Maximizing Income / Podcast

YFP 196: How Cory Uses Improv to Create a Better Healthcare Experience

Posted on March 25, 2021November 2, 2022 by yfpadmin

How Cory Uses Improv to Create a Better Healthcare Experience

On this episode sponsored by Insuring Income, pharmacist, improv comedian, and motivational speaker, Cory Jenks, joins Tim Ulbrich to talk about how and why he got started with this side hustle, how it has improved his ability to connect with his patients, and how you, as a pharmacist, can apply the valuable skills of improv comedy to create a more adaptable, empathetic, and humanizing healthcare experience.

About Today’s Guest

Dr. Cory Jenks earned his PharmD from the University of South Carolina in 2011 and completed a PGY1 residency at the Southern Arizona VA Healthcare System in 2012. His past pharmacy experience has included time as a retail pharmacist, outpatient clinical pharmacist, and inpatient clinical pharmacist. Currently, he practices as an Ambulatory Care Clinical Pharmacy Specialist where he applies his passion for lifestyle interventions in the management of chronic disease. Cory is also an accomplished improv comedian, having started on his comedy journey in 2013. Since then, Cory has coached, taught, and performed improv for thousands of people. Today, Cory travels the country (or at least Zooms around) teaching other healthcare professionals how to apply the valuable skills of improv comedy to create a more adaptable, empathetic, and humanizing healthcare experience. When not working or performing improv, Cory enjoys playing racquetball, basketball, and golf, exploring the science of disease management through lifestyle, and is currently earning his Master’s Degree in “Dad Jokes” with the help of his two sons Jacob and Henry.

Summary

On this episode, pharmacist, improv comedian, and motivational speaker, Cory Jenks, joins Tim Ulbrich to talk about his side hustle in improv comedy. Cory details his journey in improv as a curious student, his experience as an improv coach, instructor, and performer, and how improv comedy aligns with his profession as a pharmacist. Through his various stages of development as an improv comedian, Cory noticed his ability to more easily connect with his patients, and his professional satisfaction as a pharmacist grew.

Cory walks through the mental shift to positive from negative, outlining the importance of applying the improv 101 phrase, ‘yes, and…’ in his life as a pharmacist. Because of the skills learned through improv, Cory tells us that instead of dreading difficult cases or patients, he began to see each experience like a puzzle to solve.

Cory further explains how, not only his own experiences with improv but also the experiences of those around him and those who he has taught, have inspired and motivated him to share exactly how improv comedy can be applied in the healthcare professions. Through nationwide workshop facilitation and public speaking events, Cory is able to reach healthcare professionals with his message – to create a more adaptable, empathetic, and humanizing healthcare experience. He notes that balance, an open line of communication with his wife, and the ability to dedicate time to his passion projects have contributed to his success.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Cory, welcome back to the show.

Cory Jenks: Hey, thanks for having me. It’s a thrill, it’s an honor, it’s a privilege, and I’m excited to be back.

Tim Ulbrich: Glad to have you back. And last time we had on the show was Episode 134, which aired in January 2020. Hard to believe more than a year ago, and a lot has happened since January 2020. Who would have known at that point we had a global pandemic in front of us? And in that episode, we talked about the journey that you and Cassie were taking towards Coast FI and some of the steps that you had taken or been putting in place towards financial independence. So how are you guys doing? What’s new? Give us the update.

Cory Jenks: Well, everything went according to plan, right?

Tim Ulbrich: Right.

Cory Jenks: It’s like, we’ve got this podcast recorded, we’re going to have a great 2020. It’s our year. And then COVID hit. But I think all things considered, we really have counted our blessings. I think being in a strong place financially set us up to weather that storm as well as we could, had hoped for. We had our second kid in June.

Tim Ulbrich: Congratulations.

Cory Jenks: Good time to have a kid, right in the middle of a pandemic, right? We’re home anyway, so we have to hang out with them. And I had a chance to continue to work and grow on my little business, which I think we’re going to talk about today. And Cassie’s had the opportunity to drop back further into a part-time role. So that was what that Coast FI journey allowed us to do was to reduce some of that income from her to spend more time with the kids. And she actually got an opportunity to work a little extra on a different, more passion project working on lifestyle for disease management and diabetes reversal. So that’s something that she’s been starting in the last few months that being able to go to part-time has afforded her the opportunity to pursue that passion. So guiltily good. We’re guiltily good in this 2021 now.

Tim Ulbrich: Well, we will link back to Episode 134 in the show notes. And I hope our listeners will take a listen back to your journey, really an inspiring one. And when we talk about financial independence or even FIRE at large, standing for Financial Independence Retire Early, I think sometimes we think about it as a finish line. And really, it’s more about the journey. It’s a trajectory. And I think about your story as an example of that trajectory, of that evolution. And so we’re going to talk to you about what that has allowed you guys to do as a family. Obviously a lot has changed, the addition to your family obviously with Cassie’s role changing, the work that you’re doing with ImprovRx, and all of that is in part possible because of the steps that you have taken related to the financial plan. So excited to talk about your side hustle, ImprovRx, and the work that you’re doing to help other healthcare professionals create a more adaptable, empathetic and humanizing healthcare experience. So before we dive into the nitty gritty of ImprovRx, remind us about your pharmacy journey, where you went to school, the work that you’re currently doing now, and even the other work that you have done as a pharmacist prior to your current role.

Cory Jenks: Sure, yeah. So I am coming up on my 1-year anniversary of graduating from the University of South Carolina, so go Gamecocks.

Tim Ulbrich: Go Gamecocks.

Cory Jenks: I’m wearing my Gamecock Pharmacy sweatshirt for all the — this is an audio podcast, so perfect segue there.

Tim Ulbrich: Yes, I can see it here.

Cory Jenks: Yeah, thank you. Yeah, it’s a beautiful garment color. So graduated 2011, and I grew up in Tucson, so I went out to South Carolina for pharmacy school because I just loved student loans and out-of-state tuition. And I ended up coming back to Tucson to do a residency here at the VA in Tucson, where I have been ever since. I’ve worked anywhere from in ambulatory care, inpatient pharmacy, I’m back in ambulatory care now as a clinical pharmacy specialist doing chronic disease management. So really cool job, getting to help manage patients’ health. And I have a real passion for helping sort of reverse the chronic disease, not just manage them but do my best to get patients off their meds and living a healthy life. And in between, I’ve worked a little bit of retail, I’ve worked in a community health center. And so I’ve kind of — it’s like the Johnny Cash song, I’ve been everywhere in pharmacy. So yeah, that’s where I find myself today in my day job.

Tim Ulbrich: And we’re going to make that connection here in a little bit for folks that are wondering, we’re going to provide that bridge between improv comedy and the healthcare practitioner and how that relates to the experience for the patient. Now, I know some funny pharmacists, Cory, but I don’t think about pharmacists and comedy that often and the two of those coming together. So give us the back story. Why improv comedy? Why did you start it? What drew you to that area? And tell us a little bit about the work that you’re doing.

Cory Jenks: Sure. So growing up, I loved Simpsons, I loved Saturday Night Live, I loved watching comedy. And so this was back before you could DVR stuff. You young punks in pharmacy school with your on-demand and your DVRs, so you had to watch the show on Saturday or Sunday night, and you’d talk about it with your friends the next day.

Tim Ulbrich: That is right.

Cory Jenks: And I loved it. And I mean, I enjoyed school, good at science, pretty bad at sports, that’s why I pursued pharmacy and not trying to play baseball. But always had this love of comedy. It’s always been a part of my life that I think as a pharmacist, a good laugh really is good medicine and something I enjoyed. And in undergrad and pharmacy school, there was an improv group at the University of South Carolina that I went and saw once, was like, ‘Oh my gosh, that’s amazing.’ And I didn’t do it because I was very committed to my academics. So I kind of put that dream and enjoyment on hold but always kept that sort of fire for comedy. And then when I finished my residency in 2012, Cassie was like, ‘Hey, you’re just kind of hanging around. You have this time on your hands. What do you want to do with it?’ And so I had a birthday coming up, and so I said, ‘Well, I’ve always been interested in trying to play the guitar or do improv comedy.’ So give me one of those two lessons or classes for my birthday. And so if you heard me play guitar, you would probably assume I did the improv. And that is correct. So it was 2013, I took my first improv class. And it was a local theater here where I live in Tucson. So just starting up, so the guy who’s now one of my best friends was — took a class, took another, and it was a matter of, ‘Hey, you have a pulse and you’ve taken these classes. We need people to perform. I’m trying to grow this theater. Do you want to do it?’ Yes. Love it. Let’s do it. Perform, get on stage, and it’s really a thrill. I had a ton of fun performing it. And then eventually, ‘Hey, Cory, you’ve been doing this a couple years. Can you help me teach my classes?’ Because he was scaling his business. So sure, I love teaching this. And so I got a chance to learn the intricacies of teaching it. And eventually, it was, ‘Cory, I need someone to run my comedy school. You’re a very organized pharmacist. Use those skills to organize my curriculum.’ Sure, let’s do it, would love to do that. And then while I was doing this and sort of bringing my wife back into it, she’s the real superhero of the whole story. She was in nurse practitioner school. She was busy every night, so I got my improv Master’s degree during her Master’s degree of her getting her nurse practitioner degree. So I was down at the theater 4, 5, 6 nights a week coaching, teaching, performing. And it’s a blast. It was fun. And along the way, I realized that these skills that I learned as an improv comedian, listening, communication, teamwork, empathy, all of these soft skills that we sort of talk about but don’t really find a way to teach or measure became better. I was connecting with patients, I was adapting, I was feeling like I was a better listener. And so as we had our first kid in 2018, as much as I enjoyed being down at the theater performing for 5-10 people in a very small crowd sometimes, the heat of the Tucson summer, I would get paid to teach classes but not quite the rate as a pharmacist, if that makes — if I’m making sense there. So and when you’re away from your kid and your family, you want to make sure you’re really getting a lot out of it. Not that I didn’t get a ton out of it, but I was kind of thinking like, what’s my next step with improv? How can I push this to another level? And auditioning for Saturday Night Live is just on the cards because I’m not moving to LA or New York or Chicago, abandoning the family to pursue this dream, which I don’t — it would be cool if I somehow SNL. I think I’d have to be some sort of unlikely national hero of something to be famous enough to do it, but then I realized, oh, I’m a pharmacist. It’s helped me as a pharmacist be better. What if I push it in this direction of applying it to healthcare? And so that’s where I found myself a couple years ago as I started the business of speaking and doing workshops.

Tim Ulbrich: I love the creativity in finding something that you were passionate about and connecting it to your skill set and experience and what you are trained to be doing as a pharmacist. I think sometimes we talk about side hustles or businesses, sometimes they’re connected, sometimes they’re not. And I think probably many folks like myself when I first heard about you and the work that you’re doing with ImprovRx, I was trying to find the connection, trying to see where that connection may be. And like yes, we can always use an extra lap, but when we talk about enriching our experience and interactions with patients and enriching the healthcare system at large, we all know there’s a lot of room for improvement. We’ve all been through it as a patient, perhaps some at the different levels than others. So I really start to see the connection of how pharmacists can benefit from some of the skills and training that we’ll get to hear about in a little bit. So dig a little bit deeper for a second on the connection between improv comedy and the ability to connect with patients as well as just your professional satisfaction as a provider. You mentioned some of the softer skills, but take me in the room. You know, Cory, I’m working in ambulatory care, I’m seeing patients, how do you begin to apply this personally in your patient care encounters?

Cory Jenks: Yes, so improv is actually — I would consider it very similar to a healthcare encounter.

Tim Ulbrich: Absolutely.

Cory Jenks: And here’s why. So taking it a step back, when I go and practice improv when we’re not in a pandemic and can gather, I tell my parents, ‘Hey, I’m going to rehearse improv.’ And they’d say, ‘Cory, it’s all made up. What are you rehearsing?’ And I’d say, ‘Fair point. But improv, like a sport, you have specific skills.’ Like basketball, you ought to practice dribbling. You ought to practice defense. You’ve got to practice your — if you’re me, you’re practicing your slam dunks all day long. You’re just flying above the rim, right?

Tim Ulbrich: Absolutely.

Cory Jenks: Well, with improv, we’re practicing characters, voices, playing on teams’ different format of improvisation. Like I perform on an improv hip hop team. I rap. I do improvised rapping. Much like an improv scene, we do have certain rules within improv. And I don’t need to get into the weeds of that, but there are rules within improv that help guide us in these scenes. Well, sports you have specific rules and then in healthcare, obviously we have this specific set of rules. But with improv scene, every basketball game, every interaction with a patient, anything can happen within that timeframe. No two basketball games are the same. No two improv scenes are the same. And certainly no two patient encounters are ever the same. So you’re able to take those skills of listening, being 100% in the moment, and adapting to what that patient is telling you and continue to provide them the best outcome. One of my best examples of this was one of my patients I was managing for diabetes. And he came to the room, was just demanding a prostate exam so he could get Viagra. Like this was just his connection. He was told he needed to get that checked out to get his Viagra. And I — how do I navigate — like I never had that question on a test in pharmacy school. No one gave me the “patient demanding prostate exam, what do you do?” but also continue to do the job that you’re assigned to do, which is manage their blood sugars but also make sure that he’ll trust you in the future to take care of what you need to do. And so pardon the graphic example of the patient, but the way I was able to navigate it, I was — the two words of improv are ‘yes, and.’ Those are the basic words. If you ever want a free lesson, ‘yes, and’ are the two words. We agree and build together. So how can I say yes to this patient who’s wanting a prostate exam from me, a pharmacist, who decidedly went into pharmacy so I did not have to do exams like that? And so I said, “Yes, I could give you a prostate exam. And you wouldn’t like it, and I wouldn’t like it. And you wouldn’t get the meds you want.’ So let’s focus on your blood sugar, and you talk to your doctor about that prostate exam. He said, “That’s great idea. Let’s do it.” So it was a way to connect with him without fighting him, right? I think a lot of times consumers, we as consumers will fight with the healthcare system. We agree, we get on the same page, and we work together as a team with your patient rather than seeing it as an adversarial issue when they bring something off the wall to your office.

Tim Ulbrich: Yes, and I love that. What a tangible takeaway for folks that are interacting with patients. So is ‘yes, and,’ is that like a staple of improv comedy, improv training? Like when you’re teaching that and you saw that connection with the healthcare, is that something that’s commonplace?

Cory Jenks: Literally like Day 1 of Improv 101, you learn this idea of ‘yes, and.’

Tim Ulbrich: Really?

Cory Jenks: So if you’re doing an improv scene and then you say to me, “Hey, we’re on the moon and it’s so beautiful.” And I say, “No, we’re not. We’re in a bounce house,” well, I’ve completely negated your reality. We have to rebuild everything. And so that scene grinds to a halt, the energy stops. And I have to explain why I thought we maybe we’re on the moon. But if I say, “Yes, and it’s so beautiful up here,” or, “Yes, and we only have 30 seconds of oxygen left,” we’ve now agreed to our reality, built on a detail or a consequence and have gone down this journey together rather than trying to fight and have this adversarial reaction. And in healthcare, that’s what we’re doing. We want to build together in the moment. That’s all we’re doing with our patient. So to get the outcome, improv is to get a laugh, with our patients it’s to optimize their health. And I also am a big proponent of the experience because we don’t get to control their health all the time. Sometimes the diagnosis is beyond our control. So we can at least agree to their reality and build together.

Tim Ulbrich: I love that. And one of the questions I like to ask folks — and especially, Cory, of the journey like you’ve had is when you have such a clearly defined vision of where you are going and you have obviously thought a lot about how this interest in improv comedy can connect to patients and create a better healthcare experience, that doesn’t just happen without a specific passion, without a motivation or without a why, whatever you want to call it. Was there an “Aha!” moment when you realized that you could help other healthcare professionals have a similar experience, develop their skills to better their connection with patients and ultimately better the healthcare system? We know there can be improvement there as well as improving their own satisfaction as a healthcare provider. One of the things we hear, of course, from healthcare providers, you know, I’ve lived it, you’ve lived it more than I have, I talk with many pharmacists, physicians, veterinarians, etc., I hear, “You know what, I’m burned out.” And so there is also this piece of provider satisfaction in addition to the patient experience. So what was that “Aha!” moment for you where you saw this connection?

Cory Jenks: I’ve just done all of this talk of ‘yes, and’ and how I would agree with you. And I have to say, it wasn’t so much an “Aha!” moment as a slow boil or a slow burn. In my own professional life, I started to realize like I didn’t come home as cranky. I enjoyed the — like when someone would give you, ‘This patient is difficult,’ I stopped saying, “Oh no,” and started saying, “Cool. What are we going to do here?” Right? It’s that mindset shift that it comes — it’s solving a fun puzzle versus dreading not having the answer. So I think that was part of the puzzle. My wife Cassie went through improv training and she was like, “Oh, wow, this is really useful as in my career as a nurse practitioner. I enjoy this.” And then I’ve had — we’ve had nurses and I have a physician who’s now a friend here in Tucson that went through the training. And his like, he was like pure “Aha!” Like every class was like, “Oh my gosh, I could use this with my patients. Oh my gosh, I’m too left-brained. Oh my gosh, I need to say yes more.” And so I think seeing the light bulbs go off in those that I have taught through our classes in Tucson, I mean, you get all walks of life. You get — in our theater, we joke we have a rocket scientist. He’s an engineer. We have nurses, lawyers. But then we have the typical theater artistic folks who live with that right brain a bit more. But it’s just that consistent reaction from people who buy into the ‘yes, and’ philosophy. So I really see it as more of a philosophy than just a rule of improv. I try to live that ‘yes, and’ life as much as I can. But seeing those light bulbs and “Aha!” moments is just energizing back to me. And I realized, oh, this is an opportunity to take what I do 40 hours a week and what I do on the weekends and improve that 40-hour life, not just for myself but I think we could do something for the other people that, as you say, we struggle. Healthcare is hard. Like, to everyone listening, kudos to you. We have hard jobs. It’s OK. Admit it. So how can we make those jobs a little less hard and a little more rewarding? And I think this is one of those avenues to find that satisfaction.

Tim Ulbrich: So I have to ask as a father myself, you know, I suspect dad jokes are a regular. Is that fair? I mean, are the dad jokes getting better? Are they getting worse? Where do the dad jokes come in?

Cory Jenks: I give myself like a 6.5 out of 10. So like the littlest one just turned 9 months old, so he just sort of like, I smile at him and he laughs. So the bar is low for him. And my 3-year-old is just getting a little sense of humor and a little playfulness. But I can make Cassie’s eyes roll pretty good with a lot of my dad joke humor. And just kind of circling back to what you said, you say you don’t know many funny pharmacists. The interesting thing about improv is that you don’t have to be funny to be good at it. I think improv is perfectly suited for pharmacists because it requires you to listen, be in the moment. And if you are smart, which pharmacists objectively are very smart, you can be really good at improv because you learn the patterns, you learn the rules. And as kind of left-brainy pharmacist as that sounds, once you learn that, you can play up and find the funny. You can develop that sense of humor. And so if you’re listening to this at home saying, ‘Well, I’m not funny,’ first off ‘yes, and,’ yes, you can be funny. You can do this. And so that’s my bit of pushback. I think that the smartest people make some of the best improvisers. So just brushing my shoulder off here.

Tim Ulbrich: So this connection of obviously bringing your interest in improv comedy or experience as a healthcare practitioner, your opportunity is, I suspect, as a patient, perhaps a caregiver, other experiences, recognizing that this could be done better. Insert ImprovRx, so an opportunity to train other healthcare professionals. So let’s talk about more of what you’re doing with ImprovRx. What do you offer? You mentioned to me before we hit record that you’re going to be doing an upcoming session for a Rho Chi induction. So give me some examples of things like that. What would it look like to the person in the room when you’re doing a workshop? What does this experience look like for pharmacy students?

Cory Jenks: Yeah.

Tim Ulbrich: Give us some more of the nitty gritty of what these types of sessions would include.

Cory Jenks: Definitely. So I offer basically — I’m an improviser, so I can adapt to whatever session or issue or event you’d like. But I can do a good old fashioned speech or a talk on it where I’m talking to your crowd, revving you up, inspiring you, pretty much what I’m doing with the audience today, just giving you just a bunch of motivation and excitement about what improv can —

Tim Ulbrich: I’m ready to go.

Cory Jenks: Yeah, like I’m glad there’s no brick walls in front of you because you might run through it.

Tim Ulbrich: That is great.

Cory Jenks: But I think my bread and butter really are the workshops. So what I do with those is I provide, depending on the workshop — and I have a menu of those depending on what the event calls for, what the particular organization wants. So I could either get right into some basic rules and we just get in and play. And what we do is we have the participants doing improv within 10 minutes. You’re doing scenes, you’re building things together. And then what we do, regardless of those different workshops, is we break down what happened in those scenes. What happened with those skills? What made them work well? What didn’t work well? And then how do we turn this into making ourselves better healthcare professionals. So how are you going to take what you did during this particular game and utilize it to be more in the moment with your patients? And so whether it’s something where we jump right into the improv or whether we do a little bit of background, a little presentation on some of the literature that supports — because ImprovRx is evidence-based comedy. There is literature supporting the use of role play and improv in education and pharmacy and medicine. So we’re pharmacists. We like to have that data to show that what we’re doing is worthwhile. And so there is — so I can dig into the data, give you the good background, and then we jump into the fun. And what I think the most important thing that comes from this is that people are going and taking risks, they’re trying new things, and there’s no consequences. Like in pharmacy school, for example, you can take a test and if you fail the test, you fail the test, right? In improv, if you do a scene that’s not funny, the scene is over, we move on, it’s disposable comedy. It’s beautiful. And you can learn that lesson in the moment. And I think that’s something that students — it’s really resonated with students because they are under pressure 24/7, get the grades, go to residency, get your job, get your student loans paid to tie it back here to YFP. So for an hour, we’re going to try something. It could be difficult. We’re going to be growing some skills. But the thing that I love — and I’ve been doing all these virtually right now because of COVID — is I’m looking at my screen and I see smiles on faces of students trying new things that are hard. And when do we have those moments in life where we get to try something and have fun doing it? And I think that’s the — like at worst, we come out of this having fun. And at best, you have fun, you challenge yourself, and you realize that those limiting beliefs that I’m not funny, that I can’t listen, that I can’t create, are not true because there’s so much more lurking — in a good way — inside of all of us as healthcare professionals that are waiting to be there to help our patients.

Tim Ulbrich: You know, I’m connecting back to my experiences in academia and even as a student where while we have come a long way in providing I would say more digestible learning experiences for students in terms of not as high risk of assessments, making things more spread out, smaller, lower risk and so forth to help foster the learning experience and take some of the anxiety out of it and an effort to try to help students manage stress and other things that they have going on, I suspect for pharmacy students listening, they would still say it’s a very pressure-inducing environment. And you can see it among students currently. They feel the stakes are high. And they certainly can be in a session like this and see value from this. And I can see it happening in a classroom, in a student organization event, as a part of another event on campus, whatever that would look like, where there’s just an opportunity to grow, to have professional development, but to have fun and to do it in a safe place. I mean, what an incredible experience. So if I’m tracking with you correctly, Cory, these hands-on workshops that you described as kind of your bread-and-butter type of offering would be provided to a college of pharmacy or offered at a national organization or a state organization or an organization like Rho Chi. Is that correct?

Cory Jenks: Perfect. Yeah, exactly. Those are all places that I’ve done this. I’ve done it at a state association, I’ve done it at a national meeting for a — I’ll be doing one at a national meeting for a pharmacy organization here in a few weeks. And I’ve done them in a small group with Rho Chi. And one thing that I actually did too was a pharmacy residency. So something — you think of pharmacy residents that the high stakes, the pressure —

Tim Ulbrich: Absolutely.

Cory Jenks: So teaching them adaptability, some resilience, and having fun while doing it. So I had a lot of fun doing this with some pharmacy residents as well, doing it virtually, playing together and learning these skills in like a very — I hate to say zero gravity environment because it kind of — I don’t want to cheapen what I’m doing, but it’s just from a world where if you’re a pharmacy resident and you’re in training and you’re taking care of patients, like the stakes are incredibly high. It’s life and death, real life and death. So here’s a way to get a step away from the life and death but be more effective when those stakes are high and you need to communicate with that doctor in a life-or-death situation or that patient in a life-or-death situation.

Tim Ulbrich: Well, what is the reaction? You know, I’m thinking of my experiences with pharmacy students or other pharmacists and depending on where they are at, I can see that some might really get into this type of experience, others maybe kind of skeptical, maybe others warming up to it over time. What kind of reaction do you get from the audience during these sessions?

Cory Jenks: The beautiful thing is that it’s different with every session. So I’ve worked with student groups that they’re a little more tentative, they’re a little more self-conscious, and so it takes a little bit of we’ll say prompting from the organizer or the school to send me a private message on Zoom and say, “Hey, call on Davey or Suzy,” or whatever. And then they’re like, “Oh no!” And then there are some where it’s like they can’t get enough. Like, ‘We only have an hour? I want to go and I want to go again, I want to go again.’ And then there are the ones that they’re like, they’re really uncertain, but they do it. And then they realize, oh my goodness, that was fun. I did a great job. I had that in me. And so it’s like I said, everyone is going to be different. And that’s what makes it fun for me is that every group presents its own challenges. Some of them it’s like, we’ve got to slow this energy down, we’ve got to give someone else a chance. And some it’s like, OK, it will be more work to get you to come out of that shell. That is OK. That is my job. Let’s do it. Challenge accepted.

Tim Ulbrich: Which I think is a whole separate skill set, one I’m guessing you are continuing to hone and develop upon. I mean, there’s an art to it I think, interacting with folks, drawing things out of them, creating the experience and the environment that gives the best shot of participants engaging in the material. But it just depends sometimes on the group, on the culture, what is going to have those types of interactions, what’s going to lead to those types of interactions. And I can’t just roll by the fact that, Cory, we’re in the midst of a global pandemic where you are really just warming up to the work that you’re doing and things like traveling and being able to engage with other organizations and along the way comes a global pandemic, which I would suspect brings things like travel to a grinding halt. So for me to jump on to Zoom and to do a talk about personal finance, yeah, I would love to be there in person, but we can make it work at the end of the day. The information is the information. And I’ll try to do my best to inspire folks in that environment. Now, this, the work that you’re doing, feels like the experience that you would have with the learners in the room is so important to the outcome of the event. So talk to me about how you have been able to pivot with Zoom, with obviously what’s going on with the pandemic, and how you’ve been able to be flexible and the mindset that has allowed you to continue to press on despite the limitations that have been brought on by the pandemic.

Cory Jenks: So yeah, it’s a great, great point. I picked a wonderful year to decide to be a speaker, right? But don’t worry, what I speak on is drawn entirely out of what the energy in the room is. So no, I think that’s — you mentioned like the mindset. So one of the things we talk about in improv is that there are no mistakes, only gifts. So you don’t go to an improv show, watch it and say, “Well, they messed that line up there.” It’s not like a play where you’re expecting. You don’t know it’s going to happen. And so a good improviser will take whatever happens, whether it’s the tech person talking over your scene on a microphone, which has happened to me before, and turning it into some sort of narration of their life, we turn it into a gift. And so this past year of having to do everything remote, well, I’m an improviser. I teach adaptability. If I couldn’t adapt, you shouldn’t be dealing with me. And so I’ve been able to adapt the exercises to the Zoom or the virtual platform. It’s more of a challenge — like it is more of a challenge to get people engaged and involved, especially it’s very easy to have people just like, I want to turn my camera off and hang out on Zoom. So you have to work harder. Like in a way, it is harder to do to be able to do this virtually. But I have adapted the message, I have adapted the games, I’ve adapted the activities to make it much more interactive for those participants, even though we’re virtual. And in the world of seeing things as gifts rather than mistakes or problems, I will not anger your entire audience and say, “COVID’s been a great gift,” right? It’s been terrible for many people, myself included. Everyone has been affected by this. However, the gift of doing things virtually has allowed me to maybe reach some groups that I would not have been able to reach before. Doing Zoom sessions across the country from here in Tucson when the travel costs might have been prohibitive for a small organization. Well, you don’t have that barrier now. So I get to interact with your students, I get to share this message. And so the ability to adapt is baked into what I do. And so it’s been fun having that chance to adapt to see how these different things work and to get to talk to and interact with a bunch of folks that I might not have had the chance to otherwise.

Tim Ulbrich: Absolutely. And I think what you said is just so on point. I mean, the mindset being so important, the adaptability piece being so important, but also the opportunity to reach organizations and groups that otherwise might not have been open to a Zoom session and because of, whether we like it or not here, we are. And we are all comfortable with it now. And so you’re giving things like this a try and obviously continuing to have the impact that you want to have by reaching more folks through the technology and what you’re able to do. And you mentioned the evidence. You know, my academic perspective is thinking, when it comes to the evidence, Cory, that you reference, I know that there’s likely something there. And you specifically mention some of the pharmacy and medical literature that’s out there. Tell us more about the evidence behind some of the work that you’re doing.

Cory Jenks: Yeah, so I’ve got to give props to the University of Arizona here in Tucson. This precedes me, but there’s an article from I think the late 2000s, the late ots, I guess we call them, where they incorporated — they actually have incorporated improv into their pharmacy school curriculum. So it’s a lot of fun. I’ve been able to help out with those sessions once the world found out that, ‘Oh, you’re a pharmacist that does improv. Well, we do this improv thing for pharmacy students.’ Wow! I have a clinical specialty! Here it is, it’s improv. So I get to go participate in that. But they’ve written up the improvement in patient communication with the pre- before and after doing their improv sessions. So it’s improved subjective communication. In medical school curriculum, it again showed that it improved communication. They felt like there was a quote where I don’t feel like I have to do things off of a checklist, I could just listen to it back in the moment. And most of the medical school students, I think they got 10 hours of improv instruction in the article that I researched and read, is they felt it was worth repeating. And now, put your hand up out there if there’s any classes in pharmacy school or medical school that you wanted to repeat. It was like, I’m done with this one, moving on to the next one. So to me, that — it’s not like where we can objectively measure like, ‘You were a 7 on communication and now you’re a 9 on communication.’ But getting at that human side of healthcare, like if students are saying they’d repeat this, I think they find it valuable. And so trying to promote that evidence more so would be something that I would love to be able to continue to pursue and really with what I’m doing, trying to make that more of a reality in more places for more students to get that training and of course graduates as well.

Tim Ulbrich: And I’m going to for a moment, Cory, connect the work that you are doing here in the improv comedy, the impact that you’re obviously having, you know, one of the things that really strikes me is the compound impact this can have. So if you’re training, let’s just say a session where you’re doing a workshop with 75 pharmacy students. Let’s be glass half full and say 40 of them are all engaged and they’re going to take away some things that they can then apply with the patients who they probably also will share with others and their classmates and have an impact on other folks, could be families and friends, and hopefully have an impact on the practice sites and the patients that they serve and the culture within that organization and within those experiences. So the compound effect of the work that you’re doing to me is really interesting. And the influence that you can have on really transforming the healthcare experience through the pharmacists that you’re able to have an impact through obviously your training, your understanding of what pharmacists are doing each and every day. So I want to bring together that work. I know from our personal conversations that your family is incredibly important to you, a big motivation of why for everything that you’re doing, and I also know that your financial journey, as we talked about on Episode 134, is important.

Cory Jenks: Yeah.

Tim Ulbrich: So fast forward to us five years. What does success look like for you in terms of the work that you’re doing here as it relates to ImprovRx?

Cory Jenks: I think success to me would be that I am at least — I’ve at least gone down to part-time as a practicing pharmacist because I am doing too much speaking and training with improv.

Tim Ulbrich: Absolutely.

Cory Jenks: I think perfect world in five years, it’s really hard. I’m going to be vulnerable here in front of everybody. Like giving up this identity as a pharmacist would be really hard in this moment to think about not being. However, the energizing thought of being a full-time speaker and trainer, implementing this improv training, whether it be in healthcare associations, other hospital systems, in curriculum, at university level, that’s what I would love to be. Having that compound impact, as you said, is it’s one thing for me to go and teach this to a group of 70 people. But if I can go implement it into multiple curriculums in different healthcare settings, dental schools, pharmacy schools, nursing schools, that compound effect is exponentially more. And it’s just going back to this idea of something that you would not consider traditionally related to healthcare, improv. Like I would love to be known as, “Hey, it’s Cory. He’s the healthcare improv guy. Like he knows how to make that experience great by implementing these really fun, simple rules of improvisation.” And in five years, I would love to see cultures change. Like I talked about this ‘yes, and’ mindset. I think in healthcare, we often are stuck in a world of ‘no.’ Like the paradigm is ‘no.’ So like can I get more time with my patients? No. Is this drug covered by insurance? No. I had this new idea for this new service as a pharmacist. No, we don’t have the time or the budget for that.

Tim Ulbrich: Or did I bill for it?

Cory Jenks: No. There you go, right? See, you said you’re not funny. You just like followed the pattern right there.

Tim Ulbrich: Yeah.

Cory Jenks: That is textbook comedy. Beautifully done. But I would love to build a culture where of course we can’t literally say yes to every request. Like we can’t say, “I want 1,000 Percocet.” Boom, done. Right? That would be irresponsible. But when we say yes to the idea of some — so here’s this idea for a new billable service, or when a patient’s asking for an obscene amount of controlled substances, we say yes to what they’re telling us. That is they have something deeply going on that we need to investigate and help. So it’s not — ‘yes, and,’ does not literally mean yes all the time, although I have had a improv student come back married after their first week of improv class. It was like, “You said, ‘yes, and,’ and someone asked me to marry him, so I said yes!” I was like, that is ultimate commitment. Beautifully done. But it means at least saying yes and listening. I think that’s a big thing that Cassie hears from her patients, I hear from my patients is they’ll say, “You’re the first person that’s just listened to me.” It doesn’t mean that we fix their problem all the time. It doesn’t mean that we give them exactly what they want. But that ability to listen and empathize with that patient is to learn, why are they saying this? Why are they frustrated with their system? Why are they feeling like they haven’t been heard? And so in five years, if I’m helping create a culture of that for patients and as you said, for providers who are burnt out, I’ll have considered it a wild success.

Tim Ulbrich: One of the things, Cory, that I want to ask you because I think I see folks struggling with this when they’re starting a side hustle or business, whatever you want to call it, is that they’re just crazy passionate about what they are starting. And they see some initial success, and that’s starting to build momentum, hopefully over time, and they’re having an impact. You know, it can be incredibly fulfilling work. So I know, again, as I mentioned, your family is incredibly important to you, the time that you have with your family is important to you. So how do you balance and reconcile the work that you’re doing with ImprovRx, the time that you’re spending preparing for presentations, obviously pre-pandemic traveling? You know, you and I both know that you can sign up for an hour presentation, but it’s much more than that when you think about the before work, the after work, the time that you’re spending thinking about that. So tell me how you handle and reconcile that in terms of scheduling where you’re spending your time and ultimately your decision algorithm for what you decide to say yes to and what you decide to say no to.

Cory Jenks: I think the first step in this is marrying up. So my wife is — my wife Cassie is incredible. We have frequent conversations about what we want our life to look like, what our visions are, what our dreams are, and I know it sounds hokey, but it’s just — the line of communication is open so well. So when it comes to the decision algorithm, a lot of it runs through her because we are on a team together. And every time I’m doing something, she is taking the burden on it. Like right now, she is keeping our kids quiet so we can have this conversation. Mostly quiet, I think. So I think that’s part of it. But I also — we have blocked off time for ourselves. Like these hours during the week in the evening, Cassie is doing her extra little passion project. These hours, Cory’s doing his thing. Oh, Cory wants to do this thing in three months. I check with her, and we look at our schedule, we make sure that there is no other family things, and she’s like, “Go for it.” Like she’s all in too. Like she is in this for making these dreams happen. And I think that relating it back to our episode, being in that Coast FI world of really, I’ve been out of pharmacy school a decade, so a decade of hard work setting ourselves up to take some of these risks to pursue the dream, right, is what has set us up. So the algorithm for what I say yes to at this point in my business is very much saying yes to as much as I can to get that experience, to get those reps, to get that network built. And then the goal is, like my goal that I write down every day, is to have to turn things down at some point.

Tim Ulbrich: That is right.

