the status quo. My thought is is like that’s one less bill that I have to worry about in 8.3 years like it’s almost. so there’s a tricky one is correct. So like, I part of me is like, do I just get it too, and maybe we’ll talk about this in the next iteration. So like, do I go to 67%, you know, to get to my to like my two thirds of post and present income for that. And then she has a 1/3. So just to break down the math for 33%, I need $61,212. What you currently need today to be on pace would be I would need $8400 and I have $28,000. So we’re beating that. And then if I had $0, like, if I lost all that money, I would essentially need to be saving so $420. So if you have a 10 year old, and you want to send them to a four year in state and you haven’t saved anything, and you want to save at least a third, you would essentially need to be saving $428 per month, between now and when they go.

And then the last column is kind of the choose your own rule. So if I were to if I were to say, hey, Shay, like, let’s, let’s, you know, we have some room in our budget, you know, retirement looks good, etc. If I were to say, hey, let’s let’s go to that 67, that kind of checks off both for us, I would need $123,000.  I would need today $38,000. We don’t have $38,000, we have $28,000. So that lump sum to get us on track would be putting $9700 and I’m on track. And then we would essentially be needing to pay or invest $438 so I’d need to increase my monthly contribution by about $138. And then I go through the same thing with Liam. So Liam, just in broad strokes not to go through every every every calculation. He has, so his, what we need for him and for four year in state 13 years from now, since he’s five is $234,400 essentially. He has currently $13,800. We’re currently putting in $225. So not as per month, so not as much as Olivia. And then we’re on pace to save one, it will we’ll call it $109,000. So we’re 46% of the way there. We’re on track to be at $46, which is still beating our 33% roll. So we’re I look at this and we were in good shape. I think with Zoe, it’s too early to tell she only has a couple 100 bucks in hers. But that’s kind of the calculus that we’re doing from hey, are we on track or not from a from an education perspective. And again, like if the market if the market loses 30% today, Tim like right now it’s been on a bull market. But if loses 30%, and all of a sudden he doesn’t have $13,800, he has $10k, that changes thing. Right now, over the long period of time, we’re still assuming, you know, a nominal rate of return of 8.8%, which is an 80/20 portfolio, and then we adjusted down for inflation. So that’s kind of the math. I know, it’s kind of hard to follow over the podcast. But hopefully that made sense as I was going through the, the numbers line by line.

Tim Ulbrich  42:56

Yeah, what I love about it is it makes kids college savings much more practical. 

Tim Baker  43:01

And patatable, right? Like you hear those headlines. It’s just like your retirement. It’s like, you know, when I say to clients, it’s like, hey, you need $2 million to retire, you are looking at me like I have 2 million heads, but it’s a big number, way in the future. It’s the same thing holds true with education. It’s just, it feels more than what it actually is.

Tim Ulbrich  43:20

Yeah, makes it digestible with a third rule or some variation of that. I mean, it really it’s a compressed nest egg calculation.  And that’s what I love about it is we’re not flying in the dark. What what do we have saved right now? What’s the goal? We’re gonna put some assumptions in place just like we do with retirement planning. And then what do we need per month to achieve that goal. And that last part, is the piece that is so often missing when we talk about long term savings and investing, right? Whether it’s 10 years or 30 years, some of these numbers, as you mentioned, too, feel big, they feel overwhelming, they feel scary. And what we can relate to and put our arms around is what do we need to be doing per month? Or what is the goal? And then we can look at the rest of the plan, the budget all those things and figure out, can we make this happen? Or can we not make it happen? And then what does that mean, in terms of what they have saved? What does that mean for other financial goals? So yeah, I think if we think about it, in that sense, we really can start to implement this and put a game plan in place and make some adjustments if need be. And context matters, right. So I would think, how you think about this for Olivia versus your youngest, Zoe is very different, right? When you get to the potential for over saving with Olivia well, that’s different with your first and your third because option to transfer, so I think a lot of details to be considered as we look at the individual components of how you approach the 529. 