Cory Jenks: To get to that place where you’re in such demand that I can’t do everything. And so that’s how I see it. But really, it comes down to we have our protected family time, we have our day job time, and then these other hours are for us to work on these things or if I wanted to sit and numb myself with Netflix, which is OK sometimes, you can. But don’t ask me what WandaVision is. Like I have no idea, like no concept of these shows because at night, from once the kids are down, it’s laptop open and if all I have is an hour of energy, I give it an hour, and then it’s get that rest and bedtime. So that’s how I try to balance it. A lot of it is just cutting out the nonsense and unnecessary things that in 10 years, will I be happier that I watched the Cubs spring training games? No, it’s fake baseball for a baseball team. Like, no, I will not. But will I regret not having given this thing that seems to be resonating with the people I work with, if I don’t give it my all, that’s going to be the regret. That’s the broad strokes, I guess.

Tim Ulbrich: Yeah, and I think some of the best businesses, you know, from a fulfillment/impact standpoint, are those that you can turn into a business, side hustle, again, whatever you want to call it, but that you do have an impact on others and that you feel a sense of contribution towards the work that you’re doing. And if you can build something that is also sustaining but is having an impact, obviously that’s a sweet spot that I think we often strive for when we’re working on things like that. Not just speaking, you also have a blog in the mix, you’ve got a book that you’re working on, so tell us more about those opportunities, in addition to the speaking, the things that you’re working on with the blog and the book, and what you’re hoping to accomplish with those projects.

Cory Jenks: Yeah, so as a fairly new side hustler, I think the struggle is I have this idea, how do I get people to know about it? And so is it a podcast? Is it social media posts? Is it this or that? And so for me, the blog is — I’ve always enjoyed writing. In undergrad, I actually wrote a blog for the University of South Carolina’s Admissions Department describing my day-to-day activities as a pull to get people to come to our college. So I’ve had that practice of writing, so it’s in a world, as you say, we have limited time, how do we say yes to what’s important? Well, writing is a low barrier to entry for me to get these ideas out that I have a chance to go deeper on, to take these seemingly unrelated concepts and put them together into something that’s really usable. So I’ve enjoyed getting the chance to write about that. Part of the gift of COVID — the “gift,” I’ll use my quotation marks here — is that I didn’t have the spring of — March of 2020, like everything shut down. What are we going to do? No one knows what’s going on. So I’ve had all of these ideas formed in my head, so I put them down in a manuscript for a rough draft for a book. So I’m hoping to publish that later this year, to provide that value that I can provide on a face-to-face basis but provide sort of the manual and the stories and the background as to why this is useful, to provide that support and that evidence and try to establish myself more so as an expert in this field. I think writing a book, as you have done, you’re the expert in this. So to the other improv pharmacists out there, let’s collaborate if there are others. This isn’t a — I don’t have to be the expert. Certainly not. Improv is a team sport. But yeah, I’m trying to reach folks with that message of application, really.

Tim Ulbrich: They are going to be coming out of the woodwork, Cory.

Cory Jenks: I know. We have a certain type that’s drawn to pharmacy. I know of all the pharmacist comedians, improvisers, you’ve got me on here. So I appreciate it.

Tim Ulbrich: What is the best way for folks to connect with you? You know, I’m suspecting that some of our listeners might be with academic institutions or state or national organizations, would like to have you do a speaking engagement or a workshop or just in general learn more about the work that you’re doing. How can folks connect with you?

Cory Jenks: Yeah, so I think my website, CoryJenks.com, that’s Cory Jenks — my parents were cheap and did not buy the vowel, no ‘e’ in Corey, so little dad Wheel of Fortune joke there. And if they want to find me on LinkedIn, that’s another great place to connect to. I am on Twitter, Facebook and Instagram, but I don’t post much. My whole goal with improv is to have people being in the moment, listening, going deeper with their patients. I’m not going to say social media is not useful. It certainly is very useful. I think the value that I’ll give to people is going to be from my blog, my book and my face-to-face interactions. So you’re welcome to follow me on Instagram. If you like periodic posts of — I don’t even know what I posted last — so you can do that or on Twitter too. Twitter is kind of a — can be hit or miss as far as fun or terrible. But or you can email me, [email protected] email. So the beauty of 2021, there’s a million ways to find me. And I love to talk about this. And I really want to express my gratitude. This is an honor to be a two-timer here on the YFP. I know that you have all helped Cassie and me on our journey so much. And my hope is that I will resonate with somebody and I will help them on their healthcare journey and help them with their patients. So much gratitude to you and the team for having me on.

Tim Ulbrich: I appreciate that, Cory. And we will link to the blog, we’ll link to some of the social profiles, specifically LinkedIn, your email address, in the show notes so folks can find that information. Go to YourFinancialPharmacist.com/podcast, you can find this episode and the corresponding notes. You know, you are contagious. I mean, the whole heart of —

Cory Jenks: I don’t know, you might choose your words better in a pandemic, here.

Tim Ulbrich: Yeah, that is true. Not a good choice of words necessarily. But you know, the energy that you have, the interactions you have with folks that you remember is something that I often think about. And I always describe these as bucket-filling interactions. So you know, sometimes we have interactions with other folks that can feel exhausting or feel draining. And then we have those interactions with folks that they really exude energy and they’re contagious to be around, and it obviously hopefully makes those folks better in the individual work that they’re doing and the desired outcome that they have through that work. And I can honestly say, Cory, my conversations with you, you are really that individual that is bucket-filling. I love the passion for what you’re doing. I love the purpose and the intent behind what you’re doing. And I think there are really exciting times ahead for you professionally and for you personally and the folks that you’re going to impact through your work. So congratulations on the success that you’ve had thus far. I look forward to following your journey. And please also send Cassie my regards.

Cory Jenks: Will do. Thank you so much.

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YFP 194: How Karine Used Her Pharmacy Skills to Create a Successful Healthy Dessert Business

Posted on March 11, 2021November 2, 2022 by yfpadmin

How Karine Used Her Pharmacy Skills to Create a Successful Healthy Dessert Business

On this episode, sponsored by Insuring Income, Karine Wong, pharmacist, educator, and entrepreneur, joins Tim Ulbrich to talk about her journey starting My Guiltless Treats. Karine discusses how she uses her pharmacy skills in her entrepreneurial journey, how to determine whether or not a business idea is worth pursuing, why it is so important to have a clear purpose and vision, and why saying ‘yes’ is so crucial when starting and running your own business.

About Today’s Guest

Dr. Karine Wong spent her entire pharmacy career in the hospital pharmacy. She worked as a staff pharmacist, director, and clinical coordinator. Over time, she became frustrated about the lack of compliance with her diabetic patients. After countless hours of counseling at the bedside, the patients would return in a few short months with the same problem; uncontrolled diabetes. In 2013, Karine and a colleague had an idea to make protein candies. The idea seemed intriguing; simple and yet revolutionary. The company could provide a viable, sustainable solution to the non-compliant diabetic patient. By 2018, Karine has led My Guiltless Treats on a successful journey to popularity, sustainability, and profitability. To date, My Guiltless Treats is the only company that specializes in healthy desserts.

Summary

Karine Wong, pharmacist, educator, and pharmacy entrepreneur, joins Tim Ulbrich to discuss her pharmacy career, how she’s used her pharmacy skills on her entrepreneurial journey, and how she’s built a successful business, My Guiltless Treats, by going above and beyond the usual standards.

Karine has also learned how to determine if a business idea is worth pursuing and outlines practical benchmarks to evaluate when starting a new venture. She explains that great ideas can turn into great businesses if they can solve a problem that you care about and are passionate about, solve a pain point, have a market (with or without competition), and help people on a large scale.

Additionally, Karine shares her personal experience with the power of being positive, how the act of saying ‘yes’ can have a huge impact on your business, and practical ways to say ‘yes’ in your own business practices. Business owners, aside from providing free product (if the business can afford it), can also provide knowledge and time in various forms to their customers, building relationships that may potentially turn into lifelong sales.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Karine, thank you so much for taking time to be on the show.

Karine Wong: Hi, Tim. How are you?

Tim Ulbrich: I am doing well, excited to have you on. We had a chance to meet virtually a few weeks ago and had an opportunity to learn a little bit about your pharmacy career as well as the work that you’re doing with My Guiltless Treats and said, “Hey, we need to get this in front of the YFP community,” as I know many folks may have an idea that they’re wondering about, whether it’s a business idea, a side hustle idea, and I think featuring other pharmacy entrepreneurs is really an opportunity for them to see examples of what others are doing out there. So let’s first start with your pharmacy education and career. Why did you go into pharmacy? Where did you go to pharmacy school? And what type of work have you done in pharmacy throughout your career?

Karine Wong: I went to pharmacy school right out of high school, straight into University of the Pacific in southern California and endured a 5-year program, the accelerated program to be a PharmD at the end of 5 years. By the end of the 5 years, I really loved the clinical field. I actually wanted to be a doctor at that point, but at that point my parents decided not to support me anymore. So I was stuck being a PharmD. That’s OK. At the time, pharmacy was — it’s a world that can be anything you want it to be. You can be a CVS pharmacist, a Kaiser, nuc pharmacy, ambulatory care. It was — the world’s your oyster. I chose to stay in the hospital field. I felt that was the best place for me to be surrounded by the greatest minds of Edison. And so I stayed in hospital pharmacy when I graduated in 1999. And I have worked up the totem pole. So I was a (inaudible) pharmacist, worked up to outpatient pharmacist, did some floating here and there, became a director of pharmacy at one point but stayed put as a coordinator, which is a fancy word for clinical manager. So I was in charge of all the PMT minutes, agenda items, formulary additions, deletions, and in these settings. I also got the precep student from West University for 8 years and I’ve also participated in rounds with the teaching staff of the hospital. So I’ve always been in academic settings in terms of the hospitals. I was always teaching nurses or students, interns or residents and pharmacy students. So that’s pretty much my journey. Always learning.

Tim Ulbrich: Always learning, which is a good connection to business. And we’re going to talk a little bit about how your pharmacy career has played a role in the work that you’re doing in running your own business. So My Guiltless Treats — and we’ll link to that in the show notes for folks so they can learn more, check out the website, learn about the products that you offer — give us the 20,000-foot view. What is My Guiltless Treats all about?

Karine Wong: My Guiltless Treats is not something I intended to start at all. If you had told me 20 years ago I would start a business, I’d laugh in your face. I’d be like, no, no, no, I’m going to live and die in my pharmacy office. That’s what I thought I would do. Kind of changed now, I think I got burn out in pharmacy. I was really good at what I was doing, and I was writing codes, I was helping the pharmacy staff with all the difficult cases we had at our hospital. When 2008 rolled around, I took some time off to give birth to my child and I came across this fitness director who wanted to increase my protein intake. But it did not taste good. And she complained about why does it taste awful? Now, as a pharmacist, I thought, that’s kind of funny. I don’t take protein myself, but don’t you think it’s odd that we can make steroid solution taste really great but we can’t make something as simple as protein taste better?

Tim Ulbrich: Right? Yeah.

Karine Wong: So I told her, I can make it for you. I’ll make you a protein candy. And that’s how My Guiltless Treats came to fruition. I did create a product that was a delicious treat. At the end of the 5 years of working with her with RMD and sales, we decided to split up. She went to pursue a different career path, but I stayed on board. The original treat that we had, they’re actually protein gummies, was not scalable. It wasn’t something that people wanted to buy. We had no sales to warrant the continuation. We had people who loved it, but it wasn’t like a lot to justify a $50,000 investment into buying a million gummies, OK? That’s a lot of gummies to sell. It’s almost like two pallets. And it wasn’t scalable, it wasn’t something that we could sell. So she took off, which is fine, but I stayed on with the company because I still believed it had so much potential for it. So I looked at Guiltless Treats as a vehicle to deliver treats or desserts to diabetics, to those who really need it. And this Aha! Moment came back to me when I was working at the hospital. I remember counseling at the bedside and doing diabetic teaching to our patients diagnosed with diabetes, and I would teach them how to use insulin and the syringes. One gentleman stuck in my mind because he was very noncompliant, his A1C was double digits. I had to tell him, “OK, senor, no more bread, no more rice,” and he said, “OK, I would love to do it. But senorita, I want my bread. I want my (inaudible) bread. I want that.” And I looked at him and go, “OK, I guess I’ll see you in 3-6 months,” you know? Right? What can I do? He told me he’s noncompliant. He’s not going to change. He gave me a dare. He said, “Unless you can tell me something that is good for me and delicious, I’ll eat that.” And I had no answer for him. That was the Aha! moment. That was the moment I realized, oh my gosh, he’s right. So I go downstairs, and I ask my dietician friends, my physician friends, “What do you tell patients what can they eat that’s good?” And you know what they all told me while they’re eating their Twinkies and their Ho-Hos, “You tell them to eat their kale.”

Tim Ulbrich: Oh gees.

Karine Wong: Quinoa’s good, brown rice is supposed to better. This is what they’re telling me. But they weren’t eating it. And I’m thinking to myself, OK, that’s — I can’t use that, OK? Because they don’t know how to make kale salad or quinoa rice. They don’t know how to do that. It’s not part of their culture. So I was up against the wall. So when my fitness instructor friend mentioned the protein gummies, I thought, that actually sounds interesting because I can take out the sugar and replace it with another macronutrient like protein. So even though the gummies didn’t come to fruition, there was a point to make the treats. There was a reason for it. I needed to make something for that gentleman. I needed to make a dessert, something that he can have that doesn’t taste medicinal, that doesn’t use artificial flavors or sweeteners, something that he can grab at the store, not have to make it, not have to thaw it or bake it but can eat it right out like a protein cup. So aha! Six months later, after intense RMD, I created or actually made a version of my own kind of pork bun, (inaudible) a type of dessert similar to flan or custard. It’s very soft in texture. I don’t use (inaudible) cream or eggs or gluten or milk. I just use coconut cream, which is better for you, doesn’t cause the same problems as animal fat. And I layer over real mango, pineapple, or guava. So it’s a tropical dessert. And then I fortify the dessert with protein from the protein. But it’s also filtrated, so there’s no lactose, there’s nothing that will make you bloated. I deliberately made my products allergen-free. I took the top seven allergens that we see in the States and took them away, so nuts, there’s no seafood, there’s no tree nuts, stuff like that. I avoid that. Coconut is not considered a same nut as a tree nut, so it’s OK to use that. And yeah. I’ve been successful with the panna cotta desserts, people love it, it’s a thing now. People know me as the kind of the panna cotta lady. I’m the only one that makes it. And I make it healthy. So it’s the only dessert that you can find that’s actually good for you. So you can eat it instead of your ice cream at nighttime, you can eat it instead of yogurt at breakfast or like my friends at the hospital, they eat it during their shift. So when they have a long shift, the protein sustains them for the entire 10-hour shift that they have. So it’s a great option for everybody. You don’t have to be diabetic or pre-diabetic to enjoy it. You could be anyone. It’s just a dessert that’s healthier. Other manufacturers can’t do that because they put lots of sugars in their products. They don’t really know what we know as pharmacists. And that’s why being a pharmacist really helps your product if you’re going for the food industry. Because you know so much.

Tim Ulbrich: Yes. Yes. Absolutely. That makes sense. And one of my favorite stories, Karine, from our conversation several weeks ago was, you know — and get the story right if I have it wrong, but you had mentioned at the gift shop of the hospital, you know, this being distributed and sold and how quickly it would come and go and that you knew you were onto something in terms of folks that obviously appreciated the product, the quality of it, and certainly those that could benefit from it from a health perspective as well. And it has me thinking, you know, we’ll take a little bit of an aside here, but many folks may be listening that have an idea, right? And so you had an idea of something that could be done better. You mentioned the protein gummies, which ultimately didn’t come to its full fruition. So what ultimately does make a good idea? As you’re thinking of this not only with your own business here and other experiences you’ve had but also potentially advising and giving input to other folks that have business ideas, what makes a good idea? What’s the framework in which you think of what is this idea and does it actually have viability going forward?

Karine Wong: That’s a great question. And I’m going to say lots of time and energy because I could break it down for you in this way. I actually have a lot of students or mentees that I work with who have ideas, and ideas come in and out of your mind all day long. Doesn’t mean you act on every single idea. So what makes a good idea, an idea that you probably want to sit on. First, the idea that you have, whether it’s a service or a product, should be there to solve a problem. And the problem could just be just to you, but if you find that this problem bugs you — let’s suppose that it bugs you that every year, your smoke alarm will run out of batteries and always at 2 o’clock in the morning, right? Every night.

Tim Ulbrich: Amen.

Karine Wong: I don’t know how they do it. And that’s the night that you can’t sleep, that’s when you jolt out of bed with almost an MI because it’s like, beep, beep, and it won’t stop, especially if you have like 5 in your house and you don’t know which one it is, right? What if that’s a problem for you? If it’s a problem for you, it’s a problem for someone else and probably many others that have smoke alarms. No. 2, if you could develop a product like a battery or a monitoring system that tells you when your battery is low, like if you can find a way to make an app that bluetooths the battery life to your smoke alarm, that would be superb. And you don’t have to physically make the app, you just have to hire someone that can code it for you. You tell them what you want, and they make it for you. It’s pretty simple. But you have to have the idea, you have to do the research and find out is there a market for it. So if I know every house in the United States has to have smoke alarms, right? That’s a law.

Tim Ulbrich: Yep.

Karine Wong: No. 2, so the market’s very big. No. 3, does anyone make that besides you? Like is there an option out there? Now if there is, it doesn’t mean don’t do it. Just know that if there’s no competition, you have a more difficult road because you have to pave the road for yourself. You have to do all your market research and find out how to get the pricing down, find the right coder, for example, and get the best pricing for that. But if you have competition, follow them and see how are they doing it? OK? I’ll give you an example. Protein gummies was my first skew. We had three competitors. That was back in 2010. Today, they’re all defunct. Why? Because no one wanted protein gummies. Interesting. They all went bankrupt. We didn’t go bankrupt, we just changed our name. Going into No. 3, you have to find out if there’s competition or not. OK? No. 4, if it’s a good idea, it’s an idea that will come back to you the next day.

Tim Ulbrich: Yes.

Karine Wong: So an idea that’s OK goes away the next day. You don’t remember. You just like, eh, whatever. I don’t remember the idea. It just came and go. It didn’t stick around. But if the idea is awesome and you find there’s potential in it because of what you know, whether it’s a pharmacist or a handyman or living your house and hearing that every year, the smoke alarm chirping, then that idea will come back to you. And you’re like, you know what? I won’t let it go. I can’t let it go. Because it’s a really good idea. And that’s how you know. So those are four benchmarks. And just like when you sig a patient, check them off, right? Do you have a problem that you’re solving? Check. Can you make a service or a product that will solve it? Check. Competition, is there any? Check, yes there is. That’s fine. OK? That doesn’t stop you.

Tim Ulbrich: Yes.

Karine Wong: It just means that, hey, there’s a market for it because so many people have tapped into it. Now if there’s too many competitors, you might want to like not do it because it’s too hard. Like I would never go into the beverage market now because it’s so supersaturated. I would not go into the frozen industry because you know the frozen aisle is very coveted shelf space because it’s frozen. So I can’t get in there if I had the best tasting item ever. I could not break into that. And No. 4, like I said, if the idea comes back to you and you won’t let it go, then you have a really good idea.

Tim Ulbrich: I love that, Karine. Very tangible advice. Checklists, we like checklists. We like thinking about things in sequential order. And I think your comment that resonates — several things in there — but you know, multiple ideas that may come to focus doesn’t mean we need to act on every one. What I actually do at home, my wife and I like to brainstorm various business ideas. And we write them down on a legal sheet, you know, 8.5×11 yellow piece of paper. It’s in my office. And then what I find is some of those we keep talking about, right? We come back two days later, four days later, six days later, eight days later, even some of those we may determine for other reasons in your four steps aren’t viable. But those that we find we can’t let them go, like that means you’re at least at the beginnings of something that obviously is important to you. The other thing I think about here, Karine — I’d love your input — is I think folks often struggle with is this an idea that I really care about solving this problem and I have a solution that I’m going to be really passionate about? And is it financially viable? Am I after the money? Am I after the purpose and solving this problem? Or both? And what advice would you have with folks, you know — here as I hear your story, obviously at the end of the day, you’ve got to run a business but also something that you saw could have a tremendous impact on patients. It was a problem that needed to be solved. And so the concern that folks might be chasing becoming rich or having a home run of a product and how important it is to be passionate about the problem that you’re trying to solve.

Karine Wong: The way I look at it is your company is a baby. If you’ve lost interest in your baby, the company, literally dies. So imagine yourself, like you’re in charge and you decide, you know what, I’m going to take a break and do something else. Guess what? The company that you built falls apart. It may take awhile, but it will fall apart because you are the glue that holds it together. So you’re the why. Why are you doing this has to be something that you will use every morning you wake up, every morning you clock in, you turn on your recording or you reach out to people for your interviews, that is your why, why are you doing it. And if you say, “money because I want to be a millionaire,” or “be featured on Ellen, the show,” you’re going to have issues, OK? Because the likelihood of that is almost as high as winning the lottery. It’s very rare. Just like people who want to be on TikTok and they want to make it big. That’s pretty rare. What’s your why? It should be because you’re solving a problem that is important to you, that bugs you. And you want to solve it. We as pharmacists I consider are problem solvers. Right? We fix people’s ailments with drugs and we tailor their regimens. And so the same thing happens with products or services. If I could fix your life to be better, even by a little bit, hey, that’s so neat. That is your why. I love that I know that my products help those that are enduring chemotherapy or those with the canker sores from the chemotherapy or has protein loss because of dialysis or they just can’t eat because they’re kekectic, be able to thrive. Hey, my stuff is better than Ensure+. My stuff is better than most medicinal foods. So that’s my joy. That’s my why. And if I stop my company, those customers are affected. And that’s why I don’t stop. And there’s more than one person. There’s a lot. In fact, in about a month, I’ll be celebrating my milestone — I had to tell you this, Tim — but I’ll officially have sold 25,000 units.

Tim Ulbrich: Hey, congratulations.

Karine Wong: That is not an easy feat. And I did it in about 18 months, so that’s a lot of panna cottas.

Tim Ulbrich: That is awesome.

Karine Wong: Yeah, I mean, I’m sure if I was a big company that packs and manufactures it, I’m sure it makes a lot. But a single person by myself using pharmacist-grade benchmarks, yeah, it’s not easy. It takes awhile to do because I’m very picky. When I make products, I go beyond, beyond the food safety measures. OK? Food safety measures are pretty low, OK? It’s like, don’t put stuff in there like debris. Yeah, I get that. But I don’t put piologens in there. I don’t put bacteria in there. My stuff is vacuum-sealed, sterile, no piologens. It lasts for six weeks without any bacteria count of significance. And I do this with technicians in laboratories, so it’s all certified. OK? So I go beyond the scope of a food manager because I’m a pharmacist. I don’t want to give people stuff that — it’s not a liability, it’s more like what makes you feel good? I don’t want my patients — or not my patients, consumers, to eat something healthy and that’s not dirty or have full of debris or particulates. That’s our nature as pharmacists, right? So going back to your question about your why, yes, your why, my why is because I want to help people be on the medicine. I want to help people at the marketplace, give them teaching, counseling. I do more patient counseling now that’s more viable, that’s more significant to them, than I would have at CVS. Because CVS is very fast-paced and you only have so much time. But at the marketplace, I’ve got time and they’re much more open to me. So when I give them advice or valuable tips, they love it. And they get to go home with that, and that’s going to help them from this point on. So I give them a lot of hope and insight into their management of their disease state, whether it’s diabetes or eczema or Crohn’s Disease. I’ve heard it all, so I am able to talk on that not as their doctor but as a pharmacist. And they trust me in that. And so it’s not about sales, but they end up buying it because they like who I am and what I represent. So the why for everybody should be that you want to help people or you want to solve a problem. Those are the best whys you can have in your life. But if you’re going to say money or stardom or fame, you can still do it. I won’t stop you. But your journey every morning will be so much harder because it’s tough. And so if you’re hoping to be on Ellen’s show and every morning you wake up and you make 1,000 panna cottas, you might go, God, is it really worth it? You’re going to be tired. You’re going to be kind of burnt out real fast. And that’s why those are really not good reasons to start a business. I’ll give you an example, Tim. I actually had an investor that offered me lots of money to make CBD gummies. This is right when the legislature passed the state law that legalizes like CBD and marijuana for recreational use. And he asked me to make it. He said, “You’ll make millions of dollars.” And I believed him. I would make a million dollars. And I said no, not because I couldn’t do it, not because I didn’t want the money, because it’s not my jam. It’s not my why. I could not make CBD gummies because it’s not like I don’t think it works. I think it works great, I don’t think it matters how much money you throw at me, I wouldn’t do it. It just doesn’t make me happy. It doesn’t solve anyone’s problem — at least, it does solve a problem, but it’s not a problem that I want to solve. Does that make sense to you? It is a problem. But it’s not my jam, it’s not my passion to solve that problem or to help those patients. It could be yours, maybe someone else’s, so that’s what I did. I deferred.

Tim Ulbrich: So important. And I can’t echo enough of what you just said there. Even thinking of what we’ve been working on at YFP, hearing your story here, hearing other stories of pharmacist entrepreneurs that I’ve talked with, you know, having that motivation and a why of something that you care about, a problem that you care about, that you want to solve is so critically important to invest in the time and energy that’s going to have an impact. Karine, I want to talk for a moment about the gap between having an idea and from there, getting to a minimum viable product and perhaps from there, being able to actually grow and scale something. Big separation, big gap between having an idea and actually being able to grow that idea perhaps into its full potential. And I think pharmacists may hear your story or hear other entrepreneurial stories and hear from folks that have been successful, however you may define success. And for you, selling 25,000 units in 18 months, that’s overwhelming. You know what, I have this idea and I hear Karine talking about RND, about growing, scaling, manufacturing, hiring a team, wow. Maybe I should just stop pursuing my idea right now because that feels overwhelming. What advice would you have for folks that are listening that say, “You know what, I have this idea, and I just don’t know where to go from here.”

Karine Wong: The fear of pursuing an idea is very common. It’s not unusual to hear an idea or come up with one and go, you know what, it’s a good one, but nah. It’s not going to work. And to have self doubt because you’re afraid. And I think as pharmacists, we’re more risk-averse. So we don’t want to take chances on something that we don’t know much about. That’s understandable. There’s a few things that I do in my career and my company that help minimize that risk. First, when you hear an idea, obviously we don’t put every single penny we have towards every idea. But look at the idea that you’re thinking about. A good idea is the idea that will solve a problem that is going to affect many consumers, not just you, not just your family, but other pharmacists or other people in your industry or your role as a mother or father, some of the frustrations you see as maybe a student. And that is a problem that if you have had it, and other people have had it, then that’s a good market. That’s why. You check that box, that’s a pretty good market, a pretty good idea. Second, you have to create a solution. An idea basically tells you that we need something to help fix that problem. Your job is to find a solution, and whether it’s a product like my product, a dessert, a snack, a service, or even a device that you create, then that is what you need to come up with. And that’s probably what you’re talking about when it comes to the minimum viable product. It is a product or service that will bring in people to buy your product or service in exchange for money to solve that problem. And that is what investors look for is how good or awesome is your end EP. Many pharmacists always tell me, oh, I’m not creative or I don’t know how to make dessert or I’m not a baker, I’m not an engineer. Neither am I. But you are resourceful. You’re a pharmacist. So you can easily hire a coder to perhaps make a software app for an iPhone that would track down smoke alarms in your house and find out when that battery is going to run out. You can hire engineers to create a device for you. My whole point is that designing, creating a product doesn’t have to be a solo mission. In my case, it’s a solo mission because oh heck, we’re always into compounding in laboratories and we’re always making something. And I’m a mom, so I’m always baking new recipes. It’s a small experimentation. So you don’t have to be a chef or a professional engineer or a writer or anything like that to pursue a product or device or something that solves a problem. So that’s No. 2 is find a solution, create it. No. 3, now you’ve got to test it. You’ve got to find out if your market that you’ve identified, like the other moms in your area, the pharmacists in your industry, like what you’re selling. And I don’t mean people like your mom or your dad or your brother or sister or husband. They don’t really count. Not to say their opinions don’t matter, but they’re really nice and they love us. So they’ll say whatever makes us happy. You want to know if your friend of a friend of a friend is going to buy your product or MVP. So this is a person that doesn’t know you, has no connection with you, and is more likely to give you an honest opinion. If they’re willing to give you money in exchange for that service or product you’re providing for a problem that you both share, you have an awesome idea that is worth pursuing. With that being said, if you get like a thousand ideas in a given month, maybe one or two might be feasible or fit all of those check boxes. To me, the ones that really require more attention are the ones that stick around. I have a lot of ideas, and I don’t always move on every single idea. But if an idea comes back to me in two or three consecutive days or weeks, like I just can’t let it go, I dream about it, I obsess about it, I think about it when I’m running, now that’s an idea worth pursuing because your subconscious knows it’s a good idea, Karine, don’t let it go. It’s something worth pursuing. That’s why if you look at my bio, I do more than just My Guiltless Treats. I’ve actually written a book, I have created an app for pharmacy students to help prepare for the board exam and medical students to help with their SEP boards. So I’m not just limited to the role of pharmacy. I’m not limited to the food industry. If I feel there’s a problem, in which I did, I hire coders, I learn how to write, I hire editors, I had a publishing team that all helped me get to my purpose.

Tim Ulbrich: That’s great. And one of the questions, Karine, that I’m thinking of as you’re sharing your story is when I hear 25,000 units in 18 months, obviously you are solving a problem that people are interested in that are raising their hand to purchase, but you haven’t scaled nationally into large retailers, despite the opportunity being there to do so. And that has been an intentional move, as I understand it. So my question here is how and why did you arrive to the decision that you wanted to control your growth?

Karine Wong: There are two reasons why I chose to control my growth. In the food industry world, there’s a saying, you go hard in your backyard. That means that all your marketing, all your efforts to brand, to market, should be in your local region. It doesn’t make sense for me to let’s say get in Costco or Whole Foods nationally when I’m here in California. Nobody in Chicago or East Coast knows who Karine Wong or who the Guiltless Girl is or what panna cotta is that’s made of coconut cream. They don’t know. So it’s going to be a very hard sell. And now with COVID, it’s even harder because I can’t hire marketers to go out there to demonstrate the product. That’s the first reason is to always market your product in your area. If you’re able to do a service remotely, that’s a little different. But the point is that people are more likely to buy your product, buy my product when they know you, heard about you, seen the car, seen your Instagram posts and are more familiar. So in California, in Orange County, I am very popular as the Guiltless Girl. Selling product is very easy, I sell in a few stores, and they sell through it, which means that nothing is left over. They always run out. That’s a positive sign. I’d rather have those benchmarks than to be in let’s say 200 Whole Foods stores and sell 10% of what I stocked. There’s no glory in that. There’s no fame or money to be made when you’re only selling a little bit at those stores. And eventually, those stores will discontinue you because you could not show velocity in their stores. So that’s the first reason why you want to go hard in your backyard. And the second reason is that there has to be a balance. If all I did was My Guiltless Treats and nothing else, then yes, I would go national. I would go and find investors and get seed funding to go national. I would even go on Shark Tank because that’s all I got going on and my role is to go national. And I would actually hire a larger team and brokers to get those milestones. But I am not just the CEO of this company. I’m also a professor. I teach remotely for PharmD students for PGI West University and Yogi (?). So I’m busy with that, and I do love teaching pharmacy students. I’m also a pharmacist. I’m doing remote pharmacy from my home, and I’m a pharmacogenomics counselor. So there’s a lot going on my plate. So I’ve got to be home, and this is a good balance because I can spend maybe three days a week doing Guiltless work, including weekends, and the other days are spent doing teaching, being a parent, working out, kind of having time for myself. And the balance is fantastic because I’m very happy and I feel successful because I do make money. I have enough money to pay for my staff. I have enough money to hire people to design logos for me, I can basically sustain — the company is sustainable on its own. So that’s a sign of success. And I don’t need to make a million dollars from this. I just need to make it run on its own, which it is. And I need to have time for myself, my kids, my family, and teach. If I lost all that, there is no glory. There is no fame. So controlling growth is about finding a balance where you have time for yourself and your family and your other hustles and passions but also time for yourself and the company. It’s a balance, really. And you know, I’m OK making what I’m making right now. I am making profit. But yeah, I’m not a millionaire. And that’s OK. I’m very happy with what I’m doing. You’ve got to be OK with all those things. Other entrepreneurs, for them, it’s all about, I want to get in Costco, I want to get in Whole Foods, I want to be in all these Krogers and Vons. OK? That’s your jam. It’s not my jam. Just because they’re saying it and they want it and their business coach is saying it doesn’t mean it’s for you. So you have to look at yourself and your life and see is that for me?

Tim Ulbrich: That’s great wisdom, Karine. I would encourage folks, you know, to spend some time getting clear on your personal goals and why. In addition to what we’re talking about here today, which is the business goals and why, as Karine shared her personal goals, the balance obviously informed her business goals and the direction that she is taking with the business. And Karine, I’m glad to hear what you said about controlled growth. I think we have glorified the grind and hustle and working hard at all costs. Perhaps it’s the Shark Tank effect, you know, I’m not sure. But I think it’s a good reminder of us each individually thinking about what success may look like. So Karine, tell us about a lesson that you shared with me before we hit record, which was the power of saying yes. Tell us about for you and your journey, saying yes to folks, why this was so important, even recently, in terms of the value and the power of saying yes as a business owner.

Karine Wong: Being positive and affirmative is an attractant to other consumers. Consumers, when they buy a product or service, they’re not just buying a product or service, they’re buying from you. They’re buying you. They love you. They want to be in your life, they want to be engaged with you. If you’re negative or cheap or frugal or penny-pinching, they’re probably not going to come back to you. One of the things I adopt is generosity is key. If I can do it, I will, whether it’s emotional support, physical support, knowledge, expert advice, I’ll do it. I have no problem at all. I consider ourselves a drug expert. So if someone asks me a question randomly in the aisles of Target, I’ll be happy to help them. I have no qualms about holding back information because oh, I don’t work here or I’m on break or whatever. If you need help, let me help you. It’s better that I help you than for you to find the answer yourself on Wikipedia, which is not something I recommend. So when you say yes, the rule is this: Say yes to people if you can do it. For example, when you have a product or service and especially in the initial phases of the company, a lot of the times will be giving away product for free. And that may sound counterintuitive because you’re trying to make money. But the first couple years, you’re not going to make money. And your goal is to let people try your product, even if it means giving it away for free. Most people will not try a product and pay for it just to test the waters. It’s better for you to give it away for free, gift it, donate it, mark it as a tax writeoff on your income tax returns. And that allows people to try your product and go, you know what? She’s quite generous or he’s quite generous. They let me try it for free, there’s no contingency offers, there’s no like alternative motives. They’re going to feel warm and fuzzy with you. And they’re going to love the product because hey, you know, this is a good product. And I like it. And yeah, I would come back and ask for more and I would probably pay for it. So offering the first dose or first service or first product for free actually is a really awesome marketing idea if you could afford it. And usually, you can because you have the capital for that. If you can’t afford it, don’t do it. The other things you can offer for free would be your knowledge. If you know something, if you are very well read up on gluten diet, gluten-free foods or celiac disease or eczema and they’re going to shift to dairy, definitely talk about it. A lot of consumers will come up to me, once they discover who I am, they’ll open up their hearts and tell me their medical problems. So I know a lot about their eczema, rosacea, diabetes and other problems. And I’m happy to help them. And they feel pretty much open because I’m not timing them, I’m not charging them, I’m not going to ask for their medical insurance. And it’s a great exchange of information. So they value my input, and they usually walk away with a panna cotta, they usually walk away with something that I provide because they like who I am. So there’s the generosity of knowledge. The other thing you can offer is your time. You didn’t know this, but when the COVID hit, a lot of my colleagues were being fired for obvious reasons. So I offered free CV reviews because I have experience hiring pharmacists and technicians. I said, “Submit your resume to me and we’ll help brush it up.” And it was great because people were sending me — I actually opened up publicly to everyone in my community, my neighborhood, and all I could reach. And I got so much response, and people even said, “I liked it because I don’t know who you are, Karine, but I love it that you’re doing it,” so they were referring me, shared my post, and I didn’t charge them for it. I just wanted to look at their CVs, make recommendations, and I send it back to them. So I do it now for pharmacy students and those applying for residencies. Just my opinion, just make it nicer, cleaner. And usually I could find one or two errors, and they’re very appreciative. ‘Oh my gosh, I forgot to add this,’ or ‘Oh my gosh, I didn’t know I had to add a header or footer.’ Those are kind of core things you look at as a director because we get so many resumes for one position in a hospital pharmacy. So it helps to have page numbers and footnotes and lists of references instead of me asking for it. So those are little things that I want people to see what I see. That’s what I offer is my knowledge, time, free product if I can do it, free service. At the end of the day, it makes the consumer, the other person, just like you more, like your company more and guess what? All those people I helped the first few years of my career, of my business, have come back as repeat customers. So I didn’t charge them the first time, but guess what? They’re total lifetime revenue for one customer is well over $100. So is it worth it? Yes.

Tim Ulbrich: Great advice. And the resume service is a good example of serving others, whether it’s product, whether it’s time, you know, I think offering and bringing something valuable and serving others without necessarily a return in mind but just providing that value in the moment, we know reaps great benefits. So I think you articulated the value of saying yes well. I try to follow that advice from mentors I’ve received before. And it’s not about being reckless. I mean, as you mentioned, being the face of the brand, folks are looking for that energy, they’re looking for that enthusiasm, they’re looking for that we’ll figure it out type of mentality as you go along and build some of those relationships. Karine, I really appreciate the time that you’ve taken, the wisdom that you’ve shared. What is the best way for our audience to connect with you to learn more about your journey as well as to follow the work that you’re doing with My Guiltless Treats?

Karine Wong: Very simple, just go to MyGuiltlessTreats.com. On the very bottom of the home page is “Send a Message.” That goes straight to me. All of my emails and phone numbers and even an Instagram/Facebook, you can go onto My Guiltless Treats, it goes straight to me. I don’t believe in hiring a third party marketing agency for that because I want to engage my customers. So if you want to engage with me, just go straight on board to the website, email me, run by your ideas with me or any questions you have about possibly starting a company or a product, and we’ll talk about the feasibility of it. It’s better to rule it out or rule it in as early as possible before you need to put money towards the product or whatever.

Tim Ulbrich: Absolutely. We’ll link to the website in the show notes. We’ll link to some of the social media connection opportunities as well. And again, appreciate you taking the time, sharing your journey and your willingness to also support and encourage other pharmacy entrepreneurs that are out there. So Karine, thank you very much.

Karine Wong: You’re welcome. It was a pleasure, Tim. If you decide to come up with that smoke alarm app, you owe me 10% of the royalties.

Tim Ulbrich: You’ve got it. It’s a promise. Thank you.

Karine Wong: Thanks.

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YFP 192: Findings from the 2021 Pharmacist Salary Guide

Posted on February 25, 2021November 2, 2022 by yfpadmin

Findings from the 2021 Pharmacist Salary Guide

On this episode, sponsored by Insuring Income, Alex Barker, founder of The Happy PharmD, joins Tim Ulbrich to discuss takeaways from the 2021 Pharmacist Salary Guide, including the current state of the job market, trends in salary and compensation, and contributors to job stress and dissatisfaction.

About Today’s Guest

Alex Barker is a pharmacist, entrepreneur, author, and creator of The Happy PharmD and the Happy PharmD Summit.

Summary

Alex Barker, founder of The Happy PharmD, breaks down the 2021 Pharmacist Salary Guide, a helpful resource for pharmacists to understand trends in salary, the job market, and job satisfaction and stress. Alex and his team gathered data from multiple sources and reports to help share trends about the pharmacy job market. Alex shares that pharmacists are still well paid, earn a salary in the six-figure range, and are seeing a small increase in pay, however there are trends that pharmacists should be aware of when it comes to salary changes.

Alex first digs into the low ceiling pharmacists have on their salary. While pharmacists are very well paid when just getting out of college, especially when compared to other similar professions, after 20 years they may only see an additional $12,000 added on to their salary even if their job performance exceeds expectations. Some salary starting numbers may be even lower and it is difficult to work your way up to a top tier salary. He discusses that pay is based on what type of pharmacist position you hold. The highest paid positions are in management, pharma, and nuclear pharmacy, however a small percentage of pharmacists hold those types of positions.

He explains that the reason for such a small increase in pay is due to a ‘perfect storm’ he’s seeing in the pharmacy job market. Alex describes that due to the supply and demand of pharmacists, this perfect storm has been created: 13,000-14,000 pharmacists graduate each year, ⅓ of current pharmacists (~100,000) are looking for a new job, and a negative job growth is predicted due to the oversupply of pharmacists (321,000 jobs decrease to 311,200). Because of this, it’s important to consider your career trajectory. Alex also talks about satisfaction and job stress and Job Rx, a new job board that pulls open pharmacy positions from employment sites.

Click here to download a free copy of the 2021 Pharmacist Salary Guide.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Alex, welcome to the show.

Alex Barker: Thanks for having me, Tim. I enjoy hanging out with you.

Tim Ulbrich: It’s been awhile, specifically Episode 092 when we talked about creating an indispensable pharmacy career all the way back in March of 2019. But for those in our audience that may not know you, I know many folks do know you and the work that you’re doing with the Happy PharmD. But tell us a little bit about your pharmacy career and the work that you are currently doing with the Happy PharmD.

Alex Barker: Happy to, but first I want to acknowledge — was it Episode 092?

Tim Ulbrich: 092.

Alex Barker: So you had me on 100 episodes later.

Tim Ulbrich: Nailed it.

Alex Barker: Wow, good job.

Tim Ulbrich: That was planned. No, I’m just kidding. It wasn’t.

Alex Barker: Yeah, so I’m Alex Barker. I’m a pharmacist. I graduated in 2012, did a residency, went into clinical practice, did not enjoy myself and struggled to find my way with my career. That led me to business, led me to coaching people, led me to creating a few other media companies and other crazy, random ideas. And then I saw, unfortunately, the need of our profession. A lot of people are burned out, a lot of people are unhappy, unfulfilled in their positions. So I took coaching along with our profession and kind of married it into this Happy PharmD where we help pharmacists and coach them into better careers and jobs, doing that since 2017 now.

Tim Ulbrich: Wow.

Alex Barker: We’ve got — yeah, it’s crazy.

Tim Ulbrich: It is.

Alex Barker: If it was back in 2019 that I was last here, I think we only had maybe four coaches including myself. We now have 11. And we have an awesome team, support team, we’re doing research. Lots of crazy stuff. And a good colleague of yours now is our lead coach, Jackie Boyle.

Tim Ulbrich: Yes.

Alex Barker: Who is at NEOMed in Ohio. So yeah. That’s what we do here at the Happy PharmD. And I know why you brought me on was to go over trends and what’s going on in the job market and specifically in pharmacists’ salaries. So, happy to be here.

Tim Ulbrich: Awesome. And for those that are not familiar, make sure you check it out, TheHappyPharmD.com. We’ll link to it in the show notes. And Alex, as you mentioned, today is a topic that I know is of interest to our community, one that I enjoy talking about on the show as well as our folks are certainly interested. What’s happening in the job market? What’s happening with the current state of jobs? And you have an incredible annual salary guide of which we will link to in the show notes and I mentioned in the introduction that distills data about pharmacist salaries, salary changes, job stress, job satisfaction, and overall the pharmacy job market. And one of the things you talk about in there, which we’ll get to towards the end of the show is the perfect storm and what that means as it relates to where we are as a profession. So you’ve been doing this now for several years, is that right, Alex? The salary guide?

Alex Barker: Since 2015, which meant we were looking at 2014 data. So yes, we’ve been doing this many, many years. We have a lot of data, and it’s — frankly, it’s all over the place. It’s a little frustrating. But we’ve got a good — you’ll be able to see in charts and graphs, you’ll be able to compare yourself to others. I’d recommend you look at yourself where you’re at rather than the trends as a whole, but we can dive into those here. Where would you like to hit first?

Tim Ulbrich: Yeah, so my first question, Alex, is there’s other resources out there, you know, a couple that come to mind, several state associations do this, I know we do here in Ohio, there’s the Pharmacy Workforce Survey, which I believe happens every five years, one published last year. So what’s the need for this? Tell me more about why you felt like there was a gap and an opportunity to fill that gap with this resource.

Alex Barker: So one of the things that I like to do whenever I’m looking at a complex problem is multiple resources. You know what, that’s not really unique. I think every pharmacist does that, especially when we’re researching a disease state or a new drug. We’ve got to have the whole picture, right? And one of the things that frustrated me about the multiple reports were the indiscrepancies and the different numbers. So I didn’t really see anyone else putting all of this information together in one place. So that’s why I started way back in 2015 working on this report. I think I published it originally on Pharmacy Times. And we had since now put it on our website because obviously we weren’t around in 2015. I like looking at seeing multiple sources of data, multiple reports, to see and to look for those trends. Right? Because I think we all have hearsay and, you know, secondhand stories of —

Tim Ulbrich: Absolutely.

Alex Barker — what’s happening in the job market. And there is some truth to that. And then we actually have some solid data for some of those hearsay stories. But overall, we can say that pharmacists are still well paid. We’re still in the six-figure range. We are continuing to see a very small overall increase in our pay, albeit that it is very slow and it is slower in comparison to the majority of other health professions. But we are seeing some trends that we should all be aware of when it comes to salary changes.

Tim Ulbrich: And Alex, one of those that you talk about in the guide that I know is something that is of interest to me and the financial plan because these topics are very connected I think for obvious reasons is that when it comes to pharmacist’s salary, of course we’d expect to see some difference based on experience, depending on areas of practice of which we can dig into further. But one of the things you mentioned is that there’s an extremely low ceiling for pharmacists. And this is one of those things — speaking of hearsay — that I have always thought is of course varies based on positions and we know that some areas, there’s more long-term upside and maybe some longer term growth opportunities, but for many pharmacists, outside of cost of living adjustments, if that sometimes, that there’s a relatively low ceiling of where you start, which is a great blessing, may not be too far off from where you end. And you know, that matters for a whole lot of reasons when we talk about the financial plan. So give me your read on that. You know, tell us more about what you’ve found and why is that so significant?

Alex Barker: We should be well aware as pharmacists, we are very well paid for just getting out of college. If you compare our education, the length of it as well as the job market and compare it to other similar professions, we are more likely to be paid higher. So according to a report by Pay Scale, which was the only one, unfortunately, that looked at years of experience with an annual average wage, you’re looking at about $113,000 is the average starting salary for less than years experience, which is, I mean, insane. If you told that to a high schooler, you’d get their ears to perk up.

Tim Ulbrich: That’s right.

Alex Barker: However, if you add on years of experience, so if you work in the profession 20+ years, according to this report, you’re only adding about $12,000 more per year to your salary, which I never realized that when I went through education. I never had my eyes open to that problem, but like that should be a sinking feeling that it doesn’t really matter how much harder you work, it doesn’t matter how long you work with a company, chances are your salary will not increase. In fact, for an institution I worked for, it was very clear that after a certain amount of time, years of experience, that my salary would increase incrementally up to a point. And then at that point, I was locked at the rate at which, you know, the cost of living increases, which in my area, is very low. So —

Tim Ulbrich: Regardless of performance, regardless of performance, right?

Alex Barker: Right. Right. And I would not say that I was an above-average pharmacist. I would say that I was just kind of in the middle. And it didn’t matter. And what made me the most frustrated was that finding out the amount of money that people got for doing insanely well. We had a few amazing pharmacists on our team. They worked really, really hard. And I found out that their — when they exceeded expectations was the measure that they had to get in their annual review, that when they got that, it equated to about $1,500. $1,500. And if you take that, you divide it by the hours that you work, I mean, it isn’t worth it. It isn’t worth it at all to even try harder. And so what we’ve kind of created, unfortunately, in this perfect storm, one factor of it is we have a profession where we are not rewarded for effort. And that’s disconcerting. It creates complacency, I would say for sure. I mean, it did within me when I was a clinician.

Tim Ulbrich: Yeah, and I think especially at a time where you and I both know, we need some innovation, we need some risk-taking, we need some great ideas coming forward. And you know, compensation of course isn’t the only way that’s going to drive that. But certainly, you know, a low ceiling, as you mentioned in the report, may subtly not encourage high performance. And I think that’s a noteworthy thing. And of course, it goes without saying, we’re generalizing here. As you look at this data across the profession, there are certainly areas of the profession where there’s more upward mobility, I would use management/admin type of positions on the health systems side as one example. But there are certainly others. And of course when it comes to the financial plan, what screams to me here, Alex, is that you have to if this is going to be true for your career and the trajectory, you have to be that much more diligent about the financial plan from Day 1. Right? Because naturally what happens is expenses are going to go up if we let them. And so over time, if expenses go up proportionally but salaries do not, we’ve got a problem in terms of being able to achieve all the financial goals that we do. Another way of looking at this if we want to be a little bit more half-glass full is that you do have a great salary at a very young age coming out of school. And if you’re able to keep those expenses down, you’ve got a long trajectory where that money can be saved, you can have compound growth and other things where other professions, while there might be more upwards trajectory, it might take them longer to get to a point of savings. But of course, we haven’t talked about the $175k of debt that our graduates are taking on. Separate story for another day. So when we look at the pharmacist’s salary based on job sector, we know that there are a lot of avenues pharmacists can take in their pharmacy profession throughout their career. So tell us a little bit more about the variation you see in terms of jobs that have higher salary ranges, jobs that have lower salary ranges.

Alex Barker: I don’t think people will be too surprised, but perhaps maybe by the amount. So based on where people are working and the kind of job that they’re working, which by the way — don’t try to do this yourself, OK? Don’t go to look at all these reports because they call pharmacists by different names. I mean, the Bureau of Labor Statistics, which is a U.S. government organization, defines one of our professions as working at food and beverage stores. Tim, I’ll be honest, I don’t know what a food and beverage store is. It’s not a gas station. And they already have general merchandise stores and pharmacies and drug stores. So maybe I’m missing — I live in Michigan, so I haven’t been all over the world. I don’t know what this is. So where are the great paying jobs? Like you said, it comes down to management jobs, they are clearly paid more. We’re looking at ranges anywhere from $15,000 to even $25,000 more. We know that pharma jobs, particularly higher management jobs, pay extremely well. Nuclear pharmacist is one of the top-paying patient care jobs. JobRx reported that their average was at $157,000, which is very, very high. And again, we’re also seeing similar trends that where there is more responsibility, so more prescribing ability, we see pharmacists being paid higher, so clinical pharmacist roles, whereas where we’ve seen the lowest paid pharmacists, we’re seeing those typically in mail-order and PBMs. We’re seeing it in medical marijuana places, mail pharmacies. And as everyone would expect, we are seeing lower salaries, trending downward, in chains and of course independents, long-term care. Now, to clarify, everyone’s got opinions on these things. ‘Oh, well, I know of this person who got this. And I’m paid this.’ It’s trends. We have to keep all of this with a grain of salt because the reporting from each of these sources varies greatly. So I’m herding cats here, and I’m just telling you about my experience with it, OK? It’s challenging.

Tim Ulbrich: Sure. And it’s a good point, I mean, I hope our listeners will take it with a grain of salt. But it’s a great opportunity to see what’s out there. And what’s of concern to me, Alex, is I’m thinking of the distribution of pharmacists by practice, and that first group that you mentioned, management/admin positions, industry and nuclear pharmacy I think were the three you mentioned, that is a small sliver of the pie. Right? The bigger chunk of the pie is the community positions, is the managed care positions. And so I think it is something that we have to consider and we have to take seriously in terms of the significance. Now, hearsay — speaking of hearsay — one thing I have heard that I think is easy for us to hear and say, “Oh my gosh, the salaries of pharmacists, it’s falling apart,” and that is the instances of somebody starting at $35 an hour, $40 an hour, you know, and is it because of a saturated market? Is it because of this or that? Are they perhaps part-time? You know, 32 is kind of the new normal, what we’ve seen here in Ohio. Tell us more, give us the data. What are you actually seeing when it comes to these numbers of, “Hey, I’m starting at $35 or $40.” Is this isolated? Is it more widespread?

Alex Barker: Hearing you say that makes me feel like maybe I’m the one that needs to collect those reports and that data because no one is. You’re right, it’s all anecdotal. I’ve seen it in your Facebook group, I’ve seen people report some of the offers that they’re getting. It’s abysmal. The worst I have heard is $28 an hour. That’s a floating position. I think it was in Austin, Texas or one of the major cities in Texas. And we know that these typically are retail chain positions that are offering these insanely low salaries. We also do have reports of it happening as well in hospital positions. And we also know that there are a few remote clinical positions that are very low as well. And so we’re talking like MTM jobs where you’ve got a lot of flexibility. You work when you want to. But you’re looking at an annual salary of maybe $70,000-80,000. That’s not true across the board, but that’s what we are receiving reports from from the people that get jobs because occasionally, we do salary negotiations for people as well. But the only evidence we have as far as an actual report that’s been shown that I enjoyed seeing this year was drug topics. So if you look at their 2020 base salary, you see this very concerning skew of data — and I’ll send you a picture of this as well so you can put it in the podcast notes if you can do that, I don’t know — but you’ll see that 13%, which is a huge number of people, at the end of their report were receiving less than $70,000 a year or less. And unfortunately, what they didn’t report in this data is the number of people in that bracket who were full-time or part-time. But we do know that the total amount of people was only 13% as well that worked part-time. So I’d have to venture a guess that that 13% that worked part-time, you know, potentially were majorly in that bracket of 13% reporting that, I don’t know. But unfortunately, what we are seeing is because of the glut, because of how easy it is to hire a pharmacist, particularly in a very generic role, we are seeing a lower salary being offered to those pharmacists. And we — based on what we just talked about, that low ceiling, you should assume that you will not — you’re not going to work your way to the top tier salary, $120,000-140,000 if you’re being started at $70,000 annual.

Tim Ulbrich: And where you start matters for obvious reasons. It matters when you’ve got $175,000 of student loan debt, it matters when hopefully if you have something like an employer retirement match, you know, 4% of $70,000 versus 4% of $120,000, that matters over time and compound interest and growth. So question for you here — and I know this is more complicated than we have time to unravel, but what’s the reason? You know, is it simply that we’ve got supply and demand, we’ve got 13,000+ grads coming out per year, pharmacists aren’t retiring at the rate that we thought they may. Is it more about the evolution of the pharmacist’s role and we’re seeing faulty business models and not only those that are being strained financially from existing models but new, innovative ones not popping up that can just find new positions? Like what do you see as the main culprit here?

Alex Barker: Supply and demand. I am not a labor or economics expert.

Tim Ulbrich: Come on, Alex! No, I’m just kidding.

Alex Barker: I did consider getting a PhD once, but no. Not my thing.

Tim Ulbrich: And then you saw the light.

Alex Barker: I did. But now what we have is this perfect storm, as I alluded to in further of our salary guide. The perfect storm is approximately 13,000-14,000 pharmacy students graduating every year entering into the job market, approximately one-third of the current job market — so about 100,000 pharmacists — is looking for a new job — and that’s based off of the AACP national workforce study — and then we also have the U.S. Bureau of Labor Statistics predicting a negative job growth from 321,000 to I think it’s like 311,000.

Tim Ulbrich: Correct.

Alex Barker: So by the way, if numbers confuse you, if I’m saying a lot of numbers, check out the report. It’s all there. Because if I was listening to this, I’d be like, what did he just say? But you’ve got this gestalt of a problem where each factor is creating a much more complex issue. But ultimately, what we have is the main positions that pharmacists take, i.e. hospitals and community pharmacy, and we’re a dime a dozen. I asked on LinkedIn managers, approximately how many applications do you get per job? And it was anywhere from 60 on the low end to I think the highest was over 210. And so if you are a smart manager, you are going to think what is my biggest cost? Employees. So if I have that many people, am I going to give them a compelling offer when if I don’t get my top pick, I probably will get my second, third, fourth, fifth —

Tim Ulbrich: Who are all pretty darn good.

Alex Barker: Maybe even my 15th pick.

Tim Ulbrich: Yeah.

Alex Barker: Because someone’s going to take this offer. Right? We’re pharmacists, we have a PharmD, we’re doctorates, we’re insanely capable people. So you know, getting your 15th pick isn’t the worst thing in the world for them. For our profession, however, what suffers ultimately is our salary, our buying power. We no longer have that. And back in the 2000s, we had that inflated need, right? We needed pharmacists. You got signing bonuses, you got cars when you got offered a job. I don’t know if students are told that anymore, but that’s the way it was. And now, everything’s flipped on its head. We’re in the exact opposite situation, albeit that there is a huge hiring phase happening right now simply because of the COVID jobs.

Tim Ulbrich: Yep.

Alex Barker: We’re seeing a ton of people readily take those. But these pharmacists are just probably going to be in the same situation once this vaccination rush passes through. It isn’t like we’re going to need all those pharmacists again to vaccinate every single year. They’re going to figure out cheaper ways. And everyone knows you can pay a nurse a lot less to vaccinate people. So this temporary demand is not going to last.

Tim Ulbrich: Now, I am — and I’m be remiss if I didn’t say, Alex, my audience knows this — I am a half-glass full type of person. And I will say the one thing — and it does not mitigate the concerns here — but the one thing that stands out to me here is, as I alluded to early today, I do think we desperately need some innovation, thinking a little bit differently, people taking calculated risk. And when you’ve got $175,000 of student loan debt and you have $120,000 contract that’s there to sign, it’s very hard to make an otherwise decision, right? I mean, it’s classic golden handcuffs situation. And I do think there’s a lot of pharmacists out there that have great ideas. And one of the reasons we’re so passionate about the financial plan side of it is that we know the financial pressures are very much connected to the career opportunities, the willingness to do either, whether it’s starting something or even just enjoying the work that you do and having some choice. So I am hopeful. I am also concerned that lower salary and a debt load that continues to climb is a compound problem. But there is also perhaps an opportunity out there where folks may now say, “OK, I can make $70,000, or I might go do this.” And that, “I might go do this,” might be something that’s of perhaps more interest or even an opportunity to pursue.

Alex Barker: You bring up a really good point that I didn’t consider in writing this guide is particularly for new grads, considering your career trajectory is insanely important for determining your financial plan because if you think right now that now’s a good time to be a clinician, trends are showing that clinicians, people who are able to prescribe or have some sort of agreement with a doctor, those jobs, we’re not seeing a major increase in those salaries. In fact, we’re seeing students — or I should say residents being offered less and less money. So you know, if you think you’re wanting to make a lot of money later in your career and you’re willing to work up to that, there are plenty of opportunities out there. We didn’t even go over the fact that as a pharmacist, you’re more than qualified to be a pharmaceutical sales rep. And that has an amazingly high ceiling. You could be paid insanely well. It is not a pharmacist job. It’s not a typical one. But you are overqualified to do it, and if you have the ability, if you have those natural gifts to sell, the ceiling’s really high. And so I think — you know, this is something I didn’t consider, so I’m glad you brought it up, Tim — that when considering your financial future, there is a space for you to take a job that pays you less if the trajectory, if the potential plan of that path could pay you a whole lot more because the reality is that as a clinician, your salary is not going to dramatically increase. One minor report that I didn’t touch on in my report is that Drug Topics said 41%, but in their report reported additional income in 2020, anywhere from the majority of them making around $1,000-5,000 in extra income. Now, they didn’t say how they made that money, but the case is that people, they want to make more. They’ve got things to do with that money.

Tim Ulbrich: Yeah.

Alex Barker: So consider your career trajectory wisely. If you’re looking at the $175,000 and thinking, I need to pay this all down, you know, don’t make the mistake of rushing into a job that just pays well but is a dead end.

Tim Ulbrich: That’s right. Yep.

Alex Barker: That’s just a risk to take.

Tim Ulbrich: Got to think about the 30- to 40-year timeline. And here, we’re talking salary, which is one component but certainly not the only, right? We could have a pharmacist who’s got multiple job offers, is making great money, but they may not like the work that they’re doing or it may be stressful. So talk to us about satisfaction, job stress. Obviously we know job stress correlates to the rate of dissatisfaction that pharmacists are feeling in their work. What did you find here in the reports as far as the number of pharmacists, percentage of pharmacists generally speaking that are either satisfied/dissatisfied in their work and tell us more about those findings.

Alex Barker: Your term earlier, golden handcuffs, I think captures the feeling that most have. According to Drug Topics, they reported 44% are unhappy with their jobs. But a third of the entire group that they surveyed was looking for another job because of their unhappiness with their current one. I think they asked some wrong questions in their survey, but in my interpretation, we’re looking at 7 out of 10 pharmacists were not satisfied with their jobs. And we all practically I think know the reasons why pharmacists are unhappy across the board. But there are some other reports that show that we actually have a higher satisfaction score than that. Pay Scale said that we’re about 74% satisfied, which was higher than what I thought. AACP said 58%. But the pharmacists that were the most happy were those that were in independent community pharmacies, ambulatory care, or non-patient care, which kind of goes back to our problem — you and I have talked about this numerous times. We as pharmacists, we’ve got an identity crisis. If we’re supposed to be patient care-oriented, then why are people who are not in patient care more happy than those that are in patient care. Another survey question in that AACP report was that only 27% of people said — agreed to the statement, “I feel happy at work.” Grinds my gears. I’m supposed to be the Happy Pharmacist, but I’m not happy about that.

Tim Ulbrich: I mean, it’s heavy. And you know, again, this goes back to your comment — I hope the new practitioners and even the students listening are really thinking about the long horizon and trajectory. And this again goes back to me — for me, obviously, the financial plan and cost of living. If you rise your cost of living and everything that comes with it right out of the gates because you’re now going from -30 and debt every year to make $110,000 or $120,000, it is very hard to walk that back. Very hard to walk that back. And if you can hold the line — and I understand certainly this is easier for me to say in Ohio or you to say up in Michigan that may not be as easy for folks that are in higher cost of living areas. But if you can hold that line, especially as you’re going through this transitionary period where you’ve got multiple competing financial priorities, you’ve got typically big student debt loads, you’re trying to really understand what you do or do not like in the work that you’re doing, give yourself options. You know, we talk about all the time, put yourself in the driver seat rather than that being dictated for you. And I think, of course, this discussion certainly emphasizes that as well. Alex, I want to wrap up, you mentioned earlier in the episode talking about the Job Rx. Tell us more about Job Rx. You talk about that in the guide as well. What is Job Rx? And what can folks expect to get from that resource?

Alex Barker: Yeah, Job Rx is a website from a friend of mine, mutual friend of yours, Kevin Miro (?). And I included in this report simply because of some of this newer data that he’s been finding in his job board. If you look at the powers that be, there is a pharmacy demand report, which stated in the 4th quarter of 2020, only 12,000 new pharmacist jobs were created, which is not great but not awful either, which you know, kind of just makes me think like OK, doing the numbers in my head, it makes sense why we’re getting 100 applications per job. But Job Rx is — essentially, it’s a job board where it pulls in all these jobs from employers’ websites into one place so you can apply and get notified when the newest jobs are created. He reported to me that in December of 2020, they added 12,800 pharmacist jobs in one month versus this other demand report that said that that’s how many jobs were created over the entire quarter. This gave me a lot more hope than I’ve ever had before because I’ve never been able to have access to that kind of information or technology that says OK, what exactly is the job reports and how are you getting that data? He also — and I share this in the report as well — that 16,000 pharmacist jobs were added in January of 2021. So when I hear these numbers, I am a lot more hopeful. I do think that they are slightly probably more than what we would expect simply because of the COVID hire push that is going on. But ultimately, this is potentially an amazing resource for pharmacists to finally find the jobs that are out there. And I’ll make one final note that from what I could tell, the vast majority of these jobs, though, were community and health systems-related, long-term care, hospitals, things like that. So right now, I still know that the majority of the buzz, what everyone is selling as the promised land, is the nontraditional roles, right, the pharma, the work-from-home, the remote. And those are still out there, they are possible. But they are certainly not as available as hospital and community jobs.

Tim Ulbrich: Absolutely. And our community can check that out, JobRx.com. We’ll link to it in the show notes. I think certainly a resource that’s going to afford us an opportunity to have some more real-time data, some more up-to-date information that I know will be helpful to not only pharmacists looking for positions to perhaps — I often found myself in a faculty administrative role trying to advise and help students looking for jobs. I see some value there as well. So JobRx.com, again, we’ll link to in the show notes. Alex, where is the best place that our community can go to connect with you, to follow the work that you’re doing and to stay up-to-date on information that we’re talking about here today?

Alex Barker: I’d love it if you connect with me on LinkedIn, that’s where I hang out, it’s where I spend the most amount of my time. We do have Instagram and Facebook, but after watching The Social Dilemma, I don’t know. I’m just trying to stay on one and not try to give away too much information about my life. But yeah, connect with me on LinkedIn. I’d love to have a conversation with you and I try to have one with every single person that connects with me. So that would be a great place to check it out. Otherwise, you can go to TheHappyPharmD.com where we’ve got a lot of resources, blogs about career paths and of course this salary guide.

Tim Ulbrich: Great stuff, Alex. We’ll link to Alex’s LinkedIn profile in the show notes as well as of course TheHappyPharmD.com and the salary guide. Alex, thank you again for joining us and sharing your insights and expertise on this important topic as we talk about the state of the job market and our profession. Appreciate it.

Alex Barker: Thanks, Tim, for having me.

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YFP 190: 7 Ways to Reduce Your Monthly Housing Costs

Posted on February 11, 2021November 2, 2022 by yfpadmin

7 Ways to Reduce Your Monthly Housing Costs

On this episode, sponsored by Insuring Income, Nate Hedrick, the Real Estate RPh, joins Tim Ulbrich to discuss 7 ways to reduce your monthly housing costs.

About Today’s Guest

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

Summary

It’s no secret that housing costs, whether that be your mortgage or rent payment, make up a large chunk of many people’s budgets. For some people, housing can be 30% or more of their income. Nate Hedrick, The Real Estate RPh joins Tim Ulbrich on this episode to share 7 ways to reduce your housing costs. Reducing your housing costs allows you to have more disposable income to fund your other financial goals. It’s a win-win, right?

The first is downsizing your home. Many people think downsizing means moving into a tiny home or to an apartment that’s drastically smaller than where they currently live. If that’s what you want to do, that’s great, however downsizing can simply mean moving into a house that’s a bit smaller to help reduce the costs of taxes, insurance, utilities, and maintenance. The second way to reduce your monthly housing costs is to house hack. While house hacking may not be for everyone, this is a great stepping stone into real estate investing and can allow you to, hopefully, live for free. The third strategy is to get a roommate. Like househacking, this may not be an option for everyone, but having a sibling, friend, or even stranger live with you can allow you to significantly reduce your housing costs.

The fourth is geo-arbitrage, a concept that’s been picking up some steam over the years especially among those in the FIRE community. Essentially, in order to save money on housing costs, healthcare, or the general cost of living (think gas, food, taxes, transportation, etc) and get more for your dollar, you pick up and relocate to a new place. We know that the cost of living can vary greatly between cities but that your income may not increase or decrease accordingly, so this can be a powerful way to save money if it’s an option for you. The fifth strategy is to use Airbnb to increase your income. Although COVID-19 may make it difficult to put this in action at the moment, this is one to definitely consider when state’s start to re-open more in the future. Renting out your home, in-law suite, or room in your home can bring in extra cash and help you pay down your mortgage. The sixth way to reduce housing costs is to re-evaluate your homeowner’s insurance policy. Just like you’d shop around for car or disability insurance, you can do the same with homeowner’s insurance. You can also check in with your current company to see if there are any discounts available for installing certain security measures or for paying yearly vs monthly. The last strategy is to refinance your mortgage. With historically low interest rates, you may be able to significantly reduce your monthly mortgage payment. However, it’s important to keep in mind the total cost of the loan and any additional fees and costs you may incur when refinancing.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Nate, excited to have you back on the mic. How you been?

Nate Hedrick: Good, Tim. Thanks for having me.

Tim Ulbrich: It’s been I think a hot second since you were last on the show, Episode 178, where we talked about 5 lessons learned during your most recent investment property purchase. But I don’t want to assume that everyone listening knows who you are and what the Real Estate RPh is all about. So give us a brief background of you, your role in pharmacy, and how and why you started the Real Estate RPh.

Nate Hedrick: Absolutely. So I am a full-time pharmacist. I work with an insurance company here in Cleveland, Ohio. But I also moonlight or side hustle as a real estate agent. So I have my real estate license, have had that for four years now. And I work with local pharmacists and other health care professionals to help them buy and sell property here in Cleveland. And then that expanded a couple years ago into Real Estate RPh, which is a website that I run to educate pharmacists about the real estate process, help them find agents all over the country through our concierge service that we’ve partnered up with YFP for. So we do a lot of interesting stuff. And that’s really what my focus is on this year is really growing that network and being able to help more pharmacists around the country.

Tim Ulbrich: Yeah, it’s been fun to see that grow and more and more that are reaching out to you that are in that home buying process. So we will link in the show notes, obviously, to your site. We’ll also have some more information about the real estate concierge service for folks that want to learn more. We’ll come back to that throughout the episode. So today we’re talking all about ways — specifically, 7 ways — to reduce monthly housing costs. And I don’t think it’s any secret, I know from personal experience, that housing costs, whether that’s your mortgage or rent payment, make up a large chunk of many people’s budget. Now, check this out. According to the U.S. Bureau of Labor Statistics, people that fall into the top income quintiles, many pharmacists of course would be included in this, spend around 30-32% of their pre-tax income on housing. 30-32%. That’s a big chunk of your earnings that immediately are being spent on housing each and every month. And when you think about other competing financial priorities, the ones we talk about all the time on the show: student loans, child care, food costs and so — it may feel like there isn’t much money left to put towards other goals. So of course, thinking about strategies for reducing monthly costs I suspect is relevant for many. So Nate, when working with clients looking to buy a home, do you ever give them any insight on how much of their income they should aim to allocate toward those housing costs? And how do you determine that?

Nate Hedrick: Yeah, so you have to be a little bit careful as an agent, right? We are not financial advisors. You know, I don’t want to step outside my shoes a bit. But we always — whenever I’m meeting with a new client, I do make sure we talk early on about the importance of budgeting and making sure that they’re the ones setting the budget. I’ve had numerous clients come to me and said, “Hey, Nate, I got pre-approved for $600,000. What do you think about that?” And I said, “That’s great. What is your budget, though?” It’s a totally different question. So I always make sure that I bring that up, make sure that they understand that they need to set their own budget and then it’s my job to help keep them on budget. So if they come to me and say, “My budget is $300,000. I don’t want to spend a penny over that,” it is very easy for them to fall in love with a house that is $350,000. And it’s my job to make sure that they don’t go that direction, right? Especially if they’ve told me upfront, “This is our number. We want to stick to it.” I’ve seen it time and time again where if you start looking outside of your price range, all of a sudden, your price range goes up. So what I take my own role as is, “Look, I’m not going to tell you how to spend your money, but I’m going to help you stay on goal if that’s what you want me to do.”

Tim Ulbrich: Absolutely. And I can’t overemphasize enough, you know, what you’re pre-approved for and what the budget is likely are two different things. And so really taking some time up front, you know, what are you looking for? How does that fit in with the rest of your financial goals? Obviously biased on our end — working with a financial planner to help do that. And then you go through the home buying process and make sure that that home buying purchase fits in with everything else that you want to do. Nate, when you heard that BLS statistic, you know, 30-32%, of course we recognize we’ve got listeners all over the country. Cost of living here in the great state of Ohio is very different than cost of living up in the Northeast or out West. So we recognize that. But generally speaking, is that statistic, 30-32% of pre-tax income on housing, is that pretty common what you see among pharmacist clients?

Nate Hedrick: Yeah, if not a bit higher, right? I think that’s probably about right, but it tends to be that or more, I would say.

Tim Ulbrich: OK, makes sense. And of course, we have friends, family that are spending much more than 30% of their income on housing, maybe even spending 50% or more. And again, sometimes that’s subject to cost of living in certain parts of the country. So Nate, why is spending this much money on housing something that folks should — you know, I don’t know if avoid is necessarily the right word. Obviously for everyone it’s a personal decision. But that they should at least be aware of the impact that this might have on other parts of their financial plan.

Nate Hedrick: Yeah, absolutely. I think sometimes it’s easy to look at it and say, “Well, I can handle that payment today. It won’t be a problem. But what does that look like in five years? In 10 years? You know, are you going to be working as much? Are both of you going to be working if you have a spouse? There are a lot of things that you want to plan for the future, and getting yourself into the highest possible payment right up front kind of cripples some of the opportunities you have later. So you could easily become house poor, you could — honestly, I’ve seen pharmacists, I’ve talked to pharmacists, who feel like they’re living paycheck to paycheck because that housing cost is so darn much that they have to commit such a large portion of their income to basically staying on track. Up front, if you can make that decision to pare that back a bit, it makes your options that much better down the road.