Tim Baker  44:39

I’ve really enjoyed you know, I’ve been trying to get Olivia kind of more interested in like money and the value of money and, you know, she told me the other day she’s like, you know, when I go back to school, can I buy these like $100 like Nike shoes and I’m like, No, you can’t like it’s like, we’ll spend some money and then you can save some with your money, and there’ll be a cap on what you can do. And even my wife said, like, oh, like she gets money, you know, should we put that in a 529? I’m like, I actually, like when we, when she does her allowance, I say like, Hey, any money that you want to put into your UTMA account, like, I’ll match it. So, and I did the same thing like she, she’s going to, she’s going to donate to YFP Gives. And I’ll match that, right? So I want to I want to incentivize that behavior. But I kind of want the 529 to be like, funded by me and mom, right. So like, I don’t want her spend money to go to the 529. So I’d rather have that money go into an UTMA that she can use it, she could use it for school, which she could use it for a car, a business, a gap year or whatever. But I’ve enjoyed kind of like having some of those conversations with her and kind of seeing some of the lights go on. In terms of like, investments and that’s the thing, like I’ve always struggled with like, should I kind of key them into like what we’re doing on the 529 or should be more of like, a mystery because I really don’t want her to like say like, oh, like mom and dad have it paid for like I don’t, you know, I don’t need to work. My mom took the opposite route. She’s like you have to work because we’re not going to help you at all. But I think I think these types of discussions with your kid, even when they’re young, like mine are is, is positive. And again, like, I grew up, we didn’t really talk about too much about money, like outside of like you’re on your own. But I think building some of those behaviors and kind of mindset around money is important because a lot of people that come through the door to work with us. They’re kind of an image of their parents, right. A lot of them is like, you know, if they had consumer debt issues, it’s probably because their parents did. If they were oversavers, its probably because their parents were. You know, some people look at the parents and say, I don’t want to be like that. And they’re trying to fix it, but like the natural inclination is to spend or save. So I think it’s a good opportunity to at least start the conversation around money with kids. 

Tim Ulbrich  46:58

Great stuff, Tim. And that’s a topic we’re gonna talk more about on the show. One because we haven’t talked about it enough. And two, we’re living it firsthand with our own kids. We’re excited to share that journey as well. Let me wrap up by saying for those that are listening, yes, talking about kids college, but also other parts of the financial plan, saving investing for the future, retirement planning, tax planning, debt pay down and so forth. We’ve got a team of certified financial planners, and Sean Richards, our CPA and tax professional that can help you in working one on one as it relates to your own financial plan. If you’re interested in learning more about the services, you can visit yourfinancialpharmacist.com. From there, you can book a discovery call with Tim to learn more about the services and determine whether or not they’re the right fit. Thanks so much for listening. If you’d like what you’ve heard on this episode, other episodes of the podcast please do us a favor and leave us a rating and review on Apple Podcasts or wherever you listen to the show. Have a great rest of your week. 

Tim Ulbrich  47:51

Before we wrap up today’s show, I want to again thank this week’s sponsor of the Your Finanicial Pharmacsit Podcast, First Horizon. We’re glad to have found a solution for pharmacists that are unable to save 20% for a down payment on a home. A lot of pharmacists in the YFP community have taken advantage of First Horizon’s pharmacist home loan, which requires a 3% downpayment for a single family home or townhome for first time homebuyers and has no PMI on a 30 year fixed rate mortgage. To learn more about the requirements for First Horizon’s pharmacist home loan and to get started with the pre approval process, you can visit yourfinancialpharmacist.com/home-loan again, that’s yourfinancialpharmacist.com/home-loan. 

Tim Ulbrich  48:37

[DISCLAIMER] As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment. Furthermore, the information contained in our archived newsletters, blog posts and podcasts is not updated and may not be accurate at the time you listen to it on the podcasts. Opinions and analyses expressed herein are solely those of Your Financial Pharmacist unless otherwise noted and constitute judgments as of the dates published. Such information may contain forward looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward looking statements. For more information, please visit yourfinancialservices.com/disclaimer. Thank you again for your support of the Your Financial Pharmacists Podcast. Have a great rest of your week.

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