Tim Ulbrich: Yeah, makes sense. And I think we have a bias and a tendency — I know I do — to tend to look at our future state through the lens of today, right? It’s just natural. So of course things could change, you know, incomes could go up, but also incomes could go down. So do you have margin? You know, what about financial emergencies and being ready for those things, things that we may not be able to anticipate happening at this point in time? So it’s obvious that reducing monthly housing costs, if we’re talking about 30% or more of pre-tax income, can have a huge benefit on your financial plan. We know that when it comes to the financial plan, obviously income and disposable income is what we need to be able to allocate towards our goals. So whether that’s short- or long-term goals. So let’s dig into seven ways that people can reduce their housing costs. No. 1, Nate, we’re going to talk about is downsizing. And I think when people hear that word, they immediately think of living in a tiny home, moving to an apartment that’s drastically smaller than where they currently live. And if that’s what people want to do, great. You know, we’ve talked with several pharmacists that have had very creative housing situations. I think of Rena Crawford that we had on this show talking about her housing situation out in San Diego and her creativity with renovating a van while she was completing residency. And certainly those are exceptions probably to the norm. But what do we mean here when we talk about downsizing? And why can this be such an impactful way to reduce housing costs?

Nate Hedrick: Yeah, I mean, anytime you’re talking about a larger home, more expensive home, it’s not just the house itself, right? You’re talking about more utilities. If you have more square footage, you’ve got more to heat, more electricity, all those different things go into it, more maintenance costs. If you’ve got a larger footprint of house, there’s more stuff that can break. So all of those things start to stack up. It’s not just a bigger house is it. So that’s kind of important. And what I find is that it’s not always about necessarily downsizing but making sure that when you start, you’re not upsizing, right? So downsizing can be a good move if you’re already in a house where you’re like man, this is really crippling our budget. We need to make a decision. But what I see most often is that people who take this ahead of time, before they ever buy their first house and think about OK, I don’t want to have to downsize later, what can I start with now and then work my way up down the future?

Tim Ulbrich: Yeah, that makes sense. And I think your point is a good one, being proactive — and not even just focusing on necessarily things like the square foot and the mortgage, of course, and those things but other things. You know, you mentioned taxes, you mentioned maintenance, you mentioned utilities. What about the lawn care? And really considering everything that’s involved — could be association fees and other things. How do clients that you work with — you know, I know one of the things folks may not necessarily be as obvious is OK, what is it going to cost me all-in per month? You know, of course you’ve got the mortgage and insurance and they’re thinking about those things. But they may not necessarily be thinking as much about utilities and other things. Of course, taxes are readily available information. I mean, is this information that’s typically forthcoming from the seller? Do people have to prod to try to get some utility payments and things like that to be able to best estimate what this is going to be for their budget?

Nate Hedrick: Yeah, I usually recommend to my clients to ask. I’ve seen some sellers — and I’ve done this once — where we actually posted, not our bills exactly, but I had the seller pull their previous utility bills and say, “Look, let’s just put this number out there. That way a potential home buyer can feel good about it, that it’s going to be $300 a month for all this,” or what have you. That’s definitely something that we’re seeing people ask for, and it’s a great way to get a true estimate of what that particular property might be costing someone.

Tim Ulbrich: Awesome. And I think it’s worth mentioning here, of course when we talk about real estate transactions, you know, there’s costs that are involved. So making sure you’re factoring that in. If you’re going to pick up and move, how great — this is a conversation my wife and I have all this — you know, what’s the true net difference, right? So you might look at, hey, we’re going to sell for $350,000 and we’re going to buy for $250,000. But when you really consider the transaction costs, obviously the fees involved, the moving expenses, really trying to evaluate this and understand what the net difference is. So that’s No. 1, looking at downsizing. No. 2 is house hacking, I think a topic that you and I love, love talking about, one that we have both said on this show several times, “Man, if I could do it all over again, I would have house hacked.” So something we talked about Episode 130, I had Craig Curelop on from Bigger Pockets, episode talking about house hacking your way to financial freedom. And that episode I thought was a great overview in his book of the house hacking process. And it’s a real estate investing strategy that we love but also can serve your primary home needs. So Nate, break it down for us. For those that aren’t aware or perhaps a refresher, what exactly is house hacking? And how can it be a powerful way to reduce housing costs?

Nate Hedrick: So house hacking at its core is the idea that you are buying a property in some way, shape, or form that you are going to live in part of it and you are going to have a renter live in another part. And so traditionally with a house hack, you’re looking at like a duplex, a triplex, or a quad, which you can buy as a — the bank looks at it like a single family home. But you can live in one unit and then you can rent out the others. And ideally, with a proper house hack, you’re having that renter basically pay for your mortgage or pay for your mortgage and your taxes in an ideal world. But the idea is that if you can live in part of the house, rent out the other part, you’re going to have far less housing expenses because you’ve got someone else paying for it for you.

Tim Ulbrich: Absolutely. And I think it’s certainly can look very different for the reasons you mentioned. And one of the things I like about Craig’s book on house hacking, he gives a lot of different examples from his personal situation, others that did it, that I think will give folks a variety of ideas about what house hacking may look like for them and how it may or may not fit into their home buying goals. So Nate, have you worked with clients that have done a house hack? And if so, what was their motivation?

Nate Hedrick: Yeah, actually, I’ve got one right now that I’m working with locally here in Cleveland that’s looking to house hack, which is fun. We’ve been doing — running numbers on houses recently and looking for opportunities. And right now, this pharmacist is actually living in a house with a couple of roommates, wants to buy his own place but doesn’t want the housing prices or the housing expenses to jump dramatically, right? If you go from living in a $400 a month room or whatever the cost is there to this big housing payment, it might be a shock to your budget. But if he can transition to only a couple hundred dollars because the house hack is paying for some of that cost, you can get your own place, start building equity, all the advantages of owning a home without this huge uptick in expenses. So I’ve been working with him to try to find that opportunity. And then we’ve got a ton of concierge clients throughout the country that have done this. I think we’ve talked with a couple here and mentioned a couple in the past that have primarily been searching for a house hack when they’re looking for their first house.

Tim Ulbrich: Love it. And speaking of roommates, let’s talk about roommates. No. 3 here on our list of seven ways to reduce your housing costs, No. 3 is get a roommate. Nate, I thought this wasn’t college anymore. So similar to house hacking, getting a roommate obviously could be a way to reduce housing costs. Talk to us about the role that this can play.

Nate Hedrick: Yeah, especially again, I think people overlook this because like you said, once you buy a house, like I can’t — I can’t go backward, I can’t have a roommate now. But it’s a great way — if you’re in a personal situation where it makes sense, it’s a great way to reduce your expenses for both people. And you can take this as simply as, you know, I’m going to have my brother move back and he’s going to pay me a little bit of rent, or is as severe as putting an ad on Craigslist and having a stranger come live with you. You know, we’ve actually gotten a chance to talk to a couple of individuals here that are experts in this, I would argue. Ryan Shaw on Episode 173 knows all about how to deal with roommates and keeping them sane. And then Bryce Platt, one of our concierge clients that actually went out and bought — Episode 160 for those that are looking for it. He actually went out and bought a condo basically that had — was set up to have three other roommates with him. And so that’s part of that process. So it’s not uncommon anymore, and it’s a great way to reduce your overall expenses.

Tim Ulbrich: Yeah, and I think it’s worth, you know, the reminder or maybe the obvious statement of your first housing situation will likely not be your forever situation, right? So whether it’s a roommate directly living with you or in a situation like Bryce, that may work for awhile and then you decide you may move on. But now you’ve got an investment property that perhaps you can hold onto as well. So that’s No. 3, get a roommate. No. 4, perhaps the most interesting, my favorite on the list, but also likely very unpopular to some folks that love where they live. This is geoarbitrage. And Scott Rieckens, author of “Playing with FIRE,” mentioned this on the podcast last week, Episode 188. And I think it’s such an interesting way to reduce your housing costs. And I think this actually stems back to some of Tim Ferriss’ work talking about geoarbitrage. So Nate, what is geoarbitrage? And how can it help someone’s budget?

Nate Hedrick: So it’s a concept that basically you are — and we’re seeing a lot of this grow in the FIRE community, like you mentioned Scott but many others in the FIRE community are embracing this idea that in order to save money on housing costs or the cost of living based on a certain area, you basically you pick up and move to a new place. And we’re seeing this really taking off, especially with the changes in how people are working during the pandemic and hopefully after the pandemic is over. Work from home is just totally different than it’s ever been before. And you can basically do your job from anywhere now. If Option 1 is to live in downtown New York in a tiny apartment for a huge, huge cost, but Option 2 is to do that exact same job in Cleveland, Ohio, here, your costs go down dramatically. And so a lot of people are looking at this like, are there other areas that I can live in that I can either find a better job or keep my same job and work remotely that are going to improve my overall housing costs without dramatically impacting my life?

Tim Ulbrich: Yeah and again, I think this is not a forever situation, right? I know I’ve brought this up to various groups when I’ve been speaking before. You know, often you get that look of like, Tim, are you really suggesting that I pick up and move? You know? And it’s not necessarily for everyone, right? Sometimes there’s family situations, other things, where this is not even a possibility for a variety of reasons. But I think sometimes, this is a way to think a little bit more creatively, especially for those that might be in an area where jobs are also saturated. You know, if you could get to a lower cost of living area and perhaps open up some additional job opportunities, this might be something to consider while also accelerating your financial goals. And I think, again, it really depends on one’s personal situation. But I think what makes this so attractive for pharmacists, Nate, you know this, I know this, our community knows this, we do see incomes change slightly in higher cost of living areas but nowhere near what they should proportionally to the expense of those areas, right?

Nate Hedrick: Right. Absolutely.

Tim Ulbrich: So an ambulatory care pharmacist in Cleveland, Ohio, and an ambulatory care pharmacist in San Diego, that salary difference — while there likely is one from my experience in talking with folks — it does not represent the cost of living differences between those two areas.

Nate Hedrick: Definitely.

Tim Ulbrich: And so you know, I think that because of the nature of how that is treated with pharmacy jobs, this concept might also be attractive. And check this out for a minute, Nate. We pulled some data from RentCafe. The average rent for a 700 square foot –703 square feet, to be exact — in Manhattan is around $3,800. But the average rent for a slightly larger place, 883 square feet, in Little Rock, Arkansas — shoutout to our community in Arkansas — is $830.

Nate Hedrick: There you go.

Tim Ulbrich: Of course, Manhattan and Little Rock are not the same thing. Very different cities, right, in terms of what people are looking for and so on. But it just highlights, you know, what does that mean for monthly cash flow, what are your options. And you know, when I see $3,800 a month for 700 square feet, you and I both know what $3,800 a month can buy in Ohio, right?

Nate Hedrick: Seriously. Yeah, it’s crazy.

Tim Ulbrich: It could go a long way. So again, you know, obviously leaving family, friends, your job can be tough. Certainly not for everyone, but I think it’s one thing to consider and for — you mentioned the reasons of mobility now with some jobs having some more remote capabilities. So that’s No. 4, geoarbitrage. No. 5 is Airbnb. Nate, this is one that I think really pushes people to be creative in how they are cutting expenses or bringing in additional income. And we had Hillary Blackburn on Episode 121, where she talked about creating another stream of income as an Airbnb host and specifically talked about how her and her husband rent out their Nashville home for about $600 a night. So talk to us about how folks can use Airbnb or a similar model, of course, we’re just mentioning Airbnb, and use their home to bring in some additional money.

Nate Hedrick: Yeah, I think it’s gotten a little trickier during COVID having somebody in your house or what have you. But still, the idea there is really solid. If you can use the space that you already have — and maybe this is an extra bedroom or maybe it’s a whole extra in-law suite or a pool house or you name it, right — if you’ve got a way to rent out some of that portion of that property that you already have, and it’s a desirable area especially, you can pull in a lot of extra income to offset some of those housing costs. And again, like you talked about Nashville being $600 a night, if you’re in an area that people want to travel to, especially as things start to open back up, I really think that there’s opportunity there for you to get some serious income for that place.

Tim Ulbrich: Yeah, and again, this is one that may make sense for some, not for others. We’ve got an Airbnb calculator on the site. You can see, you know, roughly what you may be earning as an Airbnb host. That’s YourFinancialPharmacist.com/airbnbcalculator. We’ll link to that in the show notes. So that’s No. 5 on our list of seven ways to reduce housing costs. No. 6, Nate, re-evaluate your homeowners insurance policy. I just did this, so this one is top of mind for me. But I think this is something, you know, we haven’t talked a whole lot about on the show but certainly could be a way that folks may be able to shave off money off of their monthly budget, especially if their policies may have creeped over time. And because of escrow and other factors, they may not be aware or as closely aware as they could be of that. So talk to us about re-evaluating your homeowners insurance policy.

Nate Hedrick: Home insurance policy, if you have a mortgage, right, it’s really one of the only things that you can change. Your taxes are consistent, right? The county’s going to set those. The mortgage and the lender payment is set by the lender. HOA fees, that’s all fixed costs. But the home insurance policy, kind of the other piece that usually gets wrapped into that, is somewhat flexible. And it’s not — it’s not as common to mess with the home insurance policy as someone might shop around for like car insurance or disability insurance or life insurance.

Tim Ulbrich: Right.

Nate Hedrick: But realize that you can actually make quite a bit of difference with your home insurance policy. And it can change dramatically based on a number of factors. So if you change your deductible, for example. If you go from a $500 deductible on a home insurance claim to $1,000, you might save 25% on your home insurance policy in some cases. The other thing I’ll see a lot with home insurance is that if you are what’s called escrowing your home insurance or your housing insurance, a lot of times that bank will say, OK, well, we’re going to pay — and escrowing, just briefly, is that you actually pay the bank, you pay the mortgage lender to handle paying your insurance company for you. So usually you’re giving them money every single month as part of your normal housing payment. They’re taking a portion of that, setting it aside in an untouchable account called an escrow account, and then from that account, they basically pay your insurance company. But what I’ve found is that if you have that money in escrow, you don’t get a lot of flexibility with how that payment works. And if you can pull that out — and some lenders will allow you to do this free, some may charge you a small amount — but if you can pull that out, you can get even more creative with how you pay it. I’ve noticed that if you pay your home insurance premium monthly versus yearly, you can get a huge discount by paying it all up front. And so if you know you’re going to be there and you have the funds to do so, you can actually pay it Day 1 of the year and get a whole year’s worth of that payment taken care of at a much lower rate. So there are more flexibility here than I think people really realize, but a lot of it comes down to what are you allowed to do with your lender? And what are you willing to do in terms of that negotiation process?

Tim Ulbrich: Yeah, and I think too — great stuff there, Nate — I think it’s important to note, as you mentioned, these policies vary, you know, in terms of what they coverage, what the coverage includes, obviously personal belongings, other features of policies, and one thing I notice in this process, which certainly makes sense for those that have gone through this one or more times before, is that it’s easy to get focused on price shopping and not necessarily do an apples-to-apples comparison on coverage. So you know, some of these policies may present themselves as oh, well, you know, we could save you $300 a year or whatever. But when you look at the close details of the policy, you might be changing some of your coverage components. So I found it helpful, if you want to keep coverage the same, essentially as you’re going out and getting quotes, say, “This is my coverage. These are the eight things that are included. Here’s my deductible, here’s what’s covered in the policy. And basically give me a quote for this coverage.” You know? So you can do an apples-to-apples type of comparison.

Nate Hedrick: And watch because some will call things something different, right? They’ll have this special feature with Company A versus Company B and it’s literally just the same thing but with a different name. So watch out for that. The other thing I wanted to mention too is that some of them will offer discounts based on certain parameters of your home. So if you live in a disaster-prone area, ask them about what you can do to your homeowners insurance policy by doing some disaster-proofing. Maybe it’s adding storm shutters or maybe it’s actually a security discount. I’ve seen where if you put in electronic locks or deadbolts, just simple deadbolts versus a regular door lock, they will give you a discount on your overall insurance policy. So there are a number of things you should ask about too, like is there any way for me to get a discount on this? What can I do to improve this?

Tim Ulbrich: Yes. Always ask for a discount, right? Yeah, and as some of you are looking to shop around, you know, certainly many ways that you can go about this. Policy Genius is somebody we’ve talked about before, allowing you to compare life and disability insurance quotes, now also has a platform to compare homeowners insurance quotes. Also, renters insurance as well. If you go to PolicyGenius.com/YourFinancialPharmacist, you can learn more. So that’s No. 6 on our list of seven ways to reduce your monthly housing costs. No. 7 is refinance your mortgage. Again, something that’s near and dear to me. We went through this process last summer. We’ve talked about how low rates have been recently for purchasing a home, for refinancing your mortgage over the last year. Nate, talk to us about what mortgage refinancing is and how this can ultimately lower monthly housing costs.

Nate Hedrick: Yeah, so think about refinancing as basically resetting or getting a new loan. Effectively, what you are doing is you are clearing out your old loan, someone is paying that old loan off, and you’re establishing a brand new loan. So it’s similar to — we’ve talked about student loan refinancing. It’s the same idea, right? We’re paying off what you currently have with Lender A, and we’re moving that to Lender B at a new rate or at a lower monthly payment. And so the goal here would be obviously to lower the interest rate and then hopefully as a result, your overall payments are going to go down. So you’re going to eliminate your — hopefully maybe eliminate PMI if you have that in place today. You can, again, drop your interest rate from maybe a variable to a fixed rate that is much lower. You could lower the term over which you’re paying that loan. So you could go from a 20-year rate to a 15 or a 30-year to a 15. And now your overall expenses for the longevity of that house are going to go down. So there are a number of ways that you can use refinancing to cut your costs. But if you’re looking to lower your monthly housing payment, a lot of times it comes down to finding an interest rate that is lower than what you have today and finding a term that makes sense for your financial plan and is less than what you’re paying already.

Tim Ulbrich: Yeah, and I think it’s, although obvious, worth reiterating one of the traps that I see folks often falling into is yes, you know, you can lower the monthly payment, but if you’re extending out the term, keep in mind the total cost of the loan, right?

Nate Hedrick: Yep.

Tim Ulbrich: So trying to make this as apples-to-apples as you can. If you’re already five years into a 30-year term, and you refinance out to a 30-year, obviously you’re tacking on five more years. So yeah, monthly payment might go down, likely will if interest rates are lower, but what does that mean in terms of the total amount paid over the life of the loan? And keeping that in mind as you’re evaluating various options.

Nate Hedrick: And don’t forget, you’ve got closing costs as well in there, right? So you’ve got to make sure that the actual process of buying that loan, you’re getting a new loan but there’s going to be closing costs associated with that to factor in as well.

Tim Ulbrich: Absolutely. Great stuff, Nate. Seven ways to reduce your housing costs, certainly a topic for the reasons we mentioned at the beginning I think folks are interested in. This won’t be the last time that we hear from you and so if you’re listening and you’re looking to buy your first home or you’re looking to move and you want to work with an agent, you don’t currently have one, as Nate alluded to, we’ve got the concierge service working with Nate. It’s free to our community to work with Nate, who will help get you connected with a realtor in your area. And you can go to YourFinancialPharmacist.com, click on “Buy or Refi a Home” at the top, and once you do that, you’ll see an option to find an agent and that will get you connected up with Nate. Also, if you’re looking for a loan, looking to refi your mortgage, want some additional information, again, YourFinancialPharmacist.com, and then you can click on “Buy or Refi a Home” and get some additional information. So Nate, as always, appreciate your time and expertise and thanks for your contribution on the show.

Nate Hedrick: Thanks for having me.

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YFP 189: Options for Investing When You’re Maxing Out Your Retirement Accounts

Posted on February 4, 2021November 2, 2022 by yfpadmin

Options for Investing When You’re Maxing Out Your Retirement Accounts

On this episode sponsored by LendKey, Tim Baker, Co-Founder and Director of Financial Planning at Your Financial Pharmacist, joins Tim Ulbrich to talk about strategies for investing when you have maxed out your traditional retirement accounts.

Summary

Tim Baker and Tim Ulbrich dive into what traditional retirement accounts are, how contributions have or have not changed, the priority of investing, and strategies for investing when you’ve maxed out your traditional retirement accounts.

Tim Baker explains that traditional retirement accounts are generally any employer sponsored accounts, like 401(k), 403(b), 401(a), or TSP accounts. Traditional IRA, Roth IRA, SEP Ira, and Simple IRA accounts are also considered traditional retirement accounts. Many of these accounts have stayed stagnant in regards to contribution limits from 2020 to 2021, like 401(k) and 403(b) accounts which remain at $19,500. However, IRA accounts have increased to $6,000 (aggregate total for traditional and Roth accounts) and HSA contributions have increased to $3,600 (single) and $7,200 (family) with a catch up of $1,000 for those over 55.

Tim suggests a few areas of investing to consider after maxing out traditional retirement accounts. Real estate investing is a viable way to build wealth as it often provides flexibility and cash flow, can generate both short and long term gains, and comes with a lot of tax benefits. Of course there are risks involved with real estate investing and it isn’t as passive as a traditional retirement account, but can be a way to help grow your income and net worth. Starting or investing in a business is another avenue to take after maxing out your retirement accounts. This could be in the form of starting a side hustle or business, inheriting or becoming part of a family business, or investing in a partnership. Lastly, taxable brokerage accounts like Robinhood or Acorns are a good stepping stone to get into a different type of investing, however Tim suggests being intentional with what your setting brokerage accounts up for. He also shares that the more boring you can be with investments, like investing in the S&P 500 or total market index funds, the better it is.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Tim Baker, good to have you back on the mic. What’s new?

Tim Baker: Not much. Just settling into our new office, YFP headquarters in downtown Columbus. So that’s coming together slowly with just furniture and everything else. But yeah, just getting comfortable. How about you?

Tim Ulbrich: Yeah, exciting times, I think, for YFP. Excited about having you in Columbus. And we’ve got some exciting things planned for the year, and so here today we’re talking about all options for investing after you’ve maxed out traditional retirement accounts. So first of all, if you are somebody listening that hasn’t maxed out your traditional retirement accounts, kudos to you. That’s not an easy thing to do by any means. And remember, as we say many times on the show, investing is only one part of the financial plan. It can’t be looked at in a silo. And for those that are listening that are at the beginning of the investing journey or looking for a refresher, make sure to check out episodes 072-076, our Investing 101 series, as well as Episode 163, Investing Beyond the 401k, 403b, where we discussed IRAs and HSAs in details. And so we’re going to build upon that information here today. So Tim Baker, let’s back up a bit. What are we talking about when we say traditional retirement accounts?

Tim Baker: I guess the thing that pops into my head first and foremost are going to be what’s provided through the employer. That’s typically things like the 401k, the 403b. A lot of us have supplemental retirement plans, things like the 457, some people have 4018s, which are kind of like 401k’s. And then those that we kind of manage ourselves or through the help of a financial planner, so these are things like traditional IRAs, Roth IRAs. Sometimes we’ll see SEP IRAs for those that are self-employed or work for a small business. And simple IRAs also fall under that. So traditionally, those are the ones that we lean on first when we’re kind of looking at ways to defer income for the purposes of saving for retirement.

Tim Ulbrich: So talking about 2021 numbers here, have contribution limits changed from 2020 as folks are considering, alright, new year, what could I be doing to take advantage of these accounts?

Tim Baker: Some of them have changed, but a lot of them actually stayed stagnant. So the most common, the 401k/403b, is the same. So in 2020, you could put $19,500 per year. And that’s of your own money, so doesn’t matter what the match is that your employer gives you. That’s of your own money. And that’s the same for 2021. So you know, if you take your income, you take $19,500 and divide it by your income, that’s the max percentage that you could put in throughout the course of that year. So what I always say to clients that — particularly those that are starting out and maybe they have a little 401k inertia, which is hey, I put 3% and my employer matched 3%, and then they get stuck there. Years later, they’re 5-10 years into their career and they’re still there, that’s typically not going to be enough. So I kind of like the idea of planting the seed of a race to 10% or a race to double digits. And again, that’s kind of just a rule of thumb. Now, in the IRA world, the contribution limits are also the same. So you can put up to $6,000 per year, if you’re thinking about this monthly, $500 a month, into a traditional and/or Roth IRA. So that’s an aggregate number. So if I put $1,000 into my traditional, I can put $5,000 into my Roth IRA. And then probably the other one that I would call out that actually did creep up a bit is the HSA, the Health Savings Account, which is the one that we always talk about that has the triple tax benefit. So if you’re in a high deductible health plan, you basically qualify for that. If you’re an individual, you can put up to $3,600 per year. If you’re a family, $7,200. And then if you’re over 55, there’s a catchup of $1,000 per year as well. So those would probably be the ones that I would call out. So again, if you are in that population of people — which I wouldn’t say it’s always a lot of the clients that we’re working with — but if you are in that population of people that are maxing out the 401k, the IRA, the HSA, then this episode, you know, might be for you where you’re like, OK, well where do I go next?

Tim Ulbrich: And as a reminder, we have a new quick reference guide too. You can quickly take a look at 2021 key retirement numbers, including 401k, 403b, traditional IRA, Roth contribution limits, HSA, education tax credit incentives, required minimum distribution, tax rates. So for those number nerds out there, this is for you. YourFinancialPharmacist.com/2021, you can download that sheet. So Tim, that was one of my questions. I talked with a prospective client this morning who was really in this camp of, you know what, I need to full throttle my investing plan. So I’m at a point of or near at a point of maxing out my 401k, yes, I see another $6,000 I can put in an IRA, doesn’t necessarily have access to an HSA, so is at this point of alright, I’m ready to go with the next steps. So how often do you see this among pharmacists and clients of ours? How hard is it for pharmacists to max them out? And for those that aren’t maxing them out, what’s typically holding them back?

Tim Baker: It’s hard. I think, again, it depends on where you are in kind of your career and where you’re at. If you are a more of a new practitioner and you’re saddled with six figures of debt, to put money into a 401k can be a little bit of a tough go, especially if you’re looking at a $2,000 monthly loan payment. Sometimes, that is very much baked into the strategy that we are employing that the money that goes into these pre-tax accounts lowers AGI and potentially maximizes a forgiveness play, or if you’re looking at a I’ve refinanced, I’m trying to get through them quickly, I am paying $2,000, $3,000, $4,000, sometimes just not a lot of money left over to go into these retirement accounts. Now, there are 10% of pharmacists out there — those are the numbers — that don’t have loans, that kind of the world is their oyster. But that doesn’t always necessarily mean that their money is going into retirement accounts. A lot of pharmacists after going through years and years of training, it’s kind of like, alright, I need to treat myself a little bit. And then that can sometimes be hard to get out of as well. So I think the flip side of that is if you are further along in your career — so the answer, you know, one of the questions is like, is it a big deal that I’m not maxing these out? And I’m like, it depends. If you’re 35 and you’re trying to retire by 50, maybe it is a big deal. If you’re 45 or 50 and you’re trying to retire by 60, maybe it is a big deal. So I think it’s a little bit of, again, looking at the math and how you feel about what your retirement prospects look like and then marrying those two up. But I think if you are in early in your career and you’re maxing these out, it’s just such an easier lift because in the investments, it’s not about timing the market, it’s about time in the market. And if you can get your money working and have that work for 3-4 decades, that money, you know, is just going to go that much further rather if you wait a decade or two out before retirement. So typically, the earlier that you do it, just the easier that number is that you need to be setting aside per month versus waiting. And that’s really what we’re talking about here.

Tim Ulbrich: And I’m going to give a disclaimer here, Tim, before I ask my next question that none of what we’re talking about here is obviously individual investment advice. And for the reason you just mentioned there, it does very much depend on one’s personal situation. And it’s becoming the running joke of, “it depends,” on this podcast. But it’s so true and speaks to the value of one-on-one, customized planning. So my question is, you know, let’s say someone is investing in their 401k/403b or employer-sponsored plan, should they focus on maxing that out first? And really, what I’m getting here is what’s the order of priority when it comes to investing and how do we think through determining this order?

Tim Baker: Yeah, so if we kind of can figure out like how to navigate the multiple competing priorities — and obviously, we talked about like student debt, you know, we didn’t really focus on consumer debt, which we have a lot of pharmacists that come to us that are — we recently started working with a pharmacist, and their biggest pain point was about $50,000 in consumer and personal debt. So — and rightfully so. That’s the one that’s probably the most debilitating. If we can work through the other competing priorities like other pieces of debt and the life events that are — whether it’s marriage, buying a house, having kids, going on vacation, caring for elder parents, you know, saving for kids’ educations, and all that stuff, then really, the baseline I think priority that we typically look at — and I would probably say for Step 1, everything else aside, unless you have really terrible credit card debt, at a minimum I think everyone that has a match available to them from their employer, they should capitalize on that. So you know, the old adage is like, take advantage of the free money. So one of the things I’ll humble brag is like YFP, we have a Safe Harbor 401k that if our employees put in 5%, we match 4%. And I want to make sure that everyone’s taking advantage of that because it is free money. So to me, for the most part, everyone should do that. From there, you know, if there is an HSA on the table due to a high-deductible plan, I’d probably say that would probably be the second bucket to look at because it has a lot of versatility in terms of what you can use it for. You can use it for today’s health expenses, tomorrow’s health expenses, and then tomorrow’s like retirement. And with the triple tax benefit, if you can shelter $3,600-$7,200 per year for the next x amount of years, that’s a great benefit. And then from there, what we typically say is look outside of the 401k and look at things like IRAs, whether that’s a Roth IRA or a traditional IRA. The reason for that is typically, a lot of 401k’s are strapped with administrative fees and/or there’s not a lot of investment options. But it’s more tied to the fees. So if you can establish an IRA and keep costs low, I think that’s a big win. We believe that the expense related to investments is going to be one of the bigger drivers in making sure that you have an efficient portfolio. So if we can do that in an IRA — and to go back to that, a lot of 401k’s are not created equal. So you have some great 401k’s and 403b’s that are absolutely efficient and fantastic, and then you have those that are not. And it can be a very, very wide range. We’re talking about, you know, very wide differences between great and not-so-great. Typically, though, once you max out the IRA, what you want to do is go back to the 401k and max that out. So that’s that $19,500. So again, you calculate that by $19,500 divided by your — or your income divided by the $19,500 — and that’s the percentage that you use. And then finally — and this can probably work concurrently in some ways — you know, if you do have access to other retirement plans or SEP IRAs if you have a side business or things like that, that might be another good way to go. And then from there, from a traditional sense, you know, a lot of financial planners will just point you to a brokerage account. So those individuals that have like a Robinhood account or an Acorns account, where they typically do that Step 1 or Step 2, you know, in most instances, it’s better to kind of make sure that you’re doing all these other things first. But it could be a brokerage account, it could be where you get into real estate investing. It could be where you are buying into a business or starting a business, things like that. But that’s kind of a general rule of thumb for most investors on how to tackle the priority.

Tim Ulbrich: Great stuff, Tim. And we will link in the show notes, we have an investing priority document. We’ve talked about it previously on the podcast as well. I can’t help but mention, you brought Robinhood’s name up before — what a week for Robinhood with the whole Gamestop thing going on this week.

Tim Baker: Yeah, I know, right?

Tim Ulbrich: Pretty crazy times. But I think brokerage accounts are getting a lot of attention this week. So we’ve established some of these more traditional accounts, 401k’s or 403b’s, or for those that are working in the federal government, of course the TSP, you mentioned the HSA, the IRAs, going back to the 401k or 403b or equivalent, perhaps a SEP IRA. And then we got to this, you know, what’s next, right? And so of course, often the advice is a brokerage account. But you mentioned several other things that might be in the mix, so perhaps real estate investing, of course, the brokerage account, investing in a business — I know I often hear something like insurance type of investments may come up. So let’s break these down a little bit further. First off, real estate investing. This is something we talked about a lot in 2020 and are excited to dig into this topic even more in 2021 as we’ve heard from many of you that are interested in learning more about real estate investing, whether that’s hearing some of this for the first time, whether that’s investing in building the portfolio that you already have, or perhaps for some of you, hearing and saying, you know what, it’s not a good fit for me. And obviously, we try to bring both sides of this, of sharing stories of folks that have been successful but also appropriately bringing in the risks that can come here as well. So Tim Baker, from your perspective, I know you personally have an investment property, I know this is something that has come up with clients, something we’re talking more and more about with clients, tell us at a high level why real estate investing, from your perspective, can be something at least worth evaluating for folks out that are maxing out these accounts?

Tim Baker: Yeah, so I think, you know, if we step back and we kind of think about like traditional financial planners, I think, you know, what I typically hear is from a financial planner, like ah, like do you really want to do that? Because do you want to unclog toilets at 2 in the morning? And the answer is no, nobody wants to do that. But I think the sentiment is really rooted in how the advisor gets paid in a lot of ways. So traditional financial planners are really going to get compensated by you, the client, having as much money in your traditional investments, whether that’s an IRA or a brokerage account or a 401k for you to eventually roll over to them for them to manage. I guess the way that we view this is we view real estate as a viable way to build wealth outside of traditional investments that have both kind of near-term benefits of flexibility and cash flow, you know — for example, when you put your money into a 401k, like wave goodbye to that until you’re at least 59.5, for the most part. So you never really can get access to that where if I buy a property, like I could start cash flowing that and make $100, $200, $300 off of that property the next month. There’s that near term, but then you’re also building, and the asset is appreciating as the note that you’re paying down is depreciated. And then there’s a lot of tax benefits from that in terms of being able to make income but then offset that by the deductions. And there’s a lot of things that’s built into the IRS tax code that reward real estate investors. And I think the other thing that’s flexible is that you could keep that, you know, if you talk about a buy-and-hold strategy, you could keep that for the next 30 years just like you keep a 401k. Or you could say 10 years into it, I want to liquidate this and do something else and basically cash out the equity that you have in the property and go do something completely else, which means you could retire on that. So that is maybe another viable strategy. So because of the flexibility, I think because of the tax benefits that you receive, I think it’s a viable way to build wealth. Now, is it as passive as traditional investment? No. And the more passive it is, the less benefit and flexibility that you’ll get. The more actively managed it is, typically the more flexibility and benefit that you get. But then the tradeoff is that you’re actively managing and it takes time and there’s risk. Well, there’s risk in anything. But I think, Tim, really for those reasons, that’s why we like it. And we think it’s a vi — again, a viable way to build wealth. And at the end of the day, the way that we work with clients is what we’re trying to do is help grow and protect income so you could make an argument that we’re growing income in a real estate portfolio by, you know, we’re cash flowing and we’re protecting it because maybe we’re diversifying that away from a typical pharmacist’s salary. We’re growing and protecting the net worth, which means what we have a collateralized asset with a note that’s appreciating over time, while keeping your goals in mind. So again, if that means early retirement, if that means more of a nontraditional path in terms of the career, I think the real estate aspect creates a lot of opportunity to really fulfill financial independence in the eyes of the pharmacist.

Tim Ulbrich: And I’m so glad, Tim, you mentioned the story and example that’s often used as the objection early on of like, who wants to be a plumber in the middle of the night? And I remember — for those that have read “Rich Dad Poor Dad,” they will be able to resonate with this — but I remember reading that book for the first time, and it was like unlocking like a piece of information that I hadn’t really been exposed to or learned before. And that obviously is a little bit more philosophical in nature, and then you start talking to people who are doing it and learning more about it, and that’s one of the great things about where we are in 2021, I mean, the resources available out there to learn more and to connect with others that are doing it is really, really incredible. But I think being open to learning, you know, perhaps being willing to see what might be the answer to some of those objections is really important. And we’re excited to bring more pharmacist’s stories to this community in 2021 on real estate investing and also connect other pharmacist investors with one another. And I would point folks back to Episode 167, we brought on David Bright to talk about must-know real estate terminology. I think that’s a great place to start. You mentioned, Tim, many of the upsides and benefits, perhaps appreciation, cash flow, tenants paying down a loan, some tax benefits, obviously we’re just scratching the surface here. And obviously, you also presented some of the challenge. You know, it may not necessarily be passive, the quality of tenants may or may not be what you have in mind. I think too there’s a little bit of, you know, I call it HGTV syndrome, Tim, in terms of like, you know, you watch the flipping show and you’re like, yeah, I got it, right? And so I think we’ve all got to take a step back and really make sure we’re not overconfident. But I think for pharmacists, I’m not sure overconfidence is often the risk here. I think it’s probably being too passive and feeling like it’s out-of-reach and not necessarily being willing to take what they may feel is a very significant risk to get started. So we’ve talked about several of these strategies on the episode thus far, you know, obviously there’s the buy-and-hold strategy. In Episode 129, we brought on Aaron Howell, and he discussed how he built a 29-unit portfolio. We brought Ryan Chaw on Episode 140 about how he built his portfolio of college town investing. Episode 173, we brought him back on to talk about his systems, which was a really neat episode to hear how he actually operationalizes this. Obviously that’s one strategy, buy and hold. We’ve talked about flips before, Nate Hedrick, 178, five lessons learned from his flip. And we’re going to continue the conversation. There’s other areas, of course, in wholesaling and forming partnerships, and we’re excited about what’s ahead here. So real estate investing, Tim, is one aspect. Another that pops to mind that is near and dear to our hearts, obviously, with what we’ve been building at YFP is building a business, investing in a business, and this, of course, is a big topic. But at a high level, you know, what types of things do you see from our clients in terms of whether it’s side hustles that they’re starting, businesses that they’re starting or even perhaps looking at investing in other businesses and how they begin to evaluate whether that’s a path forward for them?

Tim Baker: Yeah, so I think what I see most frequently is an interest in a closely-held family business, so like a private company that was inherited from maybe a grandfather or things like that and, you know, the question is like, should I keep this? Like what’s the benefit? And you know, they’re getting K1 every year with maybe a little bit of income that they have to basically declare for the IRS. So it could be like more like that. But then I think that there’s also — I mean, we’ve had clients that have taken their side business, their side hustle, and made it a fully fledged, like a regular business. So it could be just plowing money back into the business itself rather than going into the traditional, but I also have had clients interested in investing in like a partnership, whether it’s like a gym or things like that that, you know, that’s a little bit more of a — there’s a lot of risk there. There’s a lot of, again, what’s your role? What do you bring to the business? Is it money? Is it expertise? Is it planning? Is it clients? And kind of really understanding that. Sometimes, it’s just money. So it’s like, hey, I’m going put money in and let you do your thing, and you’re kind of more of a silent investor. So this can come — just like real estate, this can come in a lot of different flavors. So can investing in a business. Again, one of my favorite shows on TV is “Shark Tank.” So I love watching that and how investors speak with business owners and I’m always interested in business just because I just like to talk small business, in particular, and what makes it work and not work. I think we have a lot of clients that are there. I would say for the most part, the predominant thing that I see is a share of an inherited family business or really, taking this hobby or this side hustle and really forming a fully fledged business and how to really handle that. And a lot of the conversation is, you know, do I take money out of the business? Or do I basically reinvest into the business so I make sure it survives and grows?

Tim Ulbrich: Yeah, and we will continue — one of the areas that I’m very passionate about in the profession of pharmacy is I feel like we are missing some creativity around helping students as well as helping pharmacists just imagine what could be different possibilities or ideas. And I think we do that by sharing stories. Not that they necessarily hear a story of a business or side hustle and say, “I’m going to do exactly that,” but to help them think about another area as an example of something that they’re passionate about in terms of solving a problem, creating a solution to that problem. And so we’ll be bringing more in that area. And you know, I agree. We have to know — you know, everyone knows the stats that most small businesses don’t work. Debbie Downer reality. But I think for those that really do their due diligence, understand what their business is all about, is there a market for it, you know, there certainly is some upsides financially in terms of tax, building equity. One of the things that gets me so excited about business is that there may not be a ceiling. Obviously there can also be a floor.

Tim Baker: Right.

Tim Ulbrich: Or falling through a floor that you have to be aware of and also access to some of the retirement options that we’ve already talked about. So we mentioned, again, in the context of investing beyond maxing out traditional accounts, we’ve talked about real estate, we’ve talked about investing in business. What about probably the most common area here, which is taxable and brokerage accounts? What are some things as you’re working with clients that you’re advising them, getting them to think about, whether it’s choosing where they’re going to be investing that money, how they might keep fees low, how they determine where those investments go? Talk to us about the approach in putting money into a taxable or brokerage account.

Tim Baker: The most common that you see are kind of like the Robinhood, Acorns just because they’re UI and they’re use is so clean and easy. And I think for a lot of people that are curious about investing, it’s a first way — you know, kind of the first way to kind of wade in and see, OK, I want to buy this stock, etc. Typically, we talk about the priority of investing, you know, we just started working with a client that had, again, $20,000 in credit card debt but then they have a $10,000 like Robinhood account. And I’m like, those probably don’t make sense. So I think like with brokerage accounts, what I am a big fan of seeing with savings is like what is this account actually for? So a lot of the uses that we see for brokerage accounts are a tax bomb. So those that are taking non-PSLF forgiveness, you know, they need to cover that tax bill. So they’re putting money into a brokerage account because they’re going to need to access it before 59.5 years old, so they can’t put it into their retirement account, and they need to be able to pay off that tax bill when the loan is forgiven. The other one is, again, when we max everything out, that’s a good use for it. So what I typically urge clients to do, though — and it really directs how we’re going to allocate that particular account — is what is it for? So if you’re trying to retire at 50, all of these traditional accounts that we’ve talked about, for the most part — and there’s some exceptions of what you can do, but you can’t really access them without a penalty until you’re 59.5 years old. So that means you have 10 years, 9.5 years where you have to figure something out. And usually, that figure something out is having a robust brokerage account or maybe liquidating part of a real estate portfolio to be able to cover those first 10 years of retirement. I think the big thing here is if you have an IRA, I probably would just have your brokerage account there. And I’m not down on any of these other apps or things like that, but I think for ease of use — and again, not every custodian is equal; there’s going to be different fees and things like that. So you want to be mindful of that. But I know the sexy and the exciting thing to do is to pick individual stocks, whether it’s Tesla or Gamestop or Ford or whatever it is. But I think, you know — and again, not investment advice — but I think the more boring that you are with your investments, typically the better it is because the sexier and the, you know, the investment strategy is, typically the more speculative and the more expensive it is to the investor. So it could be as easy as putting it into an S&P 500 index or a total market index or things like that and call it a day. So there are some advisors that are colleagues of mine, they hear me talk about real estate investing and all of these other things, and I’ll say like, “Hey, this is the reason I believe that a lot of traditional advisors don’t say it is because it’s a function of income.” And sometimes, it’s — and I get a little pushback on that because I’m kind of criticizing my brethren, but it also could just be it’s a ‘Keep It Simple, Stupid’ approach, which I think for finances, it can go a long way. So you know, there is absolutely nothing wrong — I know we’re talking about small businesses and real estate — there is absolutely nothing wrong with having a 401k, an IRA, and a brokerage account and doing a damn good job of building wealth and living an intentional, wealthy life with those tools.

Tim Ulbrich: Yeah, and I think to that point, Tim, like I would encourage our community, like lean into what you’re comfortable on. You know, I think sometimes there’s some FOMO of like, you know, oh, so-and-so is doing real estate investing or so-and-so owns their own business, and it’s cool and flashy, which you usually don’t see the other side of it all the time. But maybe that is a fit, maybe it’s not. But you know, learn about them, understand them, understand your risk tolerance — and maybe for many folks, it’s really leaning into maxing out traditional accounts, maybe opening some brokerage accounts. But perhaps those other things aren’t a good fit. And I agree with you, I’m seeing more and more pharmacists that seem to be interested in financial independence, early retirement, some combination of those, whether they love their job or maybe not. And I think this is where these tools, the brokerage account specifically, come into play. And last week, we interviewed Scott Rieckens, author of “Playing with FIRE,” Episode 188 for those that are interested in learning more about Financial Independence Retire Early. Tim Baker, great stuff. I think this really highlights for me, again, we’re only talking about here investing, one part of the financial plan. But within the investing bucket, we’ve talked about several different things that of course are traditional accounts and all of the nuances there and then beyond that, lots of decisions to be made, priorities to be balanced, and evaluations to be done. And I think this is a great opportunity to promote and shoutout our financial planning team and our lead planners that work directly with clients one-on-one to have these types of conversations, to look at what are the opportunities, what’s the goal, what’s the purpose, what’s the priority, and then ultimately, how do we put a plan in place to make sure that we achieve it over time? So for those that are interested in learning more about the comprehensive financial planning services we offer at YFP Planning, head on over to YFPPlanning.com. You can schedule a free discovery call, and we’d love to talk with you to see if our services are a good fit for what you’re looking for. And as always, if you liked what you heard on this week’s episode of the Your Financial Pharmacist podcast, please leave us a rating and review on Apple podcasts or wherever you listen to the show each and every week. That’s going to help others find what we’re doing here over at YFP. Have a great rest of your week.

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YFP 188: Playing with FIRE: An Interview with Scott Rieckens

Posted on January 28, 2021November 2, 2022 by yfpadmin

Playing with FIRE: An Interview with Scott Rieckens

On this episode, sponsored by Insuring Income, Scott Rieckens, author of Playing with FIRE, joins Tim Ulbrich to talk about his journey towards achieving FIRE. Scott digs into the ins and outs of the FIRE movement, why he and his wife decided to leave their friends and family in San Diego, how to calculate your early retirement number, and strategies for implementing your own FIRE plan.

About Today’s Guest

Scott Rieckens is an Emmy-nominated film/video producer, serial entrepreneur, and author. Scott has spent his career as a storyteller connecting people with ideas. Along the way, Scott’s work has generated millions of views through a feature-length documentary, multiple televisions series, short films, and a diverse range of commercial projects for Microsoft, NBC, Facebook, FOX, Taylor Guitars, BMW, WIRED and others.

Now, Scott has created Playing with FIRE, which explores the growing community of frugal-minded folks choosing a path to financial independence and early retirement. He and his family reside in Bend, OR.

Summary

When Scott Rieckens, author of Playing with FIRE and creator of the documentary Playing with FIRE, discovered FIRE (financial independence, retire early) a few years ago, it was life changing for him and his family. Achieving FIRE allows people to potentially retire decades earlier than they normally would, a dream that many think could never become a reality. There are some guidelines that allow people to reach this dream, like the 4% rule and 25x rule, however, Scott mentions that FIRE helps you learn habits that push you to save a lot more than you ever thought possible and gets you to start spending your money on things that align with your values. He says that if you start saving more than your spending, you can invest your money in index funds, max out tax advantaged accounts, and let compound interest take over.

Scott became interested in starting a journey towards FIRE after realizing that he wasn’t in control of his time and was spending more time working than he was with his family. With some calculations, Scott determined that if he saved 16% of his income he would retire in 33.4 years but if he saved 58% of his income he could retire in 11 years. He realized that his family was spending money frivolously and went on a quest to align their spending with their values to help reduce their expenses. To figure out his family’s core values, Scott and his wife, Taylor, independently wrote 10 things that provide happiness to them. They continued this exercise weekly and used it as a tool to reduce spending money on things that weren’t aligned with their values and created a budget around what makes them happy.

Scott also talks through how mental shifts can help you cut expenses, how to push yourself to save more money, how to calculate your early retirement number, and strategies for implementing your own FIRE plan.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Scott, welcome to the show!

Scott Rieckens: Thanks for having me.

Tim Ulbrich: Really excited about this interview. As I mentioned before we hit record, I loved the book “Playing with FIRE,” couldn’t put it down, read it in about 24 hours. Loved the documentary. And I’m excited to get you in front of our community as I know this topic is something that is of interest, and I think your story as well as the broader conversation around FIRE is going to provide a lot of value. So thank you again for taking the time.

Scott Rieckens: Yeah, it’s my absolute pleasure. Thanks for having me on.

Tim Ulbrich: So for those in our community that are hearing about FIRE for maybe the first or even second time, give us a high level overview. What exactly is the FIRE movement all about?

Scott Rieckens: So the FIRE movement, it’s — FIRE is an acronym that stands for Financial Independence, Retire Early. And I think it’s a community of people who are practicing sort of a preconceived set of principles so that they can put themselves in a position of financial independence, potentially retiring decades earlier than they would have expected with sort of the way we saw ourselves growing up. So you know, it’s sort of nebulous because there are certain rules that — well, there’s things like the 4% Rule that’s called a rule, but it’s really more of a guideline. And I kind of see many of the principles of FIRE being more of a guideline than a rule. So there’s no hard and fast rules in the FIRE movement. There’s probably not even a real movement yet. But I do think that we’re starting to see seeds of social change. And once, you know, once this can really hit mainstream to the point where we’re seeing social change predicated off of or because of the FIRE movement, then I think we can call it a movement. But for now, it’s fun to call it the movement because it helps those of us who are trying to make it a movement move along. But ultimately the idea is that you learn habits that help you save a lot more than you thought was possible or just really start spending according to your values and really taking a hard look at what those values are as it relates to your spending. And if you can start saving more than you’re making, well, we have a pretty tried-and-true investment strategy. You know, and again, it varies and they’re more guidelines. But in general, people like to invest the surplus in index funds and max out your tax advantaged accounts as much as possible. And then the beauty of compound interest takes over, and the next thing you know, you’re looking at a growing net worth, a growing portfolio, and before you know it, you might have enough to live off of for the rest of your life. So these were all foreign concepts to me three years ago. And then I heard a podcast with Mr. Money Mustache, who is one of the — maybe one of the modern founders of the FIRE movement — and he was discussing these things, and I had never heard of them. I always looked at investing as sort of this nebulous thing that I wasn’t too aware of and I would need a Master’s degree to even participate in. So I kind of brushed it under the rug. And then I heard about all these things, and it all sounded pretty easy to understand and pretty accessible, and it all made sense. And so that’s kind of how I got on the path to our FIRE journey.

Tim Ulbrich: That’s great. And I love that you mentioned, Scott, guidelines because I think that it can feel perhaps if people are learning for the first time that it’s an exact science or somewhat legalistic in some regards. But as we talk about many parts of the financial plan, it comes down to customizing it to your personal situation, and everyone’s situation is different. So I think the guidelines, the principles, are really important. And one of those being — you mentioned the 4% Rule. Talk to us about what is the 4% Rule, and how does that impact one determines what their “FIRE number” is?

Scott Rieckens: Yeah, so the 4% Rule, like I said, more of a 4% Guideline, is a pretty incredible little assumption. And it’s that if you withdraw 4% off of your portfolio annually that — I think it’s something like you have a 96% chance of not running out of your principal investment portfolio over 30 years. And it’s based off of this thing called the Trinity Study. So another way to look at it is — the way I like to look at it is the 25x Rule. And so basically, you take your annual spending. Let’s say it’s $40,000 a year. And you multiply that by 25. And that is $1 million. And so basically, it gives you a way to figure out how much do I need to retire? So if your annual spending is x, you multiply x by 25, and that’s how much you need to retire because you’ll have a 96% chance of never running out of the principal investment portfolio that you have. So it’s a pretty darn safe assumption and guideline. Now, there are some people in the movement that are maybe talking about 3.75% or 3.5% is even safer, and that’s — you know, that all has to do with so many different parameters: your risk tolerance, if you plan to have sort of a side hustle or any kind of passive income or non-passive income into your “retirement years.” And those things can affect, you know, when you decide or what your percentage or when you decide to pull the trigger on your path to financial independence. But in general, I mean, I was starting from scratch. So I couldn’t have even told you how to understand what I need to retire or what that would even look like. And so to just call it the 4% Rule or the 25x and the way I just described it to you, like that’s pretty simple. It made sense to me. And it’s backed by some pretty credible studies. And like I said, there’s people in the movement who are far superior to me in intelligence who pick this stuff apart annually. And so this isn’t something that’s like oh yeah, a study way back in the day said this thing, so we’re all good. This is something that people are constantly scrutinizing. And it turns out what it’s all predicated on is the stock market over time just continues to grow. And so if you’re putting your investments into the stock market — and one of the safest bets you can make is investing in index funds because especially really solid index funds like let’s say Vanguard’s VTSAX, there are a whole team of people who are ensuring that the index of stocks are the highest performing stocks they can possibly have in that index, and it basically represents the growing stock market. So what’s nice about that is you can take a pretty reasonable growth average, and then you can start building models for what your future might look like. And like we have a retirement calculator on our website that, you know, basically bakes in all these principles into one little calculator, and you just plug in your own personal numbers and you can kind of see, oh, alright, you’re on the path, and this is how long it’s going to take you to reach financial independence. Taylor and I did this early, early on in our journey, and for Taylor, it was a huge eye-opener. It was for me as well, but I had gone through a lot of this stuff because I didn’t bring it all to her right away because it was a lot to bring because we were making a lot of interesting money decisions at that time, and there was a lot to unpack there to keep our relationship together while trying to also convince her to maybe join me on this crazy quest to pursue FIRE. But ultimately, you know, when we did the retirement calculator, at our current spending at that time, we were looking at — I think it was something like 40 years of additional work. And at that point, we were so burnt out by work, 40 years sounded like a life sentence. And it was something like we’d be working into our mid- to late 70s I want to say. And then I did some rearranging and said, OK, well if we cut our rent by this and we get rid of our two leased cars and we buy a used car for $8,000 or whatever it was, and we cut our food spending — we needed to cut that quite a bit, it was more than half, let’s say that — and then all these other extraneous things we’re doing, I mean, entertainment. The amount of money we were spending on entertainment was insane, especially where we lived where there was so much free entertainment all around us. And I started doing those numbers and kind of just built a pretty reasonable budget, and I re-entered that information into the retirement calculator to see that we were I think at that time, it was something like 10 years or something away from financial independence. I mean, to shave three decades off of your working career by just making smart money decisions, to me, that was a no-brainer. And it was a huge eye-opener because it wasn’t as if we were spending because we couldn’t help it. It wasn’t because — we weren’t spending because we have an insatiable consumeristic bent, you know?

Tim Ulbrich: Sure.

Scott Rieckens: We didn’t see ourselves that way at all. We kind of were that way, but we didn’t see ourselves that way. And so to just have that eye-opening realization and to get that in order and to do so with the guidance of a pretty strong community online where I could go for answers at any time and have some pretty compelling arguments on why I would want to do these things, it was a pretty quick and swift decision I think in the Rieckens household. And then we got busy sharing that story with the world because I’m a content creator by trade, and this story just seemed too important not to share.

Tim Ulbrich: And it was a great story to share. And for those that want to check out the retirement calculator as well as the other resources and learn more about the book, the documentary, PlayingwithFIRE.co, again, PlayingwithFIRE.co. And Scott, the math is really incredible. I pulled a note from the book. You had mentioned that when you first crunched the numbers using that retirement calculator, you determined you could retire in 34.3 years with a savings rate of 16%, which is a pretty good savings rate. And that was using $120,000 annual expenses, $22,000 in savings. And then the next calculation showed a drop from 34.3 years to 11 years if you could cut expenses in half and get to a savings rate of 58%. So I think that’s what I love about the way you teach this material, the way others teach this in the community, the 25x Rule or maybe it’s the 27x Rule, whatever that number is is that it helps shine a light on retirement numbers. It’s math, right? It’s a set of assumptions, and then you can look at things and determine, OK, what can I change? What might I not be able to change? What levers can I pull? What will have more impact? And then you’re off and running if that’s a goal that you want to pursue. And so I want to talk more about your story. And I want to read for a moment a segment from the book, Chapter 1 is Work, Eat, Sleep and Repeat. And you say this at the beginning of the chapter. You say, “If you’d driven by me on the freeway in San Diego on this particular Monday morning in Feb. 2017, you probably wouldn’t have looked twice. A guy in his mid-30s, sitting in traffic in a relatively new but unremarkable car, drinking a cold brew from Starbucks, just another American heading to work. In fact, there was nothing particularly special about that Monday morning, and I would have lumped it in with 100 other ordinary Monday mornings that I had spent navigating traffic on my way to work, except that on this particular morning, I heard an idea that would change the course of my entire life, an idea that would cause me to quit my job, leave California and spend a year traveling with my family, to question everything I thought I knew about success, money and freedom, to find the secret to the American Dream, the thing that most people crave but few achieve, the ability to do absolutely anything I wanted.” My question here is what caused this desire and feeling? And when did this begin?

Scott Rieckens: Man. I haven’t heard that back in awhile. That was fun. I think we all have an inherent desire for a certain sense of freedom and independence. And you know, I think — I can’t speak for everyone, but when I was in school, when I was in high school and then getting into college, I look back with sort of I think I had sort of a relentless optimism that work would be interesting and what I would do would be great and the things that would follow that, family and friends and all the things, you know, that they would carry me along the way. And I think as you start to get in — well, in my case, got into my mid-30s, I’d been working for a decade, some of those things came true. I got to achieve some goals I had set for myself. I had done some things I was proud of, had just started a family, which I was also immensely proud of. And all those things are fantastic, but they weren’t the entire picture of fulfillment for me because what was weighing me down was I wasn’t in control of my time. Next thing you know, I’ve built this family, I’ve got this job, but there’s no balance here. I have to be at my job more that I want to be and see my family less than I want to see them. I think that’s what it really boiled down to was just why don’t I have that control? And when it hit me, what really hit me was it was my own decisions, it was my own choices, our family’s own choices that were hindering us from having that control and having that freedom. And that’s something that had not connected for me. And you know, at the end of the day, for better or for worse, money is how the world operates. You know, this is how our social construct has been constructed. So what it really boils down to is can you earn money? And if so, how are you using it? And I just had not spent the time to consider those things. One of the taglines of this whole project is what if a happier life were a few simple choices away? And I think that’s ultimately — like that encapsulates what I had found, which was that there is a happier life a few simple choices away. That’s incredible. And then the next question that we kind of posed to ourselves was like, how far would you go for financial freedom?

Tim Ulbrich: Yes.

Scott Rieckens: You know? And that’s ultimately up to you. So that’s why I always say like, the FIRE movement is a set of guidelines, not rules. And the FIRE movement may or may not a movement, but there’s certainly a community of people who really appreciate the idea of spending less on extraneous things that don’t really bring you value and really being smart with your choices. And when you have a group of people that see it that way, it makes it a lot easier to do because I also remember having to unpack our life a bit. You know, there were a lot of — whether it was true or not, whether it was sort of a figment of our imagination or a reality, it felt daunting to suddenly take on a new identity, right? Because you have all of your friends and all of your family that see you one way and have gotten accustomed and used to the way you are. And to have to just kind of throw all that out and start fresh can be really daunting. And so it’s really helpful — you know, like never before were we able to just connect with people that see it this way that might have more information than you do and would happily share it for free instantly. That’s never really happened before, and I think that, like many things that the internet’s provided, it’s created a place where like-minded people can come together and learn from each other and grow something really quickly, grow a social movement very quickly. And right now, you know, Phase 1 of the FIRE whatever it is, to me is getting the word out. It’s improving financial literacy and realigning our world’s connection with what’s most important. You know, that’s a big, daunting task. It’s going to take a lot of time. But the best case scenario would be that Phase 2 is liberating a bunch of really smart, ambitious people from jobs that they may be apathetic at best about and liberate them to go pursue their favorite future. And what could that look like? And how could that change the world?

Tim Ulbrich: I love the way you’re thinking about that because I share that with you, Scott. What would that look like for our communities? What would that look like in terms of people maximizing their talent and their passions? And you know, we’re so passionate at YFP about if we can help put together a financial plan that allows people to pursue some of those goals, wow. I mean, game on in terms of what we could see in people getting the most of the talents that they’ve been getting. One of the things in the book that really resonated with me, as well as the documentary, which showcases the process that you and your wife Taylor worked through to get on a shared goal and path to pursue FIRE. And you mention this wasn’t easy. You know, you were obviously on board, ready to go, had been learning a lot of information and trying to get on the same page. But what I loved was in the book, in Chapter 3, you talk about an exercise where you and Taylor independently wrote down 10 things that provided happiness. And then you came together to share those lists. Why did you do that activity? And what did you glean from doing that?

Scott Rieckens: Yeah, I think, you know, looking back, it was a lot smarter decision that I think I knew it was at the time. But ultimately, you know, if we needed to align our values with our spending, it’s like, well, what are our values? And I think an easy way to decide is just think about what makes you happy. And you know, we did a happiness list predicated on a weekly basis. And it felt like the right time frame. Like if you do like on a daily basis, you’re going to get in the minutia of life and you might get too specific about the things that bring you happiness. And if you go too far out, you might get a little grand. It might be international travel or BMWs or whatever Taylor might have put on the list at that time. But a weekly basis, it’s like, what are you up to this week? And it’s like, well, I’ve got work, I’ve got this, I’ve got that. And what am I going to do to kind of inject some happiness along the way? Well, I’m going to go for a walk. I’m going to go for a bike ride. I’m going to maybe make a nice dinner this week or whatever it is. So it becomes that sort of like centered, realistic happiness list. So I really like the weekly timeframe. But yeah, we sat down and did that, and there’s a couple elements to it. One is I can’t decide for Taylor what makes her happy. And at that time, we were living in this beach community and were spending a ton of money to do so. And if the beach was on her list, and the lifestyle that that particular area provided was just swarming her list, then I had my work cut out for me. We would have to figure out a way to make that work because, you know, the idea of pursuing FIRE was not to go create a whole bunch of disruptive, diminished returns. Like I wanted to make sure that this was going to improve our lives. And so I needed to hear that from her. And she needed to consider it too because you can easily be reactionary when you think something’s about to be taken away from you. You can easily be reactionary when you’re being propositioned with something as drastic as maybe FIRE could be, and it was for us, of like having to — not having to, but maybe making the choice to move. That’s a big choice. Leave your friends behind, leave your jobs behind, like whatever you end up doing. And so yeah, I think you need to start with ultimately like, what are your values? And I think that was a way to do it. So that was critical. And it actually helped so tremendously because we didn’t even talk about money first. We talked about happiness. And I can’t recommend that enough. You talk about what matters to you the most. Then go work on a budget. Don’t work on a budget and never talk about happiness.

Tim Ulbrich: Amen.

Scott Rieckens: Or go the other way, you know, talk about your budget and then talk about happiness. Like how are you going to budget for things if you don’t know what you care about? You know, it was such a small but critical piece to our journey. And yeah, I can’t recommend it enough. Whether you decide to pursue FIRE or not, going through your Top 10 list of what makes you happy on a weekly basis quite often, maybe quarterly or biannually, is a damn good idea because it changes too. You know? We’re evolving beings, and we care more about things sometimes and care less about things other times. And those things should be reflected in your spending habits. So yeah, that was critical. And I got lucky in that scenario because she did not talk about her expensive car and she did not talk about the beach. And so that really was an opening to mutually discuss the potential for leaving. And that was ultimately I think what I would credit with why that was so successful.

Tim Ulbrich: And that was the sense I got when I read it, and it’s quoted here, you talk it all out. I hope our listeners take you up on that challenge to do it. I couldn’t agree more. And just as I reread some of these, it puts things into perspective really quick, right? I mean, I see things on here like, “Hearing my baby laugh,” you know, “Spending time having coffee with my husband,” “going for a walk,” “going for a bike ride.” And I think starting with those types of conversations around happiness and then getting into the budget and the plan and how we’re going to get there is so important. We taught this often with the financial plan of think about the goals, script your plan, and then we’ll get into the x’s and o’s because the x’s and o’s should be within the framework of the vision that we have, and that vision should ultimately derive back to how is money a tool related to deriving happiness? And by the way, Taylor nailed this when she had on here, “Wine, chocolate, and coffee.” Three of my favorite things. So she crushed that list.

Scott Rieckens: Yeah. Yeah. And I told her, look, we can buy all the wine, chocolate, and coffee you want if we take these steps on all the rest of it. And it’s worked.

Tim Ulbrich: So you mentioned the BMW, and I know that comes up throughout the book, but in all seriousness, when our listeners hear the timeframe I mentioned earlier, going from a projected retirement in 34 years down to 11 and how do you get there, you cut expenses and you increase savings. And obviously the next question is, well, how do you make dramatic cuts to expenses so you can increase your savings? So you mentioned food being one of them. You’ve alluded to the BMW. Were there other big-ticket items that were instrumental to you guys knocking down a big expense so you could get the momentum you needed?

Scott Rieckens: You know, specifically, housing, cars and food are typically the top three items that cost the most for an average family. So housing, cars and food are the No. 1 three things that I would recommend taking a hard look at, how you can get creative. Outside of those specific things, I think the thing that was the most important was the mentality, the mental shift and being on the same page because — and I can tell you this from three years of experience now. We’re not always rocking the FIRE train. You know, it’s not consistent. Like it can be consistent. We can go months, even years, where we’re on track. And then like COVID hit. And boy, one excuse after another just start popping in. Like oh, hell no. I’m doing this, I’m doing that. I’m buying this, I’m buying that. I don’t care. And I don’t regret it. We looked back at the New Year, during the New Year here, we looked back at 2020 and we said, “You know what? I think it’s better if we just don’t look at it. Let’s forgive ourselves for the decisions we made and let’s look forward because the good news is we already kind of built up the muscle, you know? We already worked out, we already know how to do this. And so let’s just keep — let’s just do it again.” And it’s amazing because it was literally a mental shift. We sat down to kind of plan out our 2021, a little vision board kind of afternoon. And it really came down to like, we wrote down the things that we wanted to shift from 2020 to 2021. And it was like, anytime we make a purchase, we talk to each other about it first, no matter how trivial because that will make us question our own decision on whether or not we need that thing and will be less about what I have to say to her and it’s more about what she has to say to herself. And it kind of prevents this reflexive, oh, it’s on Amazon, let’s grab it real quick, it’ll be here in two days, easy day, done. And that can get out of hand so quick, and so it was — and we’ve done things like that in the past, like put something in the Amazon cart and you have to keep it there for three days. If you come back in three days and you still want it, you can get it. We needed to go a little harder this time into this new year because 2020 was a dumpster fire. But again, it’s just like the best you can do is flex that mentality because we immediately got on the same page. We didn’t have to have the difficult discussion again. And I think we had the financial maturity finally to look at 2020 and say, there was a reason for those decisions. And we don’t need to sit here and relive them, we don’t need to make ourselves feel bad about them. And it did set us back a little bit on our FIRE journey. But we’re in good shape, and thank goodness because with the destruction of this year, I mean, how grateful and lucky are we that we found this when we did?

Tim Ulbrich: Absolutely.

Scott Rieckens: Imagine where we would be if we hadn’t. And imagine all the folks who are suffering through these difficult times, you know? And so we were able to look at that and go, OK, we’re super lucky. Let’s get back on track because it would be a real damn shame not to, considering everything we have, you know? It’s like, we can’t afford not to do the right thing here. So I hope that answers your question. I don’t like getting into the specific, specific things of how to cut budgets because it’s really personal. You know? You may live in a low cost of living area already with a budget that’s kind of maxing out. And you don’t know what to do, and that could be a matter of having to find ways to increase your income, negotiate a bigger salary, move to a better place — or not a better place but a place with better prospects for higher salaries in your job and then being more deliberate about what your costs are in that higher cost of living area so that you can reap the benefits of the higher pay but not have to also succumb to the higher living costs. You know, there are ways to do those things, the geoarbitrage stuff. But to me, that’s all the fun fine dining in the FIRE community. That’s all the stuff you can learn in the blogs and the podcasts and whatnot is all those very specific detailed minutia of how to really formulate your budget if you want to go hard. But to get started, I think the bigger challenge and the bigger quest is for people to align their values with their spending and start pushing themselves, you know? Taylor and I, we did something that I would recommend, actually. It was extreme in some cases, and I use that word kind of flippantly. I don’t know if it’s extreme, per se, but we — I mean, we did a lot of things very quickly. Within months, we literally packed up and moved our stuff to try to find a place that was cheaper to live, leaving behind a job. I quit my job to do this. And we left behind a whole set of friends and a whole culture that we had built for ourselves, you know? And we slashed all of our spending so hard that we ended up at our peak, we were at like a 76% or 78% savings rate, something in that range. It was extreme. We didn’t buy anything unless it was absolutely critical. And we started to get a little miserable, to be honest. Like it wasn’t fun, you know? And part of that was good, though, because we were ripping off the Band-Aid and showing ourselves how much retail therapy we were really doing. And it ended up being — that’s like such an old adage, but it’s like, you know, the best things in life are free and all that stuff. It’s like, yeah, and not only that but we were going to sushi dinners, let’s say, or just nice, fine dining dinners so often that I remember — I remember one time sitting down to a beautiful, amazing sushi dinner. And we were walking home from it, and I think our discussion was something along the lines of like, “Yeah, it was good, but I feel like last week’s was better.” And it was like, that’s horrible. That’s a horrible waste of money because if I’m comparing this amazing, decadent, unbelievable dinner that took — if you think about what it took to get that fish on that plate, it’s incredible.

Tim Ulbrich: Sure.

Scott Rieckens: And I’m sitting here comparing it to last week’s. And it’s like, oh my gosh. And so to go through and really rip that Band-Aid off and go through the sort of “hardships,” you know, and then all of a sudden we haven’t eaten out in two or three months and then you go to a medium fancy restaurant, and it’s like heaven.

Tim Ulbrich: Yeah.

Scott Rieckens: It’s so amazing. And so it’s almost like it’s a weird hack where all of a sudden, you’re like, wait, I like this more now.

Tim Ulbrich: Yes.

Scott Rieckens: Because I’m doing it less. And that’s when you can get into stoicism and all these various philosophies. And I don’t know, it’s just like our life started improving, even when it was more difficult. And that was an interesting paradox that ultimately, to bring this all back, is the reason why I suggest if people are interested in this and you decide to do it, to go hard at first because, you know, push yourself as hard as you can to see what your real — not your breaking point, but like, you know, your proverbial budget breaking point, see what that is and then work backwards from that. Don’t start where you are and incrementally try to improve because I just don’t think that’s going to be as effective, and you probably won’t stick with it, you know? But for us, to like go to 76-78% savings rates and be miserable and start going, OK, what are the things that we should add back in? And that was a deliberate decision. Next thing you know, we’re hitting like a 50% savings rate, which is incredible. And it feels easy. It feels luxurious. And it’s like, oh, this is it. This is awesome. How lucky are we. But we could have been doing the whole time if we had just made better decisions. And so yeah, I hope that helps.

Tim Ulbrich: It does. And the book and the documentary really takes the reader or viewer through your individual stories. And I also like in the book, you bring in other examples as I think that, again, back to the comment about customizing the scene, the different variations, helps give people ideas about how this might apply to their own individual situation. And one of the questions I have for you, Scott, is when I read the book, I really connected with you as a father of four young children. You discuss in the book the birth of your daughter in 2015 and how ultimately, you’d be pursuing this journey together as a young family. And I suspect many of our listeners are wondering, man, is this really possible? Is this lifestyle and this goal realistic with children? You picked up, you moved, you made some drastic cuts along the way. What advice or what thoughts would you give people surrounding pursuing FIRE while they have a young family?

Scott Rieckens: I don’t know that the children thing — the children thing’s tough because they are expensive little buggers, you know? They are. They’re going to “set you back” from your financial independence date.

Tim Ulbrich: Fact.

Scott Rieckens: But that’s ultimately a tradeoff — I’m sure you would agree with me — is well worth it.

Tim Ulbrich: Sure. Yes, absolutely.

Scott Rieckens: Nothing’s more important. I think for me, I look at it a little differently. It’s not, “Hey, guys, you’ve got some kids? Here’s a couple of trick to make it totally possible to do FIRE.” If you use kids as your excuse not to pursue FIRE, you’re not going to pursue FIRE, but it won’t be because of your kids. It’s because you have decided that that’s what you’ve — that’s what you’ve decided. You know? Don’t use the excuse of your kids. I’m here to tell you, I mean, I only have one, so I don’t have four. But — sorry about that. Gees. Good for you. Wow. Fighting the good fight. But you know, ultimately, we’ve got such a better plan for our financial future and her financial future because we’ve decided to make these choices. And I recognize that not everyone could tomorrow pick up and make the choice. But I assume, you know, your audience is probably in the camp that could make these choices. They just seem daunting. And that’s a great place to be. And so yeah, I wouldn’t use kids as an excuse. There are ways to — obviously there are hacks in everything we do when we spend money. And there are things that you think you need to spend money on that you don’t, you know? You can — just to be clear, I mean, you can buy the brand new Italian-made stroller. Or you can look on Facebook Marketplace or Craigslist and find a used one. It’s all the obvious tips and tricks. But what’s more impactful, in my opinion, is you look at that and you go, yeah, but for my baby, I want the best or for my baby, it needs to be this or that. And those are the types of things where if you’re really aligning your values with your spending, you may look at it a little bit differently after you really do some reading up on the FIRE movement and you understand why you’re spending and the decisions that you’re making. And the next thing you know, you go from only the best for my baby to only the best for my baby and what that entails is not a brand new, Italian-made stroller. It is buying the budget stroller because the amount of money that we can save by doing that will ultimately lead to that child’s college fund or our ability to spend more time with that kid, which will then allow that child to grow better, have a better relationship with their family, with their parents, get more attention and so on and so forth. I mean, these shifts are exponential. The compound interest does not just take over on the money. Yeah, that’s how I would look at it. It’s not a matter of you’ve got kids, here’s five budget tips to help with FIRE when you have kids.

Tim Ulbrich: Sure.

Scott Rieckens: It’s, you have kids? Don’t use them as an excuse to pursue financial independence, which will ultimately benefit everyone in your family.

Tim Ulbrich: And speaking of daunting, many of our listeners, Scott, unfortunately are facing big-time student loan debt. For those that came out of pharmacy school in 2020, about $175,000 is the average, $175,000. So maybe this goes in the excuse bucket, maybe not, but obviously big student loan debt, granted they have a decent income to work with. But what are the thoughts for folks that have big mountains of student loan debt? Obviously that’s a barrier, but is something that others are facing. What have you heard from your experience? And what advice or thoughts do you give folks that are looking at student loan debt but want to pursue a path towards financial independence?

Scott Rieckens: First of all, I have the utmost empathy for people that have that kind of a mountain of debt. And you know, the hope is that that debt was an investment in an education that’s going to give you the ability to pay off that debt and ultimately be even better off for it in the long run. And so with that in mind, nothing changes about my advice or the way I see it because if you have debt, as insurmountable as it may feel, that is ultimately just one barrier in the way of financial independence. And so I guess instead of starting from $0 and then starting to build your net worth, you’re starting from negative and starting to build your net worth. Either way, I would say if you have that amount of debt, you should consider it and treat it as an emergency and a crisis. And people with that situation should absolutely pursue FIRE, at the very least to get themselves out of that debt and starting at $0, you know? And what you do see oftentimes is people that I’ve seen, I’ve seen it, I’ve seen it with my own eyes, I’ve talked to people that did these things and then pulled themselves up by their bootstraps, got the FIRE thing going, and pulled themselves out of this situation. You still have all of these choices. And a lot of times, you’ll see you’ve got this mounting pile of debt, but you have a nice income, and the debt only costs x amount a month, so I’m going to lease this new vehicle, I’m going to get this nice house because I worked so hard to become this profession and now that money’s coming in, so this is what we’re going to do. And all of this boils down to still is choices. It’s those choices. Hey, I’m going to buy a used vehicle with cash that I saved up, and I’m going to eliminate these monthly payments. And those monthly payments are going to go to fund our 401k’s and our Roths. Or if you have a mountain of debt, we are going to pay off that debt as voraciously as we possibly can to get ourselves in a better position, you know? I don’t know, the advice doesn’t change. If anything, it becomes louder if you have a mountain of debt. And that’s a non-empathetic but realistic way to look at it. And another thing I should say is one of the prominent people in the FIRE movement, his name’s Johnathan Mendanza, he’s a cohost of Choose FI, he was a pharmacist.

Tim Ulbrich: Pharmacist.

Scott Rieckens: Yeah.

Tim Ulbrich: Yeah.

Scott Rieckens: And he walked away from a job about a year after finding FIRE because he realigned his spending with his values, he got right, he got on a good track, and then he built what was originally a fun side hustle into something that could sustain him. And he chose a different path than pharmacy. And I’m not suggesting people need to do that. Some people may love their jobs. And by the way, the whole retire early thing? Let’s not get caught up on it. It happens all the time. You may like your job. Great. This is still for you because if you enjoy your job but you have the freedom and flexibility if conditions change, that’s still a win-win. You know?

Tim Ulbrich: Absolutely.

Scott Rieckens: Ultimately, it’s about gaining back your freedom of choice.

Tim Ulbrich: Couldn’t agree more. I think financial independence is a goal we all should strive for. And I think that should resonate with folks, whether they love what they do every day, they don’t, or somewhere in between. And I want to again point our community to both the documentary, “Playing with FIRE,” as well as your book, “Playing with FIRE.” I can’t say enough about both of those, what they’ve meant to me, the impression they’ve left on me and my wife, Jess. “Playing with FIRE,” the documentary will be available on Amazon, iTunes, Google Play, Vimeo or folks can pick up the DVD at PlayingwithFIRE.co. Storytelling is outstanding, it was named a Top 10 Best Finance Movies of the Decade by U.S. News. It includes a cast of personal finance and FIRE all stars, including Mr. Money Mustache, Vicki Robbins, who’s the author of “Your Money, Your Life,” The Minimalists, the Mad Scientist, Jonathan Brad from Choose FI and more. And then the book, you know, we’ve just scratched the surface here and there’s much more to learn in the book, including the seven steps to achieving FIRE, where to learn more about FIRE and the FIRE community, how to crunch your own FIRE numbers, many FIRE stories, and much more. And that is readily available wherever you normally purchase your books. So Scott, thank you so much again for taking time to come on the show. What is the best place for our listeners to go to learn more about you and the work that you’re doing?

Scott Rieckens: Thanks, Tim. Yeah, PlayingwithFIRE.co, it’s got it all. I’m a big fan of Twitter, so we’re on Twitter @playingwithfireco, and we’re on Instagram as well. So yeah, those are the places you can find us. And hope to see you there.

Tim Ulbrich: Great stuff again, Scott. And on behalf of the YFP community and our team, thank you so much for taking the time.

Scott Rieckens: Thanks, Tim.

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YFP 186: The Picture Perfect Side Hustle

Posted on January 14, 2021November 2, 2022 by yfpadmin

The Picture Perfect Side Hustle

On this episode sponsored by Live Oak Bank, pharmacist and photographer Landen Conner shares how he turned his side hustle into his main gig, why and how he started his photography business, how he found his niche, and the mechanics of his business.

About Today’s Guest

The career of pharmacy accelerated Landen’s path to becoming a photographer, but where he met his passion was at the intersection of pharmacy and photography, which was “people.” Seeing people heal in an instant on camera was magical. Then hearing the unexpected wins after, such as landing a job, gaining more clients, even dates was the icing on the cake for him!

Summary

Landen Conner became interested in photography after one of his friends shared with him that he was able to create a successful business as a wedding photographer. Although Landen was a full-time pharmacist at the time, he was experiencing major burnout from his job and needed to step away from pharmacy. Landen soon realized that being a photographer was more than just picking up a camera and taking pictures. He found his niche in headshot photography and helps clients heal by taking their picture and sharing the stories of his clients.

Landen was debt free aside from his mortgage loan and knew he didn’t want to start his business without taking on any debt. He used cash to fund his start up and leaned on his pharmacy day job as a way to invest in his business. Knowing that he was paying cash for the majority of his equipment allowed him to be more present with potential clients. He estimates that he spent around $10,000 to $15,000 starting his photography business.

Landen now focuses on headshots, family shoots, commercial photography, and marketing and branding. During the COVID-19 pandemic, Landen started working a couple times a week as a per diem pharmacist to help bring in a steady stream of income. Landen also discusses how he automates functions of his business, his advice to other pharmacists looking to start a side hustle, and how he’s taking his business to the next level.

Mentioned on the Show

Episode Transcript

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

Landen Conner: Thanks a lot, Tim. I appreciate you for having me.

Tim Church: I recently learned about your story as I was perusing Google News alerts and an interesting article came up from the Orlando Business Journal titled, “Side Hustle to Main Gig,” and one of the biggest reasons I was excited to have you share your story on the podcast is basically, you have the reverse side hustle where pharmacy is not your main gig. But before we dive in, I do have an icebreaker for you.

Landen Conner: Yes.

Tim Church: Alright, you ready for this?

Landen Conner: I hope so. Let’s roll with it.

Tim Church: Alright, the pandemic is over and you’re out at a bar or restaurant and your name comes up to sing karaoke. What song are you singing?

Landen Conner: Oh, wow. Talk about a curveball. This may be funny. How about the Lion King Can’t Wait to be King?

Tim Church: Oh my gosh. I love that Disney movie.

Landen Conner: It’s like 1A in my book.

Tim Church: That’s awesome. I was not — let me just say, I was not expecting that. That’s a good jam. Do you like blast that in the car?

Landen Conner: The only reason why I’m hooked on it as like my second favorite Disney movie of all time, probably right there with Aladdin. But my wife just designed this whole room for a newborn with Lion King. And I’m hooked back onto Lion King now.

Tim Church: OK, that’s awesome, man. I love it. Well, Landen, before we kind of jump into your main gig now, really, talk a little bit about your career path as a pharmacist.

Landen Conner: Started out at 18 with a tech — as a tech/student. And wanted to see if I wanted to be a pharmacist. I got a job at Walgreens pharmacy, loved it, started school at Xavier University. The first day, I got scared and flipped my major from computer engineering to pharmacy because I got scared — I heard about 50,000 people were going to be laid off. So I was like, I’m just going to go to my second strongest thing, which was science. And that’s where my career began as a pharmacist.

Tim Church: OK. And talk a little bit about what are some of the positions that you’ve had when you were working full-time.

Landen Conner: I’ve been pretty much the full gamut. Went from retail pharmacy as everyone does pretty much to long-term care — loved that one — specialty pharmacy — loved that one as well — to MTM pharmacist and now to basically a per diem pharmacist filling in on call positions.

Tim Church: Now, obviously to where you got to that point, going from full-time to per diem, you talked a little bit about something in the article because at some point in your pharmacist career, that initial vision you had when you were training, you were starting out as a pharmacist, that changed. And in the article, you mention that you had been diagnosed with extreme stress related to your job and were quoted as saying, “As a result of this, my vision became blurred, memory loss occurred, as well as pains all over the body. The diagnosis made me sit back and think seriously, was it or anything worth the cost of my health? The simple answer was no.”

Landen Conner: Yeah.

Tim Church: Now, when I read that, I was really taken back because we’re not just talking about oh, I’m stressed at my job. We’re talking that it got to the point where it was physically affecting you. So obviously, that had to be pretty severe in the position that you had at that time to get to that point. So talk about those feelings that you expressed and how did it get to that point?

Landen Conner: The feeling that I expressed, I was actually helped along. I won’t mention her name because of the company she works with, but I was sitting next to this lady, we were really good coworkers and friends. She had mentioned her story to me years earlier when she was progressing in this company, going up the management chain. It got to a point she was taking on so much, she got sick. And she had to make a choice whether to keep working or keep progressing. And I asked her about that story and what would she recommend? And she said, “Landen, if I could do it again, I would choose to take a break and stay away for my health purposes.” So hearing that, I took that as a sign from God to say, you know what, choose your life. Because you can always find a way to make money with an entrepreneurial mindset versus how we’re taught in pretty much — you’re a pharmacist too, Tim — we go to school, we’re in school all day. And when you come out, you still practice those similar principles, but after awhile, you experience burnout. And that’s where it was with me. It was just burnout.

Tim Church: And can you elaborate a little bit more? Like what specifically were some of the things that were contributing to that? And how long did that take to develop?

Landen Conner: I think it developed slowly, honestly, going through recently a new marriage, working all the varying types of shifts, 5 a.m. shift, 10 p.m. shifts, then going from working early in the morning maybe to a photo shoot that evening and then just constantly repeating those cycles, finally caught up to me. Not being able to take vacations when you wanted or when you needed, rather, not just wanted per se, when you needed it. And just going through that, it was accumulation. Then you just start feeling the headaches, you start seeing the double vision, sometimes memory loss where you don’t really remember verifying certain things because you’re under that amount of stress, you think you’re keyed in, but you’re not.

Tim Church: How did you get to the point where you said, you know what, I’ve got to transition. I have to do something to get out of this situation?

Landen Conner: Sitting back, taking a look and starting to organize your life. I’d be lying to you if I said being debt-free except for the house didn’t matter because then I could start to organize, hey, it takes this amount per year to live. And then you break it down into monthly cycles, you know living in Florida, your bills may be a little bit higher due to the summer weather, then in the winter, you can dial it back. So you kind of average, put everything in perspective. And you don’t have your credit cards that you have to pay, the bills you have to pay. And that helped.

Tim Church: So obviously, that setting yourself up in a good financial position allowed you to make that transition, it sounds like. But one of the things that I wanted to ask you is while you were working full-time as a pharmacist, your side gig at that time was photography. And so before that became your main gig, how did you become interested in photography? I think that’s interesting because the last time I checked, you know, that was not an elective in my PharmD. I don’t know if it was — what was it, Xavier that you went?

Landen Conner: Yes, that was definitely not an elective. I tell you, I was sitting in a desk working specialty pharmacy, and I was — I kept saying the same thing over and over again. I was like, man, I’m basically saying, “You want fries with that?” And I’m like, God, you’ve got to have better for me than this. And then one of my best friends back home in New Orleans, Calvin Gaveon, called me. He told me how much he was making doing wedding photography. And I said, “No way, dude.” He’s like, “I promise you, man.” And I’m like, “Cool, I’ll pick a camera and do the same thing.” But it was so much more than just picking up a camera and shooting a wedding. I found my personal niche in headshot photography. And that grew into branding and marketing a person because the joy that I experience meeting that person one-on-one and attacking those internal securities — insecurities — watching them heal in front of the camera was just golden, knowing that you could do that in the power of a millisecond with a click, this person’s whole life can change.

Tim Church: So Landen, your friend Calvin reaches out and says, “Hey, you should try this out because I’m making great money, and it’s an opportunity for you to do something on the side,” not knowing it would eventually become your main gig. But you talked about something there that I think is really important and really stuck with me is that you said you had the opportunity to learn other people’s stories and to help them get to a point where they weren’t so insecure about getting even just a simple headshot. Talk about that.

Landen Conner: I’ll take you — I’ll make it relational. Like whoever may be listening to this, you go back to the age, I mean, to your kindergarten age. And you get your mom and your dad, and you think they’re doing the greatest thing in the world by having to take kindergarten photos. Most kids don’t want to take them. Or you’re being bullied in school or someone, that one person in life tells you you’re not beautiful and you’re not worth it. You carry those insecurities with you throughout the rest of your teen years, your adult childhood years. So once someone’s steps in front of a camera, they’re carrying it, like I’m not photogenic. I’m uncomfortable in front of cameras. I’d say that’s 99% of people I shoot, they tell me that they don’t think they take great photos. And they don’t value themselves. And once I meet them at the corner of that insecurity and just give them small coaching tips and walk with them through, it’s like, “Hey, you’re beautiful,” or, “You’re debonair.” Who told you that lie? And they pour out their heart to me. I can give you a story, a couple stories if you want.

Tim Church: Yeah, let’s hear it.

Landen Conner: The first time where photography became so much more than just a photo, I walked in shooting this behind-the-scenes interview that a guy from my church asked me to do. And I said, “Sure, I’ll do it. I just need to get some headshots to build my portfolio.” And the main interviewee said, “I hate my photo being taken. I really don’t want to do this.” So I asked her, I said, “Can you give me five minutes? If you don’t like it, delete it. It’ll never see the light of day.” And she allowed me to do the photo. I edited it, sent it to her probably within 48 hours. Then she called me back about a week later, kept me on the phone for maybe an hour, and said, “Landen, I put this on Facebook, and I got over — at that time, I think 75-100 likes.” And she was almost in tears because she said, “I am beat up verbally so bad in a marriage, abused in a marriage, abused in her childhood, I thought I was the ugly duckling in the family.” And from that moment on, it completely changed every time I stepped behind camera and had someone in front of my camera. The second one that made a massive difference was probably about a month or two ago, I photographed this young lady that was a resume writer. She came in, she got her head — she was ready to do her headshot. First five minutes, we shot, made sure my lighting was good and everything. And then I was just talking to her, getting to know her, and then in five minutes, we got a photo that she loved. And walking back to the bathroom to change, she stopped midstream and said, “I can’t believe you made me look this beautiful.” And I said, “Why? You’re beautiful.” She’s like, “I just had a kid two weeks ago, my body is out of shape from the weight gain from the pregnancy, and I didn’t feel like I was myself.” And I was like, “Hold on, you’ve got to stop because you’re about to make me cry.” And she just kept going on, and the session was just magical.

Tim Church: So did you ever think that when you were getting into the photography business that you were going to hear these stories from people or that you were going to have the opportunity to walk with them in what was a very difficult thing to do, which may not be for other people, but for a lot of people, it is?

Landen Conner: Absolutely, 1,000% no. I had no clue this would happen. I had no idea. I’d be lying to you if I said I did.

Tim Church: And so how has that really changed your perspective? And was that part of how you flipped that switch to basically say, I’m going all in?

Landen Conner: Yes, absolutely. Recently I joined a Christian Chamber about three months ago, and the leader of the Christian Chamber was Crystal Pocker. And she helped me to marry the two fields because I thought pharmacy had nothing to do with photography. And she said, “Landen, the common thing you have, you did one P with Pharmacy and now you’re doing another P with Photography, but in the middle, that P was People, that you care for people and want to see them win in life and not just meet the status quo because everybody is unique.” I’m different from you, Tim, you’re different from me. We may have some commonalities, but you have your own personal traits.

Tim Church: I think it’s just amazing, the work that you’re doing because it goes beyond just putting images on a website, on social media account. It’s driving a lot of impact and helping people get to a place where they’re comfortable with themselves. And I mean, I think that’s huge. It has to really give you that warm and fuzzy feeling inside.

Landen Conner: It does, but you want to know something, Tim? I was scared as I don’t know what to share people’s stories initially. I really battled with that because let’s just say if I took a — because if I took a photo of you and you shared something personally with me, I would — I would say about a year and a half ago, I would just put, “Had a great time working with Tim. And he was excellent to photograph.” That tells the viewers nothing. But sharing those stories, it makes it so relational, just like I shared with the lady that was mentally, physically abused in her previous relationship or with the guy who was molested at a young age, those type of things. I don’t have to put the molestation, but it’s a sense of rejection from another person’s perspective. You need to make it totally relational. I just posted something a couple of days ago. I said, the title of it was, “Don’t be Stiff.” As soon as I put that up, I said, man, this is so relational. Because I get in front of a camera and freeze up every time.

Tim Church: How have these stories that you’ve collected from the clients during the photo shoots, how has that helped with the marketing of your business?
Landen Conner: It’s humanized it because when you see those headshots, you see a healed person. You don’t see the person that looks like everybody else. You see that actual person. If I photograph Tim, I’m not shooting just with Tim. I’m shooting for Tim’s audience. I’m shooting so they can meet who Tim is, not just the, “Smile, Tim!” That’s not it.

Tim Church: Well, Landen, I want to switch a little bit and kind of dive into the mechanics of the business. The article mentioned that you used cash to fund the initial startups and you said this was something really important to you. So talk a little bit about that.

Landen Conner: I was at a photography conference, and this one photographer told me, he said, “Don’t look at your business” — I mean, “Don’t look at your day job as just a day job. Look at it as an investment into your business.” And since I already had a limited school loans, I didn’t believe in debt for the business because it did one big thing. I bought one lens on credit, and it would make me talk to people — I would allow myself to talk to people differently, thinking I had to book this client to justify putting this lens on debt. But when I paid cash for everything, I didn’t have that type of burden in my life. So it allowed me to actually sit and talk with clients freely and to serve their best needs.

Tim Church: And what were some of the other startup costs that you had besides the lens and some of the basic equipment? Anything else you needed to kind of get up and running?

Landen Conner: I would say the biggest thing — of course, cameras, different cameras, more up-to-date cameras, lenses. But getting to be able to afford automation because I photograph different people on different days, and that’s a lot of storage to kind of keep inside. So I don’t want to just share everything all at once because you get tired of seeing it after awhile if I overload you with too many stories. So I just needed to hit with that one person that one day or two people so they can know that they’re not alone. So the automation was the biggest thing.

Tim Church: Do you mind sharing approximately, what was the cost that you needed to kind of at least get started? What are we talking?

Landen Conner: I would say anywhere from $10,000-15,000 maybe. If it was now, I think you could do it — actually, I know you can — as much as half that amount.

Tim Church: That’s not a little amount to kind of get started. I mean, was that sort of intimidating looking at those costs? Or was it much more palatable considering you started it while you were still working full-time as a pharmacist?

Landen Conner: It was easier because at a pharmacist’s salary, did I know it at the time? No, not until I did my taxes at the end of the year, and I’m like, “I spent what on what?” But I’ll tell you this, for any aspiring people, do your research first. Even though I didn’t research, there were some of the marketing tricks that I fell for, which I allowed myself to waste money in certain areas. And that would have cut my costs in half, by at least 25%.

Tim Church: So do your homework. Know what the bare minimum you need to get started. But it may not be as expensive as you think is what it sounds like.

Landen Conner: No, it’s definitely not as expensive as what you would think. Right now, they’ve came out with better products at a much more affordable cost. So that’s going to knock your costs from where I started for probably down by more than half.

Tim Church: Wow. That’s a big deal. So you said a little bit earlier that headshots are basically your jam, that’s the space that you excel at and how you’re helping people. Are there any other services that you provide or that you do?

Landen Conner: I still do family shoots when my clients ask for them. Weddings, I’ve kind of stepped away from. I’m doing my last wedding this Sunday. My bread and butter now is marketing and branding, commercial photography. And we just start with the headshot and build all the way down. Why? Because everything starts with you. As a small business owner, I want to know who you are. We don’t have the luxury to hide behind a brand name such as a Nike or Apple.

Tim Church: So talk a little bit more about that, that beyond just individuals marketing themselves, you’re talking about other businesses and helping them with their marketing materials, specifically with photos but even other things as well. Talk a little bit more about that.

Landen Conner: Sure. With the marketing and branding is — you know how we, like when we start a business, we always go to those free stock image websites?

Tim Church: Yeah, of course. I’ve used those multiple times.

Landen Conner: Oh boy. Should we change the question? So as a photographer, there’s nothing wrong with those starting out. But you should try to get away from those type of websites within your first 6-12 months, especially if you’re getting big. Because if you look at it, those are models and those are ideal situations. I’ve seen a lot of times where people use those stock imagery images, and I can go to another website and see the same stock images. So it causes a disconnect in the viewer’s mind. Or let’s just say that small business owner to mid-size business owner invites me to their office, I go to their website, it doesn’t look anything like this. So now I have my defenses up because I think you’re lying to me. They’re never going to tell you this, but it’s the same scenario. When you’re doing your marketing and branding, you can’t market and brand on things such as Facebook, Instagram, using non-organic photography.

Tim Church: And so what it sounds like is you’re basically helping to foster that image of that company, of maybe that individual as well, and making that more of an authentic feel versus something that is not actually representing who you are and what you’re doing.

Landen Conner: Correct. Absolutely, 100% correct.

Tim Church: So one of the other things I wanted to ask you — what about matching pajama holiday photo shoots? Do you do those too?

Landen Conner: Yes. I’ve done that, two years ago, actually. Two years ago.

Tim Church: I mean, I could see there could be a lot of high demand for that one.

Landen Conner: It’s funny you should mentioned that because you just brought to mind this family that I photographed like two years ago. And the story behind that one was they wanted holiday photos within their home. It meant something to me when they called me because a kid was born so prematurely and was fighting for his life. And now, I believe he’s running, walking and just going all over the place being a kid. But knowing the story, the backstory behind how this kid fought for his life to live and then was able to do the whole photo session and now he’s — you wouldn’t even know he was a preemie.

Tim Church: Wow.

Landen Conner: Those types of sessions are magical.

Tim Church: That’s cool. How specifically are you marketing your business?

Landen Conner: Definitely LinkedIn. Trying to get better at Facebook. Christian Chamber has definitely been a blessing in my life.

Tim Church: Hopefully the YFP podcast as well.

Landen Conner: There’s a new one, another blessing, the YFP podcast. And just word of mouth has been my mainstays right now.

Tim Church: Does anyone help you with the business? Anyone with assistants or doing some of the behind-the-scenes things to get you up and running to kind of do the sales or is this all Landen?

Landen Conner: This has been all Landen — and I use the word ‘has’ because until recently, I realized that with people in my life, I can start to delegate and hire out to do different things. So now we’re moving into video and we’re able to move into doing a full scale brand and market build. So if you need copywriters, if you need graphic design artists, then we’re working purely organic — with organic material for the particular individual or business.

Tim Church: So sounds like things are happening and you’re growing, which is awesome because it means that a lot of people are valuing the services that you’re providing, which I think are huge. Landen, talk about how did you get back into pharmacy? You said you were doing that full-time, you switched to photography, and now it’s kind of coming back to some extent. Talk about that.

Landen Conner: I got back into it because COVID did put a kind of damper on the business for awhile. That and the house note was the only debt that I had that was left to pay off. And then with my wife’s health, with her being diagnosed with MS, I had to provide even when you don’t have a constant income coming in as a entrepreneur. So doing those on-call maybe 1-2 times a week, it does keep a constant flow when I don’t have clients that are coming through.

Tim Church: One of the things that often comes up is how do you even consider a side hustle with a full-time job? People talk about in the YFP Facebook group, they’ll message me on LinkedIn, they’ll say, “How do you do it? How do you work full-time, have a side job, and also maintain your family, your relationships, and do it all?” So how do you do it?

Landen Conner: I would say automation really helps. The other thing is I started to sit back and remember why did I get into this in the first place? Meaning pharmacy. And then the second thing — I mean third thing was do you want to make a difference in just your life and build something only for you? Or do you want to make an impact in others’ lives and change one life at a time and challenge yourself a day at a time? Can you make someone else’s life better? You make time for what you desire to have fulfilled in your life.

Tim Church: I love that. That really pumps me up. But I totally agree with you that if you’re buying into that mission and the results of what that work is going to accomplish, that that can be a huge driving factor for being able to make it work. Totally agree with you on that one. You mentioned automation, so talk about that a little bit. I think that’s an interesting way that you’re making it happen. So talk about that.

Landen Conner: You mentioned that a lot of people ask how do you do it? Let’s just say if you want to do email blasts, ConvertKit is an excellent source. If you want to do Facebook posts, you can schedule out your Facebook posts, your Instagram posts, your LinkedIn, all of those things have built-in automation. And the other thing I would explain to people who are interested in a side hustle and they’re doing those email campaigns, they’re doing those social media campaigns, there’s seven days in a week. One day, you’re going to have a groove. And let’s just say that groove is an hour to two hours. You get in that one or two hours, and you just write or bang out a bunch of posts of things that you want to go on, schedule them out. They don’t have to be every day. They could be weekly. And then as you gain more experience, as you gain more clients, then you add to it. So you’re building slowly. And it adds up over time.

Tim Church: I think that’s big. I think you’re right. You have to harness technology. We all have the same amount of time. We have 168 hours every week. And after sleeping and working your full-time job, I mean, you’re limited. That gets substantially cut. So I think that really is a huge one because you have to think about OK, realistically, how are you going to make it work? And how are you going to do the things that you want? I think that’s big. I mean, I think that’s great advice. So speaking of advice and recommendations, what advice would you give to other pharmacists out there who they have other interests, passions beyond pharmacy that have the potential to be turned into a business or they have an entrepreneurial mindset?

Landen Conner: Go slow. That was one of the biggest things that I say now I understand because if you think of the story of the tortoise and the hare, the tortoise always wins. Get out of debt. Organize it from biggest to smallest. If you watch Dave Ramsey, you understand that. And give yourself small wins. Look at the pharmacist’s salary allocated in percentages. If you want to take 10% out of your salary and invest into your business to get those automation programs, they’re going to pay off huge in the end.

Tim Church: That’s so good. I want to bring another one up that you mentioned in the article, which was find the right group of like-minded people who won’t just tell you what you want to hear but what you need to hear. How has that helped you?

Landen Conner: Immensely. A lot of times, it’s hard to hear what you need to hear from people. I haven’t had that issue because I have friends that they’re going to tell me whatever it is that they feel like they have to tell me. I know it’s out of love. So it’s getting to a place that I know that they love me and tell me up front versus hiding the truth and hurting me or damaging me long-term. My grandfather, before he passed when I think I was like 8 or 10 told me something I never forgot. He said that there are only going to be three people that make it off your block. And lo and behold, there was only three people that made it off my block that was successful. And he said, “Watch the company you keep because whatever company you hang around is what you will become.” Is that always the truth? No, but a good majority of the time, I’ve seen it come to fruition.

Tim Church: I definitely agree. And sometimes, we need that criticism, that feedback, if we want to make it to the next level.

Landen Conner: True.

Tim Church: I totally agree with you on that. Well Landen, thank you for coming on the show, for sharing your story. Thanks for being open about the burnout that you experienced as a pharmacist. I know you’re not the only one out there who has gone through that or is going through that. A lot of pharmacists are dealing with that, so thank you for being open about that. And you know, I really look forward to hearing about your progress as your business continues to grow and you continue to create memories but also share people’s stories with the work that you’re doing. And I think it’s just amazing, that work that you’re doing right now. So if somebody wants to reach out to you for a holiday photo shoot, wants their headshot for LinkedIn or they just want to learn more about who you are and what you do, what would you recommend?

Landen Conner: Of course reach out to me on LinkedIn at Landen Conner or my website, www.landenconnerphoto.com, and it’s with e’s. And of course the last one, which hardly anybody takes advantage of — give me a call. (514) 905-2249.

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YFP 185: 10 Financial Moves to Make in 2021

Posted on January 7, 2021November 2, 2022 by yfpadmin

10 Financial Moves to Make in 2021

Tim Ulbrich talks through 10 financial moves to make in 2021. It’s time to turn the page on 2020 and start 2021 off the right way and that’s with an intentional plan.

Summary

The start of a new year brings an opportunity to reflect, reset, and start fresh. It’s also an incredible time to dig into your finances and become really intentional with your 2021 financial plan. Tim Ulbrich talks through 10 financial moves you should consider in 2021 and how to make them happen.

Here are the 10 financial moves you should consider for 2021:

Simplify and clarify your goals for the year
Revisit the big questions and discussions with your spouse
Take advantage of any low hanging fruit to get a win or two and gain some momentum
Put your goals on automatic…and get out of the way!
Revisit your student loan game plan
Take your tax strategy to the next level
Button up the insurance part of your financial plan
Evaluate where real estate may or may not fit into your financial plan and goals
Update your legacy folder
Set your learning plan
BONUS: Find a community and get a coach for accountability and guidance

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? Tim Ulbrich here, and excited to turn the page on the New Year. Here we are, 2021, hard to believe we’re at the start of the new year. And we know that 2020 was a hard year for many, and I’m hopeful that 2021 brings a better year for everyone.

OK, let’s do this. 10 financial moves to consider for 2021. And spoiler alert: I’ve actually got 11, so we’ll have a bonus one at the end. Now, we know every new year, it’s a chance to turn the page, a chance to reset, and yes, it’s just an artificial point in time, a day that is really no different than any other day except obviously for tax reasons and of course, if something is changing at the 1st of the year, whether that be compensation or benefits. But regardless, those aside, it’s an opportunity to turn the page and let’s take advantage of the opportunity to reset. Now, perhaps resetting means that you’re someone who’s on track and it’s just reminding yourself of the plan that you have in place and celebrating the success and the wins that you’ve had thus far and wanting to keep that momentum going forward. Or perhaps the new year means that you feel like you’re not on track. Maybe you’ve got a plan or a plan that you need to dust off, and it’s a chance or an opportunity to reset course and to recorrect for the new year. Or perhaps you don’t have a plan, and it’s time to get one in place and it’s a time to evaluate what are the different parts of the financial plan and considering all of the things that are out there, what are the low-hanging fruit and what are the areas that you can begin to get some momentum on to be able to have longer term success as it relates to your finances?

So No. 1 — as we go to this list towards 10 financial moves to consider for 2021 — No. 1: Simplify and Clarify Your Goals for the New Year. Now, notice I didn’t say set your goals as I suspect that many of you are already doing that. We talk about that on the show all the time, the importance of having an intentional plan heading into the new year or just in general, an intentional plan as it relates to finances to know your compass and know where you are going. So rather, what I’m referring to here is bringing them into focus and getting specific with those goals to make sure that you’re laser-focused on how you’re going to achieve those. So we know, I know, you know, that there are lots of competing financial priorities, regardless of the stage that you are at within your financial plan. So perhaps you’re somebody who’s listening that has been out of school for a decade or more and you’ve worked through maybe the student loan debt that you’ve had, you’ve paid that off and you’re kind of on a next evolution or phase of your financial plan. There’s lots of competing priorities, even after getting rid of those pesky student loans. Or perhaps you’re someone who is a recent graduate or a student that’s listening and you’re trying to figure out, OK, I’ve got this behemoth of my student loans, and how do I begin to think about other things as I also face what is, of course, this big priority that’s right in front of me? Or perhaps you’re someone who’s nearing the retirement age or you’re in the latter part of your career and you’re trying to identify, OK, I’ve done all of this work, I’ve put these things into place and I want to make sure I go into this next phase of my career, next phase of my financial plan, and I do that in a way that is intentional and I do that in a way that is efficient to make sure I achieve the goals that I want to achieve and of course, lots of tax and other considerations that are there as well. So regardless of the stage that you’re in, whether it’s mid-career, end of career, new career, there are lots of competing priorities. And I’m convinced that the priorities, you know, don’t go away. But it’s a matter of how you can identify those and prioritize those to make sure you’re intentional with what you’re trying to achieve in any given period of time. And here, of course, we’re talking about heading into the new year. So if you haven’t already done so, put them down on paper. And my encouragement for you is to leave this to just a few financial goals that you want to make sure that you prioritize and achieve for the year. So I’m going to encourage three goals and that you write them in a way that provides you with the best opportunity to achieve that goal. So making sure you’re specific about the what of the goal, the when you want to achieve that goal by, and the why — what’s the purpose, why does that matter in terms of the rest of your financial plan and why is this specific goal important?

So let me give you an example here. If I were to say, you know, “Beginning Feb. 1, I’m going to allocate an additional $200 per month towards a Roth IRA so that I can grow my long-term savings in a way that aligns with my retirement goals or plan.” So when I get that specific with a what, with a when and a why — so here, we’re talking about what are we doing: an additional $200 per month towards a Roth IRA. When: by Feb. 1. Alright, how does that look in the budget? Now I’ve got an idea of when and how much. Why? So that I can make sure I’m achieving my long-term savings goals. That is a goal that we’re likely or increased likelihood of achieving because we’re getting specific and we can look at the rest of our financial plan to determine whether or not that is feasible and whether or not that is realistic.

Now, before you set your goals, you’ve heard us say this on the show before, you have to be clear on the why, the so what, the purpose. And we’ve talked about why finding your financial why is so important. And you know, really, what we’re trying to answer here is the question of why does this topic of money even matter to you? Or why does this specific goal and achieving this specific goal even matter? Why is this important? Why is this relevant? And that sounds like a relatively simple question, but if you have thought about this in depth before, you know that it is not. This is the “So what?” question. So before you get too deep into the x’s and o’s of any one part of the financial plan, whether that’s debt repayment, whether that’s investing or savings or insurance, whatever that would be, we have to first understand what we’re trying to achieve. And we talk a lot about our vision at YFP of helping pharmacists on their path towards achieving financial freedom. And my challenge to you is what does that concept, what does that term of financial freedom mean for you? There’s no one right answer. And that can certainly — will be certainly different for many folks that are listening to this episode.

So what’s the goal? So a few ideas to get things stirred up, hopefully to get you thinking about this topic a little bit more. I’ve talked with many pharmacists that say, “You know, when I hear financial freedom, I think about flexibility. I think about options of working or perhaps having the choice to work or how much I work or when I work. Even if I really enjoy the work I do.” Or perhaps it’s to be in a position of control with how you’re spending your time or your money. Perhaps it’s to be able to give, to be philanthropic. Perhaps it’s to leave a legacy or to travel without worry or stress or regret. Perhaps it’s to help family members or friends that are in need or be in a position to do that or to start a business or a movement or a foundation or a charity. You get the point. It’s the financial why, it’s the purpose, and that’s really going to help drive the rest of our financial plan. So that’s No. 1, Simplify and Clarify Your Goals. Set three financial goals for the new year. And then the background of those goals should be the purpose, the vision, the why of your financial plan such that if you achieve those goals, you’re one step closer to achieving your financial why.

No. 2, Revisit the Big Questions or Discussions with Your Spouse if this, of course, applicable to you and your personal situation. Could be a significant other as well. Now, I wrote a blog post way back when several years ago titled, “10 Financial Discussions that I Believe Every Couple Should Have.” And we’ll link to that blog post in the show notes. And you know, these are questions such as when you’re balancing financial priorities or making decisions, of all of the financial priorities you have to consider, whether that’s giving, saving for retirement, housing, transportation, paying off debt, and so on, do you and your spouse or significant other agree upon a plan for how you will balance these? How will you prioritize them? How will you fund those goals, in what order and when? Will you be focusing on several at once or just one at a time before moving on to another one? That’s an example of a big question or discussion to have. Another one, for example, might be around giving. How does each individual feel about giving? How much and where? How will this be budgeted for? Another one might be around the level of engagement. Is one individual taking the lead more than the other when it comes to managing the finances? If so, are both individuals aware of the overall financial situation? How do you talk about this topic? How do you communicate this topic? Are there shared accounts, individual accounts? So I’m just scratching the surface here, and I’ll reference you to that post. But my encouragement would be to look at these and maybe several of these you have had, maybe some you need to revisit, some you haven’t had. But the challenge here in No. 2 is to go back and revisit, discuss, rediscuss these questions with your significant other or your spouse with the understanding that the answers to these are of course going to be significant and inform the direction that you take with many parts of the financial plan.

No. 3, Take Advantage of Any Low-Hanging Fruit so that you can get a win or two and get some momentum early on in the year. Now, again, regardless of where you are at in the stage of your career or your financial plan, I think this is a very important concept for us all to consider. Is there any low-hanging fruit that we can get a quick win or two, get some momentum, so that we’re encouraged and motivated and want to be going on with achieving the other perhaps more audacious or bigger goals that we have set out for the year. So things that come to mind here, things that I evaluated myself in 2020, these could be shopping around auto or home insurance or have you looked at this in a while? If not, good chance to understand your coverage, shop these around, see if there’s any you can save without giving up on the quality of those coverages and policies. Perhaps you’re someone who has wanted to get a term life insurance policy in place or that is a need and it fits with your plan but for whatever reason, you haven’t done that. Relatively inexpensive, we’ll talk about insurance here a little bit in a few moments. Maybe it’s refinancing a mortgage. You know, I’m sure you all heard and read about where rates have gone in 2020, certainly probably into 2021, through the pandemic. And perhaps for whatever reason, you haven’t evaluated that. Is that something to consider? Are there any recurring bills that perhaps you’re not aware of or maybe have lost track of or bills that have gone up over time that you might be able to take a fresh look at and negotiate, things like cable and other services. Are you eligible for HSA savings? And we talked about this in episode 165, The Power of a Health Savings Account. But this is an example of a tax-advantaged account where there’s great benefits, the dollars aren’t enormous, but again, perhaps this small victory, this quick win, this low-hanging fruit that can help accelerate the rest of your financial plan. So do any of these resonate? Or are there any others that you would identify of things that you’ve been meaning to do that you know what needs to be done and you want to just take that next step and knock it out and to continue the momentum with other goals in 2021.

No. 4, Put Your Goals on Automatic and Get Yourself Out of the Way. Now, one of my favorite books, I’ve talked about it on the show many times, “I Will Teach You to Be Rich” by Ramit Sethi, he talks about this concept of automation, automation, automation. He goes through great examples of how to do it. We’ve also talked about it on this show, Episode 057, The Power of Automating Your Financial Plan. But the concept is simple: Once you set your financial goals, when your paycheck comes in, you have a system in place so that your goals are being funded right away and that you have a budget behind that to know that you’re not going to be putting yourself in a position where you’re overspending your income each and every month. Now, for those of you that have been doing this for some time, I think this concept of automation is also very important. It’s this concept of prioritizing your goals, paying yourself first rather than hoping you have money left over. And so perhaps it’s revisiting those goals, revisiting the amounts, the timeline, when do you want to achieve those, and building the systems — again, Ramit talks about that in “I Will Teach You to Be Rich,” we talked about it on Episode 057, how to build the systems so that once you get paid, once you have the goals, you’re automatically funding those accounts such that you are essentially assuring — hopefully — that you’re going to achieve those and behaviorally getting yourself out of the way, which often we individually are the biggest barrier to achieving our financial plan. So that’s No. 4, Put Your Goals on Automatic and Get Yourself Out of the Way.

No. 5, Revisit Your Student Loan Game Plan. Now, here we are at the beginning of 2021, ready to turn the page on a new administration in terms of the President and the President’s team, which may or may not bring additional changes around student loans. We don’t know that yet. But what we know of the first of the year, is that we know that the most recent stimulus package that was passed at the end of 2020 did not extend the administrative forbearance on qualifying federal loans that has frozen for the last nine months or so the interest that was due and any payments that were required on those loans. So it’s really been an incredible time period for those that have qualifying federal loans. For good reasons, payments were not due and interest was not accruing on those qualifying federal loans. So what’s going to come next? We don’t know. There’s been lots of hypotheses that have been thrown out there. There’s been several proposals that have been mentioned throughout the presidential debates and leading up to the election. But we don’t know. As of early January 2021, we don’t know what’s going to happen. Now, we do know that if nothing else happens at this point in time, this administrative forbearance is going to expire. But perhaps this could be continued through an executive order, perhaps there’s additional policies and legislation coming into the future. But we don’t know. So my point here is this is the time period, throughout the month of January, to take advantage of this administrative forbearance as long as it lasts — and if it goes on longer, great. If it doesn’t, you’re ready to go. Take advantage of this time period to come up with your student loan repayment plan or to evaluate or re-evaluate your options to make sure that you’ve got the plan in place that’s going to be the best fit for your personal situation. And we talked about this at length on several other episodes, we’ve got lots of resources on the blog, we’ve got, of course, one of our latest books, “The Pharmacist’s Guide to Conquering Student Loans,” which talks about A-Z student loan repayment for pharmacists. And you can get a copy of that book at PharmDloans.com, and if you use the coupon code “YFP,” that will get you 15% off. So this is the time period to take advantage of this administrative forbearance, as long as it lasts, understand and evaluate all your options, and be ready to go such that when this time period is done, you’re ready to hit the ground running with an intentional student loan repayment plan. Now, for those that don’t have student loans or paid them off, happy dance, right? We’re excited that we’re at this point in time, but perhaps this is also an opportunity to pay it forward and help those that are in this situation — it can be very overwhelming — through providing your input, your experience, maybe getting them a copy of a book like the “Pharmacist’s Guide to Conquering Student Loans,” or pointing them in the direction of some resources that could be helpful to them, things that you’ve learned through your journey, mentoring other folks, but an opportunity to pay it forward to those that are dealing with student loans and typically six figures or more of student loans front and center as they’re trying to attack this and come up with a plan in 2021. So that’s No. 5, Revisit Your Student Loan Game Plan.

No. 6 is Take Your Tax Strategy to the Next Level. Now, Episode 184, just last week, we talked about how to optimize your tax strategy. I brought on YFP Director of Tax and our CFO Paul Eikenberg, who’s our tax professional at YFP. And we talked about the difference between tax planning and preparation, a very important difference. We talked about tax planning mistakes that he sees, we talked about strategies that pharmacists should consider employing to optimize their tax situation. We talked about strategies around legal tax avoidance, tax deferment, and then opportunities to take advantage of those accounts and strategies where you can have tax-free gains. And we broke down each one of these strategies and ones to consider, and so go back and listen to Episode 184 if you didn’t catch that over the holidays. And this is the chance — if you have been someone that has perhaps had your tax filing on automatic and haven’t really thought about understanding all of the different options being a little bit more strategic with OK, now that we’ve completed the filing, what should we be thinking about for the next year in terms of more of a strategic tax plan? Perhaps this is the year where you look at bringing somebody into your financial plan that can really help you be more intentional with your tax strategy. So Paul, as I mentioned, leads our tax planning and preparation services for clients of YFP Planning. And this year, we’re excited to make that service available to 50 more households. And so you can learn more about the tax planning and preparation services that we’re offering and secure your spot by visiting YourFinancialPharmacist.com/filemytaxes. Again, don’t wait. We’re capping this opportunity at 50 pharmacist households. So first come, first served. Again, that’s YourFinancialPharmacist.com/filemytaxes.

No. 7, Button Up the Insurance Part of Your Financial Plan. This is the defensive part of the financial plan. Now, there’s lots of insurance to think about, right? Health, auto, home, renters — but here, I’m really specifically talking about life, disability and professional liability. And this is a part of the plan that I think often gets overlooked because it can be overwhelming to understand what one does or does not need. It can be perhaps not necessarily very exciting, right, to spend money on things that may or may not happen when you look at other priorities such as paying off student loans or investing or saving for the future. So my encouragement is learn first, shop second, and buy last. So first, determine what you do need, what you don’t need. So what does your employer offer? What do they not offer? Where are there gaps? What types of coverage do you need based on your personal situation. We talk about this at length on Episode 044. We talked about how to determine life insurance needs, Episode 045. How to determine disability insurance needs in Episode 155, why you need liability insurance and there of course, talking about professional liability. So learn first, spend time, dig in, understand life, disability, professional liability, understand the nuances of those policies. Shop second. Find an independent broker, and we’ve got some resources on the YFP site that can help you shop the market of what you do and do not need after you evaluate what you do or do not have from your employer, what other coverage do you need, what gaps exist? And then finally, buy last once you’re confident in what you need and the options that are out there.

No. 8, Evaluate Where Real Estate May or May Not Fit into Your Financial Plan and fit into your long-term financial goals. Now, I’ve said this before that as we focused on more real estate on this show in 2020, we’ll be doing much of that in 2021 as well, I’m not suggesting that real estate is for everyone. But I do have a sense that for many pharmacists, evaluating real estate investing — and there’s a lot of different ways to get there — is something that folks are interested in, encouraged in for a variety of reasons, and maybe have been on the fence about should I look at doing real estate investing? Is this a part of the financial plan that makes sense based on a lot of different factors? So looking at the risks, the rewards, what’s the goal? What’s the point? Why do I want to invest in real estate? What’s the point of perhaps generating additional cash flow each month? How might you get involved? Or how involved do you want to be or not involved? Do you want this to be more passive? Do you want it to be more active? Do you have opportunities in your area? Would it be outside of your area? Are there mentors or resources in your community that can help you? And so we have — as I mentioned — featured several stories in 2020, a few that come to mind, Episode 173, Ryan Shaw, all these pharmacists, Ryan Shaw talked about the systems that he has in place for the investing that he does. Episode 178, Nate Hedrick, our real estate expert, talked about his experience flipping a home up in Michigan. Episode 182, Young Park talked about his experience with long-distance real estate investing, lives in Hawaii, invests primarily in Kansas City, and how he has developed systems and how he has built the beginnings of his real estate portfolio. So I recommend you check out those episodes and really determining what your plan is in 2021 if you feel like real estate investing is a good fit. What’s the plan for 2021? Is it learning more? Is it making a move on a property? Is it finding a mentor? Is it more than one of those? So make sure to tune in here, more to come in 2021. We’re going to have more episodes, more content focused on real estate investing. We’re going to be launching a real estate regular show, regular podcast on this YFP podcast. We’ll have more information coming about that throughout the month of January and February. And we’re going to continue to build out more resources for those that are looking to learn more as well as engage and connect with other pharmacist real estate investors. Now, of course another great place to learn — as I’m sure many of you have already heard of when it comes to real estate — Bigger Pockets has great content, great resources, they’ve got forums, the podcast, the blog. And one of my favorite books for those looking to get started, “The ABCs of Real Estate Investing” they published as a book. So lots of places to go here. No. 8, Evaluate Where Real Estate May or May Not Fit into Your Financial Plan and Goals and determine where you’re going to take action as it relates to this goal.

No. 9 is Update Your Legacy Folder. Now, we talked about this. It’s been awhile, but way back when, early on in the show, we talked about this concept of a legacy folder. And I think as we turn the page on 2020, heading into 2021, this is a good time to make sure that you’re updating your systems and your files and you’re making sure that what you have in place is most up-to-date and relevant information. So I first heard of the idea of a legacy folder when taking Dave Ramsey’s Financial Peace University through a local church several years ago. And I remember walking away thinking, wow, so obvious yet so important and at the time was something that I hadn’t yet implemented for our own family and our own financial plan. And essentially, the idea of a legacy folder, whether it’s physical, electronic, or both, is a place where you have all of your financial-related documents so in the event of an emergency, others would be able to quickly assess your financial situation and get access to all of the documents and accounts that pertain to your finances. So examples of items here could include things like insurance policies, wills and power of attorney, account information for savings or debt or could be mortgages, could be credit cards, could be student loans, various savings accounts you have, whether that’s brokerage accounts, retirement accounts and so on. Essentially, a one-stop shop for all of your financial documents and making sure those that should have access or could have access or would need to have access know where that information is and how they can get ahold of it in the event of an emergency happening. Of course, you’ve got to think about security and how you secure that information, whether that’s physical, electronic, or both. So that’s No. 9, Updating Your Legacy Folder.

No. 10 is Setting Your Learning Plan when it comes to personal finance for 2021. Now, at YFP, one of our core values for our team is encourage growth and development. And we believe that for ourselves, for our team, and for you, the YFP community, this concept of constantly growing, learning and developing needs to be at the front and center of one’s financial plan, regardless of where you are at on this journey. Right? There’s always something to learn on this topic. So podcasts, lots that are out there, of course, this one. We hope you’ll tune in. I mentioned the Bigger Pockets podcast, there’s other personal finance podcasts and some resources. When it comes to books, of course there’s the classics: “Rich Dad Poor Dad,” “Millionaire Next Door,” other books that come to mind as some of my favorite personal finance books: “The Automatic Millionaire” by David Bach, “Tax-Free Wealth” by Tom Wheelwright, “The Truth About Money” by Ric Edelman, “The Compound Effect” by Darren Hardy, “The Behavioral Investor” by Daniel Crosby, and one that I recently read that’s not as well known, “Happy Money: The science of happier spending,” written by Elizabeth Dunn and Michael Norton is a great resource, not on the x’s and o’s of the financial plan but more on when it comes to how we use our money, what are some of the things where when we think about our why and our purpose and driving value and happiness, how can money be used as a tool? And what does the science really have to say in that area? So set your plan, look at the options. There’s many out there. I’m sure the YFP Facebook group would have other suggestions as well. And set your learning plan for the year and be intentional about making that a priority in 2021.

No. 11, as I mentioned, I had a bonus here. No. 11 is Find a Community and Get a Coach for both accountability and guidance. Now, when it comes to the community aspect, I hope if you’re not already, you’ll be a part of the YFP Facebook group. I think this is a great community that is really encouraging in some regard, mentoring, helping one another on their path towards achieving financial freedom. I think we’re now a community of about 8,000 strong pharmacy professionals all across the country, so hope you’ll join us. And in terms of getting a coach, we really believe one-on-one comprehensive financial planning is what leads to the greatest accountability and the customization of all of these topics that we’re talking about to one’s individual situations. And so I think this derives the greatest results for the obvious reasons of it’s one-on-one, it’s intentional, it’s consistent, it has accountability, it’s specific to your goals and your plan. But we recognize that it may not be for everyone for a variety of reasons. But if you’re not yet already aware or participating in our comprehensive financial planning one-on-one services, you can schedule a discovery call today, no obligations, see if it’s a good fit for you, a good fit for us. And you can do that by going to YFPPlanning.com, click on “Schedule a Discovery Call,” and we’ll get you on the calendar here in the next month. We also talked about in Episode 181, for those of you that are thinking about is a financial planner a good fit, we talked about many of the topics of financial planning of what we do at YFP but also what are important to look at in general? Fee-only, fiduciary, comprehensive, making sure you’re finding the good fit of financial planning services that are specific to your individual needs. And that was Episode 181.

So there you have it, 10 financial moves to make for 2021 or to consider, plus one in terms of the bonus of finding a community and a coach for accountability and guidance. And speaking of that community, as I mentioned in the introduction, we’ve got an awesome giveaway to go along with this episode to kick off the new year. I mentioned how important it was for my own financial plan and journey to find good resources. And we’re excited to be sharing those with the YFP community. And so we’re going to be doing that through a giveaway in this early part of January where we’re giving two winners in the YFP Facebook group a one-year YNAB subscription, a pair of Apple Airpods, and a copy of “Your Best Year Ever” by Michael Hyatt. So two individuals will win each of those three things. And to enter, you have to be a part of the YFP Facebook group and then comment with your 2021 financial goal on the giveaway post at the top of the group.

So let’s have a great 2021. Let’s approach this year with intention, with purpose. I hope you’ll share your goals, your success, your wins, your questions, with the community in the YFP Facebook group. And as always, if you liked what you heard on this week’s episode of the Your Financial Pharmacist podcast, please do us a favor and leave a rating and review on Apple podcasts or wherever you listen to the show each and every week. Have a great rest of your day, and here’s to an awesome 2021.

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YFP 184: How to Optimize Your 2021 Tax Strategy

Posted on December 31, 2020November 2, 2022 by yfpadmin

How to Optimize Your 2021 Tax Strategy

Paul Eikenberg, YFP Director of Tax and CFO, joins Tim Ulbrich to talk about how to optimize your tax situation in 2021. Paul discusses the difference between tax planning and preparation, common tax planning mistakes he sees pharmacists making, and strategies pharmacists should consider employing to optimize their tax situation.

About Today’s Guest

Paul has supported hundreds of pharmacists in both tax filing and tax planning to maximize their deductions and avoid overpaying. In addition to being an Enrolled Agent (EA) and YFP’s Director of Tax Services, Paul Eikenberg brings skills from his extensive business experience to YFP. Paul has owned franchises, been a VP of Franchise Operations, and a Credit Union Board Chair.

Summary

On this week’s episode, Paul Eikenberg, YFP Director of Tax and CFO, breaks down how to optimize your tax situation in 2021. Although we’re only ending 2020, planning for your future tax situation is a large part of your financial plan as it can have major financial implications down the road.

Paul explains that tax preparation is merely a historical look at what happened last year. On the other hand, tax planning is oriented in the future. The aim with tax planning is to match your tax plan to your goals and financial plan. This can help you make investment and other financial decisions while optimizing your earnings.

Paul shares three tax strategies that you can use to optimize your tax situation in 2021: legal tax avoidance, deferment, and pay now with tax free gains. He breaks down how each of the strategies work and what type of financial moves fall into these approaches.

YFP Planning comprehensive financial planning clients have tax preparation and tax planning as part of our services. This year YFP is expanding our tax services to 50 additional pharmacist households. Learn more about these services and how you can file your taxes with YFP here.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Paul, it’s great to have you on the show. It’s been a long time, way back on Episode 070, and so for our listeners who aren’t familiar with who you are and the work that you have done and are doing with YFP, share a little bit about your background and tell us about that work that you are doing.

Paul Eikenberg: Well thanks for having me, Tim. And you know, it’s an exciting time at YFP. I joined three years ago. And I’m the oldest member of the YFP team, so my background’s a little more varied than everybody else. But I grew up in a small business, and I have started a rental car business as a franchisee, joined the franchise company and worked a few years as the Vice President of Franchise Operations there. So I was involved in a lot of startups with franchisees in one role or another. And career after that was as a franchisee in the computer, hardware and repair business. And did that for 15 years. After I sold that business, I worked as a Vice President of a management service company with a lot of responsibilities for budgeting for our largest clients and their IT planning and budgeting role. And in between all that, since I had a good accounting background, I did taxes frequently in between my different careers. I spent time working with Jackson Hewitt, H&R Block, and when my role a few years ago was downsized, I called my financial planner, Tim Baker, to talk about what should I do now?

Tim Ulbrich: Right.

Paul Eikenberg: And you know, when we talked about financial freedom, I had the financial freedom to kind of choose what I was going to do next. And then one conversation with Tim, I said, “I think I might just do taxes, work real hard part of the year, and not so hard the rest of the year.” And Tim said, “Funny you should say that. I really want to add tax services to my — you know, to the offering.”

Tim Ulbrich: Yeah.

Paul Eikenberg: “That I have as a financial planner.” And from there, I went and took the test for the EA, which is Enrolled Agent, and worked part-time with a CPA firm and part-time with Tim Baker up ‘til last year, when our client roll was large enough that I could just start working for YFP. And I’ve enjoyed it immensely.

Tim Ulbrich: And we are super grateful — I know I speak on behalf of the team — super grateful to have you, your expertise. You’ve provided valuable input to the business. I mean that sincerely. It’s been really a pleasure and a blessing to have you as a part of the team. And as you were retelling that story, Paul, which I’ve heard you say before, the part about working hard during the tax season and then not so much the rest of the year, I think we’ve busted that up a little bit as we needed to lean on you in so many areas for the business, and we’re appreciative of that. And I think some of our listeners may know that we do tax, as you mentioned, as a part of our financial planning for clients because we so firmly believe that we need to wed the financial plan with the tax plan for a variety of reasons, which we’ll talk about here today. But folks may not know that even for those that are not comprehensive planning clients that we do offer tax services. And so we’re excited to give the community a little bit of an inside look into why tax is such an important part of the financial plan, why it’s worth investing in, and how they might consider optimizing their 2021 strategy. And to that point, that’s what we’re talking about here today. We’re talking about considerations to optimize your 2021 tax situation. Now, I know the listeners are thinking, wait a minute, 2021? I haven’t even filed my 2020 taxes yet. And I get it, but we’re here to really tell you and reinforce that tax planning is a big part of your financial plan. And as with any aspect of the financial plan, you know us by now, we like to be intentional — as intentional as we possibly can with it. So that’s what we’re digging into this episode at the end of the year so that you can jump into 2021 with an understanding of options and strategies with confidence that can help you be more intentional with tax planning and hopefully allow you, legally, to bring home as much of your income as possible. And so Paul, kick us off by explaining the difference between tax preparation and tax planning and why both are so important.

Paul Eikenberg: Tax preparation is really the historical look at what happened last year. So it’s required, you have to do it. But it’s really somewhere between January and April, you collect all of the information on what happened last year and report it to the IRS. There’s a couple of adjustments you can make during that period of time, but pretty much it’s a look back at things that have been done and just reporting and paying your taxes. Where I get more excited and I think we’re doing some of the best work at YFP is in the planning portion of it. And that’s where you can have more impact on your financial plan and get into that financial freedom. It’s more future-oriented. And what I enjoy about the work we’re doing with the comprehensive clients is that we’re able to match their tax plan to their overall goals and make decisions based on where you are and where you’re going. So the more complicated the filings, you know, the more helpful it is. And the other thing that’s a huge impact is for people on the Public Service Loan Forgiveness program, how you do your taxes can make a big difference and have a long-term impact. And just that coordination between a financial plan and your tax strategy makes a big difference.

Tim Ulbrich: Absolutely. So the preparation, I think our listeners are very well familiar with that. They either do it every year, perhaps they do it themselves, maybe they do it with one of the Big Box entities that you mentioned at the beginning of the show, maybe they hire a CPA. So I think we understand, we get that. We’re looking backwards. But I think you articulated so well the planning, the proactive, the strategy, the making sure we’re being intentional, looking ahead is so important. And we’re going to give some good examples of that today throughout the show. Now, we could do a whole episode I’m sure, Paul, of mistakes that you commonly see people making regarding tax planning. But we’ve got other things we want to get to as well, so hit the high points for us. What are some of the most common mistakes that you see people making regarding tax planning that our listeners can be on the lookout for?

Paul Eikenberg: Not taking advantage of employer benefit programs. We’ll see people with dependent care benefits that are available to them and not taking advantage of them. Not coordinating between spouses. If you’re not maxing out your retirement programs, is there a greater benefit of contributions to one spouse or the other? Same with HSAs are one of the best tax tools out there. People not taking advantage of the HSAs. Missing a tax credit because they went over the phase out that if they planned a little different, they wouldn’t have gone over the phase out. And one of the common things we see is not so much changing the taxes but not having your W4s correct with the employer and having a surprise balance due in April when you file taxes. So those are a few of the things. And then you see some people making decisions that are based on tax ramifications rather than making financial decisions and understanding what the tax ramifications are. So you do see some errors there with people.

Tim Ulbrich: Great point. And we know there’s a lot at stake here. You know, one of the statistics I like to give pharmacists, especially young pharmacists, as they’re just making that transition into their career but is really good for all of us to think is there’s a lot at stake here. And the statistic I give is that pharmacists on average, using the Bureau of Labor statistics data on salary, using a normal trajectory of career in terms of a timeline of work, on average are going to make $9 million over their career. Obviously, we are assuming for income increases and things that are happening. And $6 million of that, roughly speaking, will actually flow through their bank account. And so the difference there, the delta of $3 million, is in part what we’re talking about here related to tax. And so there’s a lot at stake and a lot that we have to consider. And I would argue the earlier we get this right and the earlier that we invest in the right resources to make sure that we have it right, we’re making decisions appropriately, obviously we’re going to benefit from that throughout our career. So Paul, let’s break down for a moment a couple key terms that I sense will come up throughout our discussion today. And again, we’re not intending for this episode to be all comprehensive on tax, but a couple that I know will come up in the discussion are marginal tax rate and AGI, or Adjusted Gross Income. So define those terms for us.

Paul Eikenberg: Marginal tax rate is to me one of the key numbers people should understand. And your marginal tax rate is the tax you pay on the last hour you earned and your next hour. And there’s a lot of misconceptions that when you jump a tax rate that it goes back to the first hour. It’s a graduated tax system, so when you jump a tax rate, you’re only paying that tax on the dollars above that amount.

Tim Ulbrich: Right.

Paul Eikenberg: So marginal tax rate, federal rates, we’ll typically see pharmacists in the 24%, 22% and sometimes 32% tax rates. And that’s federal tax. And states can be from 0% to 12% in marginal tax rates. So you know, we will have pharmacists typically with that combined and if you take a local tax rate and add it in there if you’re in a city with a local tax, we’ll see typically marginal tax rates from 30-40%.

Tim Ulbrich: Ouch.

Paul Eikenberg: When you add them all together.

Tim Ulbrich: Yeah.

Paul Eikenberg: Yeah. Why that’s important to know is because when you start making decisions on a Roth versus a traditional retirement, max in your retirement versus putting the money somewhere else, making a charitable contribution, if you understand your marginal tax rate, you know the general tax ramifications of if I make $1,000 contribution this year, and I’m itemizing, and I’m in a 35% marginal rate, I’m going to save $350 in taxes. If I put $1,000 more in an HSA than I was planning, I’m going to save $350 —

Tim Ulbrich: Yep.

Paul Eikenberg: In taxes. So it’s kind of a key number in decision-making and understanding what the general tax ramifications are for you. Other key number for a lot of our clients is Adjusted Gross Income. You know, we mentioned Public Service Loan Forgiveness program before. Your student loan payments are based on an Adjusted Gross Income. A lot of the phase-outs, do you qualify for a lifetime learning credit? Can you deduct student loan debt? That AGI is the number you use for the qualifier for a lot of different tax programs. And it’s Adjusted Gross Income. So when you calculate Adjusted Gross Income, it is your wages, net rental income, net business income, dividends, interest, all that kind of gross income goes in and then you’re able to reduce it by what we call “above-the-line deductions.” That’s going to be your HSA, your FSA, your dependent childcare, student loan deductions that are allowed. That reduces the kind of gross wage, gross income, to an Adjusted Gross Income. And that AGI is a key number.

Tim Ulbrich: And let’s hold that thought. We’re going to come back here in just a moment as we talk about tax strategies and even further connect what Paul just said there. So let’s dig into those tax strategies. And we’re going to look at a few different areas, tax avoidance, tax deferment, paying now, and a hybrid approach. And so let’s start with tax avoidance — and I hope it goes without saying that here, we’re talking about tax avoidance within a framework, of course, of following the law. So nothing we’re suggesting is avoiding something that we shouldn’t be avoiding. So Paul, when it comes to avoidance, what are we referring to here? And what is included? What types of financial moves would fall under this strategy? And I know you’ve alluded to a couple of them already with the HSA, FSA and some other things.

Paul Eikenberg: Let’s talk about the HSA a little bit more because that to me is the No. 1 tax tool. If you’re on a health insurance program that allows an HSA, it’s got the most tax benefits too. For a family this year, the limit is $7,100 that you can put into an HSA. That money, if you’re having it deducted from your paycheck, it goes in before not only income tax but before FICA tax. So it goes in pre-Medicare, pre-social security tax. It carries over from year-to-year so you can build the fund there, you can invest it, and that money will grow tax-free. And it is the only tool that goes in tax-free, grows tax-free, and when you spend it on medical expenses, it comes out, it’s never taxed. So it has multiple tax benefits and is really the best tool available to you to get the most out of your money.

Tim Ulbrich: And I would point, Paul, our listeners — before we go onto others in the avoidance category — we feel so strongly about the HSA, we’ve covered it a couple times. We’ve got a great post by Tim Church on the blog. Episode 165, we talked about the power of the Health Savings Account, broke down further what Paul is talking about and spent an entire episode on that. So if you’re wondering more about an HSA and have one, aren’t sure, want to evaluate where it may fit in your financial plan, I’d recommend our listeners check out those resources, which we’ll link into the show notes. So what else beyond the HSA would fall into this category of avoidance, or at least common ones?

Paul Eikenberg: One of the more frequent things you hear is treasury bonds. The interest on those grows tax-free. Municipal bonds, you know, there will be some tax advantages to those. So they’re one tool. Another tool that people sometimes miss is the difference in taxation on long-term capital gains, short-term capital gains. If you’re making money on stock investment, property investment, you’re taxed at a lower rate for a long-term gain — and the definition of long term is 1 year plus debt. You’ll see some people sell a stock, short-term gain, pay ordinary at your marginal tax rate whereas on a long-term gain, most people that we work with are in a 15% tax rate. So there can be a 17% in that by timing how long you keep it. Another area we see people not take advantage of is the dependent care — and again, that’s a deduction if it’s a payroll deduction that comes out pre-social security and pre-Medicare. Other item that we’re seeing some activity on is the home sale exclusion. And this is designed so that if you move into your home for more than two years, you make a gain on it, the gain on that sale is excluded up to $250,000 for a single person, $500,000 for a married couple. If you’re somebody that likes fixing up a home, there’s some great tax benefits that buying a fixer-upper, working on it, moving in it for two years, and then selling it and moving to the next one.

Tim Ulbrich: Especially if somebody’s in a market where, to your point, a fixer-upper may want to buy something knowing the appreciation will be good. It’s an interesting different take on kind of real estate investing than we may think of as buying other properties but rather with this home sale exclusion. And if I understand you correctly, if somebody were married and they bought a home for $400,000 between the two of them, each having $250,000, when they go to sell it, as long as it’s below $900,000 when they sell it, which would be an incredible gain in value and appreciation on that home, that that gain and that growth is tax-free.

Paul Eikenberg: Correct. And you know, while it sounds like in most areas of the country an incredible gain, San Francisco, Seattle, some of the northeast, it’s not as unusual as some of the other parts of the country.

Tim Ulbrich: That makes sense. And I think that one will be of great interest to our listeners. The other one, Paul, which you mentioned and I just wanted you to expand on a little bit more was the childcare bills from an FSA, the 129 Plan. Tell us a little bit more as I suspect that’s something that folks are already taking advantage of or could be taking advantage of going into the new year.

Paul Eikenberg: We see a lot of people not taking advantage of it. There are a lot of people that do, but you know, that dependent childcare employer plan typically lets you have $5,000 deducted from your paychecks and then you can get reimbursed for childcare expenses. And there is a credit available if you don’t take advantage of it. And for most people, it’s 20% of the childcare expenses, up to $3,000 for one child, up to $6,000 for more than one child.

Tim Ulbrich: OK.

Paul Eikenberg: But what the FSA does for you is first, it makes the deduction pre-social security, pre-Medicare. The other thing it does is if you have one child, it’s a $5,000, not a $3,000 plan.

Tim Ulbrich: Right.

Paul Eikenberg: If you’re in the 32% bracket, it’s a much better benefit than if you are taking a 20% bracket. So we talk avoidance, you know, it avoids taxes forever is what we’re kind of talking about avoidance here. I’ll come back to one of my favorite quotes from a tax court judge is that there are two systems of taxation in the United States. One for the informed and one for the uninformed, and both are in league.

Tim Ulbrich: And I’m glad you mentioned that. One of the books I’ve referenced on the podcast before, which I would reference again to our listeners — we’ll link in the show notes — is “Tax-Free Wealth” is one of those resources that really just opened up my eyes to exactly what you just said there and how important it is to be informed of the options. And we’re talking, again, in this first category of avoidance, we’ve already covered a lot. We’re just scratching the surface, but we’ve talked about an HSA, long-term capital gains, we talked about childcare bills and FSA, we talked about home sale exclusion. So again, I think just highlighting the importance of understanding all of the options that are available to you and then the power of working with somebody such as yourself to really customize this and apply it alongside of the financial plan, of course with our great team over at YFP Planning. So that’s No. 1, avoidance. No. 2, Paul, is this tax strategy of defer. So tell us what you mean by this and some common financial moves that fall under the defer category.

Paul Eikenberg: The most common thing when we talk about deferring is 401k’s, traditional IRAs, if you’ve got self employment income, but they’re more of the traditional retirement buckets where you’re putting money in in the current tax year, you’re deducting it from your income, and you’re deferring taxes on that money and the growth of that money, the investments with that money, until you retire and start taking on that. You know, it’s one retirement strategy. And where that makes a lot of sense is when — or has extra benefit to you — is when lowering your Adjusted Gross Income helps you overall in addition to that retirement. There are phase-outs that you can manage sometimes by using the traditional retirement programs. And one of the best examples is if we go to the student loans that are in the forgiveness programs. Lowering that AGI has a tax benefit, but it also is, you know, helping manage what your loan payments are going back and it helps maximize the value of that forgiveness program.

Tim Ulbrich: Yeah, and we spent — by we, I mean our planning team and working with you — spend a lot of time on this topic. And one of the things we are not shy about tooting our own horn on is that it’s not very common that financial planning teams and tax professionals will have a good understanding of student loans. And that’s our bread and butter.

Paul Eikenberg: One of the really interesting things there is from typical tax preparation and planning, you almost never want to file married filing separately. But in the situation of student loans, it’s not unusual where that’s what makes the most sense, even though it’s not a good decision strictly tax-wise, you know, when you do the comparison. It’s an obviously smart move overall financially.

Tim Ulbrich: And that’s a great example, Paul, of making sure you find somebody — especially for those that are facing significant student loan debt and/or strategies which have tax implications, like we’ve talked about here with forgiveness. But that’s not a common tax strategy. But when you layer on the implications with the student loans, you can see where someone may get in trouble if they’re working with somebody that may not be as familiar with student loans certainly. So while you’re talking here about traditional pre-tax buckets, 401k, 403b, traditional IRAs, since we’re heading to 2021, remind us of what to expect on the retirement contribution limits for these types of accounts.

Paul Eikenberg: Typically, 401k’s, 403b’s, right now, the limit is $19,500. If you’re over 50 years old, you have a catchup of $6,500. Those are where you max out on most of the employer programs. IRAs, $6,000, you know, most pharmacists are not going to qualify if they are under a retirement program. There are some strategies for doing back door IRAs and increasing the amounts you can contribute there.

Tim Ulbrich: And we’ll link in the show notes, we have two great resources on that. One of the most common questions we get is on the back door Roth IRAs for the exact reason that Paul mentioned. So we have a post, “Why Most Pharmacists Should Do a Back Door Roth IRA,” and then we also covered it on Episode 096 of the show, How to Do a Back Door Roth IRA. So we’d recommend looking at those resources and of course reaching out to our planning team for additional help. So we talked, Paul, about avoidance. The goal is legally not to pay taxes. We talked about HSA, finding ways to maximize in terms of the long-term capital gain rates and the savings that would come there, childcare bills in an FSA, home sale exclusions. Then we just talked about deferment with the most common being around lowering your Adjusted Gross Income from traditional pre-tax buckets. We talked about the implications there as it relates to student loans. Again, just scratching the surface. So the third area that I want to discuss for a few moments is that you pay them now, you pay the taxes now, but the gains are tax-free. So give us some common examples of things that folks want to be thinking about here.

Paul Eikenberg: Biggest thing is the Roth 401k, Roth IRAs. The strategy there is that you’re putting money in that you’re paying tax on this year but all of the growth of the investments on that are not taxed when you take it out in retirement.

Tim Ulbrich: Right.

Paul Eikenberg: It is your income. You’ve got that income, and if you’re not reporting, it’s not taxable in your retirement. And that helps you in some ways in retirement that’s not reflected in your AGI and not reflected in your taxable income. So there’s capital gains that that can affect in your retirement. There’s dividends that won’t be taxable to the same extent if a lot of your retirement income is not reflected in your AGI, your taxable income. The other advantage now is suppose you’re maxing out at $19,500 on your traditional retirement and you don’t have another tool to put more money in. $19,500 in a Roth IRA, the limit’s the same, but the value of it is significantly more in a Roth. So it really gives you an opportunity to increase — even though the limit is the same, you’re really putting more money in your retirement program in a Roth than a traditional IRA.

Tim Ulbrich: That makes sense. And one of the reasons — you know, we talked about the HSA already — one of the reasons we always say is the HSA, the Roth is kind of low-hanging fruit, and I think you summarized that well. The other thing that would fall in here, Paul, would also be a 529, right? I kind of think of a 529 almost like a Roth for college in that it’s going in with after-tax dollars, growing tax-free, and then you can withdraw it as long as it’s being used for the qualified educational expenses. So it has some more strings attached to it because of the nature of what it’s being used for, but would you put that here in this bucket as well?

Paul Eikenberg: Yes. And you know, 529s vary from state to state. In some states, the state that allows you to deduct it from your income for state tax purposes and has a higher limit, it’s more valuable than, say, if you live in Florida and there’s no state tax. So that one is definitely a good tool and belongs here, but it varies a little more state-to-state and individual situations.

Tim Ulbrich: Great point. And so we’ve talked about avoidance strategies, deferment strategies, we’ve talked about a third strategy, which is just pay tax now, gains are tax-free. And so Paul, I wanted to transition here for a moment. One of the things you talk about, which I love, is this concept of a tax toolbox and you know, really is inclusive of things that folks should be considering that are likely to be most relevant to their financial situation and to their financial plan as it relates to tax strategies and optimization. And we’ve covered a bunch of these already. HSAs, FSA health dependent care, we’ve talked about Roths, we’ve talked about IRAs extensively. What else would you say from your work with our clients at YFP Planning that you would see as major considerations in the tax toolbox?

Paul Eikenberg: One of the things that is looking like it’s going to be more common and really has only come into effect since the 2018 tax cuts and job act increased the standard deduction is bunching itemized expenses. A lot of people who used to itemize aren’t able to itemize anymore. The only deductions we see are charitable contributions, interest, and estate taxes. Estate taxes are now limited to $10,000 on a return. So we’re seeing people start bunching charitable contributions into one year and alternating standard deduction, itemized deduction, standard deduction, itemized deduction as they’re going on. And when you look at it, you know, over a two-year period, you’re able to get a greater tax benefit if you are putting all your charitable contributions in one of those two years.

Tim Ulbrich: OK.

Paul Eikenberg: You have some options with property tax, but really, it’s charitable contributions that make the most difference here. And there’s something called a donor-advised fund where you can make a contribution, put it in a fund that is invested and grows and it’s not taxed. The fund is actually the charity. But a donor-advised fund, you’re able to make recommendations on where that money goes, basically you’re controlling where the donations go. So on December 31, I can put money into that donor-advised fund, and it counts for that year along with any contributions I made. So it’s a great way of still making the donations but grouping them in one year.

Tim Ulbrich: Got it. OK. The other thing too that comes to mind, Paul, is we know many of our community is engaging with or thinking about a side hustle of some sorts that may evolve further even beyond that. We of course feature many side hustle stories on this show. I know many of our clients would fall into this category as well. Not intending this for them to be advice that they’re going to run with, but just general considerations for folks that find themselves in this category of side hustling.

Paul Eikenberg: Side hustles are a great way of generating extra money and getting some of the benefits from a tax side. So to be deductible, an expense for a side business needs to be considered ordinary, necessary and not extravagant. Ordinary means — for a tax definition that other people doing the same type of work are going to have similar expenses to this. Necessary has a fairly broad definition of does it help you generate more business, do that business better, or qualify you, you know, continuing education? Not many side businesses can be done without internet or cell phones today. Conference travel, things to generate new business. There are a lot of expenses there to acknowledge to get supplies, to — there’s times where meals to generate more business or to produce business make sense. So there are a lot of things that are deductible expenses from that side income that have a professional/personal benefit to the business owner. You know, I have a book of a couple hundred pages of ordinary business expenses.

Tim Ulbrich: And I firmly believe — I know I’ve heard Tim Baker say this a ton of times — that for those that are in a side hustle, have their own business, thinking about it, having your own personal financial plan and house in order is so incredibly beneficial to not only what the business will become but also to your sanity and to your peace of mind. And I can say that firmly from personal experience. And so I would encourage you, those that fall into that bucket, that’s an area we’re spending a lot of time with our clients right now. Head on over to YFPPlanning.com, you can schedule a discovery call, see if our services would be a fit for you. And I think making sure you’ve got a strong financial foundation in place is so important to the success of that side hustle or business. Paul, as we wrap up here, you know, I think we have briefly, succinctly, yet also covered a lot in terms of considerations. I know for many folks, it can feel overwhelming. I mentioned at the very beginning that we’re excited this year to be expanding our tax service and offering it — you’ve been leading — for our comprehensive financial planning clients that are a part of our comprehensive financial planning services to those that maybe want to engage with us on that part of their tax plan to see if it would be a good fit for them going forward. So briefly, what can our community members expect if they sign up for YFP to be working on their taxes for the year? What should they expect in working with you and your team?

Paul Eikenberg: We’re offering outside our comprehensive clients, the first step is preparing our 2020 return. We work remotely. We were built to be paperless. So it is a unique thing and business. We basically — the engagement, there’s an engagement letter that goes out, usually in January, to our clients. They sign the engagement letter and you get a secure link where you can upload your tax paperwork. We’ll take a look at your previous year return, and we take that work, go through it, look for any missing pieces of information. You’ll have a questionnaire to answer, all electronically. And we put together a return. If we need more information, we contact you to gather that. Once we have the return, we schedule a Zoom appointment and review the return, have it signed through DocuSign and file electronically. During that process, if there was anything that kind of obvious you were overlooking, should be thinking about, we’ll point it out there. And then with the clients we’ll be doing the returns for — you’ll have an option to engage for us a mid-year tax projection where we can take a look and see if you’re withholding’s on target and if there’s any tax tools you’re not taking advantage and talk about that with them.

Tim Ulbrich: As we wrap up this week’s episode of the Your Financial Pharmacist podcast, I’d like to remind you about our tax planning and preparation service that we’re going to be offering to 50 pharmacist households in 2021. You can learn more about that service, including what’s offered, what’s included, how much does that service cost, what you should expect by going to YourFinancialPharmacist.com/filemytaxes. This is the chance to apply much of what you heard throughout today’s episode and really be able to apply that personally to your individual situation. What a great way to get 2021 off to a great start. So again, that’s YourFinancialPharmacist.com/filemytaxes. You had a chance to hear from Paul on today’s episode, hopefully you got some insights into his expertise, what he’s able to provide, and certainly has adequate experience working with many clients over at YFP Planning. As always, if you liked what you heard on this week’s episode of the Your Financial Pharmacist podcast, please do us a favor and leave us a rating in Apple podcasts or wherever you listen to the show each and every week as that will help others find the Your Financial Pharmacist podcast and hopefully benefit from the education and the material that we do each and every week. And of course, I wish everyone a happy and healthy New Year. Looking forward to 2021, and I hope you all continue to join us on this journey as we all strive towards achieving financial freedom. Have a great rest of your day.

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YFP 182: How This New Practitioner is Leveraging a Team to Invest in Long-Distance Real Estate

Posted on December 17, 2020November 2, 2022 by yfpadmin

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How This New Practitioner is Leveraging a Team to Invest in Long-Distance Real Estate

Young Park, new practitioner and real estate investor, joins Tim Ulbrich on this week’s podcast episode, sponsored by APhA, to talk about his portfolio, why he likes real estate investing, how he got started, what has worked, what hasn’t worked, and why and how he invests in Kansas City while living in Hawaii.

About Today’s Guest

Young Park currently serves as an Ambulatory Care Clinical Pharmacy Specialist at the VA Pacific Islands Health Care System in Hawaii. He moved to Hawaii for this specific position after completing a PGY1 residency at the VA Sierra Nevada Health Care System in Reno, NV. He completed his undergraduate study at the University of Georgia, then completed the Doctor of Pharmacy program at Philadelphia College of Osteopathic Medicine (PCOM) in Georgia.

Young started learning about financial independence and investing after making the far move to Hawaii. His big “why” is to help provide financially for his parents and to be able to spend more quality time with his family and loved ones. He’s working towards financial independence through investing in out-of-state cash-flowing rental properties using the BRRRR strategy.

When he’s not working, he serves at his church on the Sound Team, enjoys Hawaii’s beautiful beaches, and learns about personal growth and investing.

Summary

Young Park, a 2017 pharmacy school graduate, stumbled upon real estate investing on YouTube and quickly discovered how powerful of an investment vehicle it can be. Young was originally interested in investing with stocks but decided to move forward with real estate investing because he felt it has the best return on investment and because of the long-term benefits like appreciation, tax benefits, and mortgage pay down.

In less than 2 years, Young has acquired 3 rental properties in Kansas City, Missouri while living in Hawaii. He decided to invest in real estate thousands of miles away for a few reasons. To start, the cost of homes in Hawaii is extremely high and it’s difficult to find a good real estate investment deal. Additionally, he connected and began working with a mentor that invests in the Kansas City market and was able to lean on him for advice while also leveraging the team that was already in place until he could build his own.

Young also digs into how he’s using the BRRRR method on his investment properties, how he’s getting the capital to fund them, how he analyzes a potential deal, how he’s formed a team to support him, the challenges he’s faced along the way, and how real estate investing is supporting his financial why.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Young, welcome to the podcast.

Young Park: Hey, Tim, thanks for having me.

Tim Ulbrich: Super excited to have you on. When I learned about your story as a new practitioner, active in real estate investing, getting started, taking that first step, we’re going to talk about your journey, what’s worked, what hasn’t worked, why you’ve been doing what you’re doing, what your plans are going forward, and I think this episode is going to be incredibly valuable to our community that is interested in learning more about real estate investing or perhaps even for those that have started looking to build upon the portfolio and the work that they’ve done so far. So Young, before we jump into your real estate journey, tell us a little bit about your background into pharmacy, how you got into pharmacy, what interested you, where you went to school, and the work that you’ve been doing since graduating in 2017.

Young Park: Alright. Hey, first of all, thank you again for having me here on the show. I am so excited to share my story today. So man, about myself. I don’t know how far I need to go back. But yeah, as a child, I guess in high school, I actually wanted to go into music, like into music engineering and recording and playing in a band and stuff. However, my parents were definitely against it. We’re immigrants, so we moved from South Korea back in ‘98. And you know, my parents moved to the States so that we can have better opportunity for me and my sister and just kind of live that American dream that they were hoping for us. They just heard about pharmacy from their friend, how their sons and daughters went to pharmacy school and they graduated, got a awesome deal with a brand new car and a brand new BMW. So to them, this was the American Dream for us. Eventually, I kind of followed that step. I went to — I finished my undergraduate study at the University of Georgia, and then I went to the Philadelphia College of Osteopathic Medicine in Georgia campus for my pharmacy school. So I think one of my professors, Dr. Brett Rollins, was on the show before.

Tim Ulbrich: Yes, he was.

Young Park: Yeah. So yeah, I went to that school and then after that, I completed my PGY1 at VA Sierra Nevada Healthcare System in Reno, Nevada. And after that, I took this current position that I have with the VA Pacific Island Healthcare System in Hawaii as an ambulatory care pharmacist.

Tim Ulbrich: So Georgia, Nevada, and then Hawaii, right?

Young Park: Traveled quite a bit, yes.

Tim Ulbrich: That’s awesome. Well, cool. And so we’re going to talk in a little bit about how do you effectively invest as a real estate investor in Hawaii and why you’ve chosen to go out of area to do your investing in Kansas City, and we’ll talk about why that’s important as we may have many listeners that say, “Hey, I’d love to get started with real estate investing, but you know what, my market isn’t really conducive to that,” high cost of living area, whatever be the reason. Obviously you ran into that, and we’ll talk about how you selected the market that you did and what has been difficult and what has worked with doing some long distance investing. But before we get there, talk to us about for you, why you like real estate investing as an investing vehicle for you going forward and one that you want to build your plan around. Obviously our listeners know there’s lots of different ways to go about investing, traditional accounts, 401k’s, 403b’s, IRAs, obviously they could invest in brokerage accounts, they could start their own businesses, real estate and within real estate, many different ways that you can do this. Why, for you, is real estate an investment vehicle that peaked your interest?

Young Park: OK, so I started getting interested in investing initially into paper assets such as stock, like most people, because that’s the easy one to get into. And I was learning more about that while I was watching YouTube videos, honestly. And I accidentally stumbled upon YouTube videos on real estate investing like Bigger Pockets and some other YouTubers who invest in real estate. And it really got me interested in real estate investing because to me, that had one of the best return on investments, and it’s a hard asset where you can physically obtain the asset. You know, paper asset is great, but it’s almost like a made-up money in the computer space somewhere that determines like this is worth that much. So yeah, that’s why I really got into real estate investing.

Tim Ulbrich: And how do you as an investor — you know, one of the benefits people always talk about with real estate of course is long-term appreciation, tax advantages, you know, that you may not see in more traditional investing — how do those things factor into you wanting to prioritize real estate investing?

Young Park: Yeah, so to me, if I were to compare real estate investing to stock investing, it’s like getting a really high-yield monthly dividend while the tenants are paying down your mortgage. And like exactly what you said, you know, you’re getting the long-term appreciation of the property, you’re getting tax benefits through the appreciation, you’re getting the mortgage paid down, also you’re getting the cash flow — and your cash flow over the long term is going to increase year by year because your mortgage will stay the same and your rent will increase.

Tim Ulbrich: Yeah, and of course — and we’ll talk about your specific properties and how you crunch the numbers. Obviously, we’re talking here under the assumption of you do this in a way that works and is financially viable and of course being able to analyze properties, determine what is a good deal, what is not, is very important as we look at the benefits of real estate investing. Now, before we get into the x’s and o’s and specifics of the property, I like to ask folks such as yourself, what’s the motivation, what’s the purpose, what’s the why? Because we talk all the time on the show about our mission of wanting to help as many pharmacists as we possibly can achieve financial freedom, but I know that that word, “financial freedom,” can mean something different to everyone that’s listening here to this episode. So for you, Young, as you think of that concept of financial freedom and how real estate investing fits into that goal, tell us about what your purpose is, what your why is, what your vision is, and why real estate is really just a piece of being able to achieve that.

Young Park: Great question. So why is extremely important. For most people, they really break it down. The money is never the goal of achieving whatever you want to achieve. It’s actually the time and what you can do with the time that you’re able to obtain through building wealth. So for me, my biggest why is — I will say two things. First of all, I want to provide for my parents financially and also to achieve financial freedom for myself, the time freedom. So my parents moved our family of four to the States with the hopes and dreams of providing a better life and opportunity for me and my sister. Neither of them went to college, and they still don’t speak much English at all. And they did manual labor well into their 60s to provide for us so that we can complete our education. All they knew was to work really, really hard for paychecks and bring food to the table. And because of this, I’m extremely privileged. So because of what they’ve done for us, my main why on investing is for my parents, so that I can help them to retire and live comfortably. And my other why is to be financially independent for myself and for my soon-to-be wife Jamie and our family that we’re going to have so that we can live on our own terms and have options. You know, God forbid, but if something were to happen to my family, I want to be in a position where I can just drop everything and go and be with my family as long as I need to. And building that financial freedom and wealth allows you to have that option.

Tim Ulbrich: And Young, what I heard there, which I love — and I hope our listeners will take heart — is the conviction in which you share that to me tells you’ve No. 1, put thought behind that but No. 2, really likely then provides clarity when you’re making your financial decisions, you know within what context, what frame you’re making those decisions because you’ve thought about, reflected upon, that why. And what I heard from you there was wanting to be able to provide and care for your parents, wanting to get to a point of financial independence such that if you were to wake up tomorrow and for whatever reason, you weren’t able to earn the income that you currently earn, that you would be able to move on without stress and continuing to move on with the rest of your goals and the things that you like doing. And the third thing that I heard was time. And my follow-up question there — because I hear a lot of entrepreneurs talk about time, I hear a lot of real estate investors talk about time, but I very rarely hear people talk about why is that time important. What do they want to do with that time to have that option, to have that freedom, with their time or to gain back more of that time? So for you and your family, more time means what?

Young Park: So more time means spending time with your family and your loved ones. So you can do whatever you would like with whoever you want, you know, going wherever you want to be and how you want to spend your time. You know, for me, growing up, my parents were both working really hard, so they weren’t around home that much. We were still extremely grateful for them, but I want to be a parent that’s there for my children whenever they — let’s say they have a play or they’re playing sports or we get to just enjoy our weekend time or go on vacation together, and I just want to be able to do all those things. Working W2 jobs, it’s great. You get great benefits, and I love my job. But you know, you’re still restricted to certain schedules. You have to meet certain quota, and you know, your schedule can always change — yours and your wife, right? Your spouse, you have to line up our schedules together and all of that’s considering I think that financial freedom and being able to build more time to spend with the loved ones, that’s all I want.

Tim Ulbrich: That’s great. And here, we’re talking about real estate investing being one vehicle in which you can achieve that goal of financial freedom, which of course means being able to do the things that you just said were most important. And so let’s jump into July 2019, you purchase your first property. So two years out from school, I want our listeners to hear, you know, obviously you’re at a point where making that transition post-residency into your first job and you pick up on real estate investing as an opportunity to pursue. So July 2019, tell us about that first property, where it was, what the property was like, what you purchased for it, what you spent to kind of get it ready for tenants, and then ultimately, what it means for you from a rental income standpoint.

Young Park: Sure. July 2019 was when I purchased my first property in Kansas City, Missouri. So I have a whole story about getting into Kansas City market, right, from Hawaii. But just to talk more about the property itself and the investment itself, it was purchased off-market. I actually got it from a wholesaler on Craigslist, believe it or not. Yeah. I didn’t know that was a thing. I was looking into a bunch of wholesalers group on Facebook, you could find that. I spoke with a bunch of realtors to get on their list, and you know, I was also searching on Craigslist to see if there are other owners that wanted to sell their properties or potentially wholesalers. So I found that property on Craigslist from a wholesaler. He actually posted it for — are we allowed to talk about numbers?

Tim Ulbrich: Yeah, go ahead.

Young Park: OK. So he listed the property at $65,000. And I offered $50,000. Of course, I kind of lowballed him. But he got back to me saying, “Hey, if you have the ability to close within five days, all cash, we can do it at $55,000.” And for a new practitioner coming out of pharmacy school, a year of residency, and you have about a year of actual job under your belt, you don’t have $50,000 in addition to me having a ton of student debt. So getting the cash was a — is a whole other story that I need to talk about. But I was able to pull that off, I had $50 in cash, so I close on the property, and we actually negotiated the route crosses. He actually wanted to close out within five days because he had a family reunion coming up the following week, so he just wanted to be done with it. We actually renegotiated so that we got it for $53,000 instead of $55,000. So I got that property at $53,000. And I actually have my mentor, who that’s how I got into Kansas City market. And I used his contractor, who’s been vetted, and they’ve been working 3, 4, 5 years together. So that contractor knows exactly how to turn a property, how everything should look, and I had my mentor, CJ, to be the project manager so that he’s just kind of managing everything and I’m just giving the rehab costs, I guess, on weekly, biweekly withdrawals so that I’m just continually funding it. And once I get some photos saying oh yeah, these were done, then I send in my next draw.

Tim Ulbrich: OK.

Young Park: So I did all that, and everything ended up — the rehab costed about $42,000, I want to say.

Tim Ulbrich: OK.

Young Park: So I’m all in $95,000. So I got that rented out — that was a whole other story about getting it rented out because it was during the holiday season, right around this time actually, and in the Midwest, I’m sure over there, it’s freezing cold, snowing, and no one wants to move during the holiday season.

Tim Ulbrich: Not a great time to find a tenant.

Young Park: It’s not. It’s really not. But you know, right after the new year, so it took a couple months, stayed vacant for a couple months, but I was able to get it rented out in January for $1,000 plus $25 in pet fee.

Tim Ulbrich: So $1,025. So just to rehash these numbers, you purchased it with some negotiation from a wholesaler, $53,000. $42,000 on the rehab, so you’re all in for $95,000. And you’re renting it for just over $1,000. And I’m guessing mortgage, interest, taxes, insurance, probably little less than $800?

Young Park: Correct, correct. But at that time, I didn’t refi yet.

Tim Ulbrich: Right.

Young Park: So I didn’t have any mortgage payments at that time. So after I was able to rent it out — so the strategy I used is the BRRRR strategy, right? So I bought it, I renovated, I rent it out, so I was able to refinance out and it appraised at $142,000.

Tim Ulbrich: Oh, wow. OK.

Young Park: Yeah. So there was a pretty decent chunk of spread there. So I was actually able to pull all my cash out and then some. So it covered all my purchase, my rehab, and then I think I — after closing costs and everything, I think I pocketed about $5,000.

Tim Ulbrich: $5,000. And for our listeners, we’ve talked about the BRRRR method on the show before, and I’d reference our listeners back to other episodes on real estate investing that we’ve done as well as the Bigger Pockets website, podcast, lots of great resources. They’ve got a book solely on the topic of BRRRR. But you know, the goal here — which Young’s story is a great example of that — is to with the cash investment of the property, be able to pull all of that money out or all that plus some, I guess ideal, or if not all of that, as close as you can, so that you can move on and repeat the process into the future, which you did in a second property, which we’ll talk about here in a moment. But I want to break down this one with a little bit more detail and get into some of the weeds here. When our listeners hear $53,000 purchase, $42,000 in rehab, $95,000 all in, rent a little over $1,000, how did you analyze or evaluate as you were projecting not only purchase price but rehab, potential rent? Talk us through your analysis process and determining what was or was not potentially a good deal.

Young Park: So yes, so you want to start before you purchase it, you want to start with the end in mind. You need to start from the ARV, which means After Repair Value. So you want to know what the property would appraise at at the end of the day. So from that point on, you want to figure out what the rehab costs would be and then that gives you what your purchase price can be. So that would be your offer price. So once I do that, I kind of analyze it. So let’s just say for this property as an example, I actually estimated this property to appraise at about $120,000-130,000. So I actually got really lucky. And $120,000-130,000 is actually — you know, if I really think about it, it’s on the conservative side. I always calculate it in the worst case scenario. And if everything works — if it makes sense for me, even if I were to pay like $10,000, $20,000, $30,000 out of pocket, would I be OK with that? And if I am, then I go with it because that’s the worst case scenario, and you can only get better. Whatever you do better, that’s all extra sauce on it, you know what I mean?

Tim Ulbrich: Absolutely.

Young Park: And so yeah. So I do that. So I analyze the property by finding the ARV. And then I estimated the rehab with me and my mentor because he’s done it for so long that he could kind of look at the pictures and see what the estimate would be. And it actually aligned pretty much what we thought it was going to be. So we got that rehab, and we were OK with the purchase price because I was thinking $53,000 purchase, about $40,000 rehab, and appraise it for $120,000. So that’s roughly about 75% of that $120,000 for me to do a full BRRRR.

Tim Ulbrich: Got it.

Young Park: The rehab was a little bit more, but the ARV was a lot higher than I thought. So I was able to actually do a whole run deal on my first deal.

Tim Ulbrich: And that makes sense, Young, if you had projected your numbers at an ARV that was $120,000-125,000 and it came out at $142,000, it makes sense when our listeners hear that you were able to pull out all your cash plus some because of the higher ARV, what ultimately came in at the appraisal when you went to go do the refinance. The other thing I wanted to touch on here, if I had to pick what I think are probably the two most common objections to getting started with real estate investing, they would be that one, I don’t feel like I have the knowledge or experience and two, I don’t have the cash, right, because of whatever. I’ve got student loan debt, I’ve got all of these other priorities of which we talk about on the show all the time, and I can’t necessarily save up $50,000, $70,000, $100,000 to be able to put down on a property. So talk us through how you addressed those two things. You mentioned student loan debt, so I’m sure our listeners are curious, you know, how did you go down this path while you still had student loan debt and how did you reconcile that? But how did you address this knowledge piece? And you’ve talked a little bit about a mentor. And then how did you address the capital and being able to have enough money to get started with investing?

Young Park: First of all, the knowledge portion. So you can get a lot of education just from — and they’re all available online. You can go on YouTube, you can listen to podcasts like the Bigger Pockets. You can read books. I read at least three books from Bigger Pockets and other investment books. However, these to me are just knowledge. And knowledge is important. And people say knowledge is power, but I really think it’s knowledge is just a potential power. It’s only powerful if you are able to take actions and apply it, right? If you just learn, learn and learn, it’s just information. But that doesn’t really get you anywhere. So you have to be able to take that action. And for me, just taking that mentorship was the action step that I needed. Through that mentorship program with CJ, I learned a lot. I learned every week. It was like a weekly phone call. But the biggest thing is that he guided me so that I can actually take the action that if I didn’t take that mentorship and have all these knowledge, who knows if I’d even have a property under my belt right now? Or maybe I bought a turnkey product. But yeah, to me, just learning, keep learning and just taking that step, leap of faith, to get into that deal, get to that first deal, that’s the biggest hurdle.

Tim Ulbrich: And how did you find, Young, that mentor? Because I think a lot of our listeners would say, “Hey, I’d love to have a Yoda in my life on the real estate side.” What steps did you take to say, to move from ‘I’m interested in real estate investing. I’ve read this book, and I’m ready to act and I need to find some people that can help me.’ Talk us through that process.

Young Park: Yes. So I started attending meetups. So after learning, learning, learning and Bigger Pockets, they always talk about, “Oh, come to our meetups.” People are always hosting in different cities. So I actually went on their website, found a meetup there, so I went to one of those meetups, and I learned a lot. And one of the guys that I met there actually pointed out to CJ and Jasmine, telling me that, “Oh, there’s this couple from Hawaii that invests in Kansas City. You should go check them out.” So I went to their meetup, and CJ was actually giving a presentation on investing out-of-state versus locally in Hawaii and how the numbers make so much more sense going out of state. The housing price here is ridiculous. The median housing price here is about $780,000.

Tim Ulbrich: Sheesh.

Young Park: Yeah, and your rents probably won’t even be .5% Rule, if you were to call that.

Tim Ulbrich: Yeah.

Young Park: So it just made more sense to go out of state. And they were doing exactly what I wanted to do, so I went up to go talk to CJ one-on-one and told him like, “Hey, I’m in this position right now. I really want to invest in real estate out of state as well.”

Tim Ulbrich: OK.

Young Park: And then that kind of led to us working together.

Tim Ulbrich: So that’s the knowledge/mentor piece. And I think the meetups is a great idea. We’ve been featuring more stories on this show with the hopes that we can connect more investors that can serve as a supporting community for one another. So that’s the knowledge piece, which led to a mentor, which led to some execution. What about the capital piece? I think many pharmacists may be in your shoes, three years out, five years out, seven years out, “Hey, Tim, I’ve got a boat load of student loan debt. I’d love to do real estate investing,” or, “I don’t even have student loan debt, but I just can’t imagine being able to save up $50,000-100,000.” Here, if you’re buying a property for $53,000, you’re doing a rehab for $42,000, you’re all in for $95,000. And the BRRRR method means that you’re bringing $95,000 of cash to get that done. Was that your money? Did you partner with other folks? How did you manage that?

Young Park: Yes, so I definitely didn’t have money. I had some money that I was getting from a W2 job, but this was actually one of the challenges or action steps that I needed to take during the mentorship course so that I can raise capital. So I had to go out and ask family and friends. I honestly — I think I raised $90,000 — I used some of my money too — from family and friends. And I got a ton of rejections. I asked over 30 people. And just to kind of explain to them what I’m doing, but you know, to them, of course I got a ton of rejections because I had zero track record.

Tim Ulbrich: Sure.

Young Park: I had no track record. People who invested in me — invested with me, invested in me because of our personal relationship. They just know me personally and they know my character. So I was able to raise that. And I think another thing that — I keep coming back to the mentorship. Because I had that guidance to show them like, “Hey, I’m not just going there blindly. I have the people there. I have someone who’s guiding me through the whole step,” I think that helped as well. So I was able to raise $90,000.

Tim Ulbrich: That’s awesome. Which makes that deal possible.

Young Park: It does. It does.

Tim Ulbrich: So and before we talk about your second property, your most recent property — unless you’ve done more since we touched base last — I’m sure our listeners are as curious as I am when somebody hears, “Hey, Young’s living in Hawaii, he’s investing thousands of miles away in Kansas City,” you know, what challenges — we’ve talked about the opportunity, right, obviously you have a more affordable market, you’ve got a group there that has connections through your mentor, through contractors, so you’ve got some track record and experienced people that know the market. So the opportunities I think are obvious. But the challenges may be not so much, or folks may hear that and think, eh, it’s not for me. You know, I can’t see the property, per se, I don’t know it, I’ve got to trust people, this is my first time. Talk to us about some of those challenges with the out-of-area investing and how you were able to overcome those.

Young Park: Good question. Yeah, of course. I think the biggest challenges that people can’t get out of their head is not being able to see and feel, touch the property. I personally have not been to Kansas City yet. And I did get a third property recently, by the way.

Tim Ulbrich: Oh, cool.

Young Park: Yeah. So just working remotely and you have to be able to — at one point, just go with your gut so you can trust people. And I’m not just doing that blindly. I’m starting out with the people I know. So I start with let’s say a realtor or I start with my mentor CJ, and he’s giving me referrals so I try this other contractor, which I used for my second property and now again for my third property. I’m just slowly building a network, building relationships, building my team. And when you’re able to do that, you’re putting a lot of pressure off of you. Right? You have people that are doing the jobs for you. You know, really, at the end of the day, you really don’t have to see the property. Don’t attach your emotion to the property. It’s the numbers. But of course you still need to figure out how can you trust those people? And you just — at one point just have to trust them, right? They’re not intentionally trying to rip you off. They’re good people trying to make their living as well. And we’re giving them opportunity, they’re sharing their experience by working with us. So I think it’s almost the same. You just don’t see them face-to-face. But working remotely has been a good system for me.

Tim Ulbrich: Yeah, and that’s one thing, Young, that I think about, you know, one of the takeaways. And I’d recommend to our listeners Bigger Pockets, David Green has a book, “Long Distance Real Estate Investing: How to Buy, Rehab, Manage Out-of-State Rental Properties.” That was the takeaway I had from that book was it in part forces you to think about your systems and your processes because there’s certain things you just can’t do, right? You’re not getting on the plane often to go to Kansas City. Not happening.

Young Park: Nope.

Tim Ulbrich: So you’ve got to have a team there that you trust, that you have systems for communication, that you have systems for vetting contractors, for paying those invoices. Then obviously with more experience will come more of a track record, and I think that will become a magnet to other investors and other partners along the way as well. So tell us a little bit about your second property, which I knew of, April 2020. Didn’t know you added the third, so congratulations. Tell us a little bit more about those and the numbers as you’re willing to share.

Young Park: Sure. The second property, as you can imagine, was April 2020. Right in the start of COVID. So that deal was so — I was scared, honestly. I thought about backing out from the deal multiple times. But I’m so glad I went with it. So this property was actually listed on the MLS, Multiple Listings Service. I saw that on Zillow, and I spoke with the realtor who posted it. And it was actually a HUD property, which if I’m trying to define it, I think it’s a property that was purchased with an FHA loan. And the person who purchased it couldn’t make the payments, so it was like a foreclosure. So it was bank-owned property. And that property actually had some plumbing issues, so it wasn’t eligible for a bank- or like Fannie Mae-backed loans.

Tim Ulbrich: OK.

Young Park: So you only — you could only buy it cash. So that was actually an opportunity for investors like us because most people who are paying down payments wouldn’t be able to afford that. Right? So that property was listed at $79,000. And I used a current contractor that I have and I had to trust him. I had not used him before. We had some ups and downs, but at the end of the day, he did me right, and we are working on the third property together.

Tim Ulbrich: Awesome.

Young Park: Those are the things you actually have to work on as an investor or with anyone, in fact. You know, people have different expectations. Right? So you know, his expectation and my expectations were different. But we talked it out like, “Hey, this is kind of like the finished product that I would like.” He’s like, “Alright, let’s do that moving forward.” So anyways, going back to my second property, so it was about a $25,000 rehab. So $79,000, $25,000, what is that? Like $104,000?

Tim Ulbrich: Yep.

Young Park: So that was my all-in. And I actually got it rented out, and it was rented out in September, I believe. Or maybe before. Oh, I’m sorry. I think it actually rented out in July. And this one was a lot higher because it was during the summer, so I got a tenant in there for $1,100 plus two pets, so $1,150 per month for the rent. And then I was actually able to refi out of that last month, less than a month ago, and it appraised at $144,000.

Tim Ulbrich: You like that $140,000 range.

Young Park: I didn’t go for that one, but it just ends up being that way. And to me, like when I was doing that conservative analysis, I was expecting it to be somewhere between $120,000-130,000.

Tim Ulbrich: OK.

Young Park: So with this one, I was actually expecting to have some of my money left in the deal, which was totally OK with me. But I ended up doing another home run. Maybe I have a couple thousand dollars in the deal at the end of the day.

Tim Ulbrich: So after the second one, if I’m doing my math right here, you’ve got about $286,000 worth of appraised property, and monthly cash flow in rent of just over $2,100, almost $2,200.

Young Park: Right, the gross rent is that.

Tim Ulbrich: Great. And then break down the third one for us.

Young Park: Third one, so I just got it under contract maybe — ooh, maybe two days after I refi’ed out of the other one or before. Somewhere around the same time. And oh man, this was an interesting one. So it was listed on the MLS since March. And it was initially listed at $115,000.

Tim Ulbrich: OK.

Young Park: And no one — there was like absolutely no interest on that property because it was still available by the time I purchased it. So every month, they’re cutting down by maybe $10,000. And in November — or actually, toward the end of October — they listed it at $85,000.

Tim Ulbrich: Wow. OK.

Young Park: Yeah. And I offered $65,000.

Tim Ulbrich: OK.

Young Park: And they came back to me saying, “Hey, we could do it for about maybe $75,000.” And I said, “There’s no way I could, I’m going to do it.” And this one actually was not an owner that was selling. It’s a huge investment firm that’s just purchasing these properties from auction, and they just keep the ones they like and they sell off the ones they don’t. So this was obviously one of the ones they didn’t like. So they were selling it, and I told them, “Hey, it’s $70,000 or nothing.” And then we agreed into the deal. So we got it under contract at $70,000. And then I sent in my contractor and got the estimated bid for it, and it was a little bit higher than I thought because they had a really good photographer, I guess, taking really nice pictures that looked a lot better than what it actually was.

Tim Ulbrich: OK.

Young Park: So yeah, my bid came back a little higher. So I went back to them and said, “Hey, I want another $10,000 discount or else I can’t do it.” And eventually, after a couple negotiations, they did settle for $60,000.

Tim Ulbrich: Awesome.

Young Park: So I got it from $85,000 down to $60,000. And my estimated rehab is about $40,000 on it.

Tim Ulbrich: And you’re still doing the rehab right now or starting that?

Young Park: Just starting, uh huh. We just — I believe we just finished demo, and they’re buying materials. Yeah.

Tim Ulbrich: OK. And what’s your estimated After Repair Value on that one?

Young Park: Right around the same, $120,000-130,000.

Tim Ulbrich: OK. And we won’t jinx it, but likely it could come in the $140,000s. So.

Young Park: Right, right.

Tim Ulbrich: Well, that’s crazy. So you got it at $60,000 through negotiation after you got the estimated bid higher than you thought. You said that it was originally listed at what? $115,000?

Young Park: Right, back in March.

Tim Ulbrich: Wow.

Young Park: Yeah.

Tim Ulbrich: Crazy. You know, what I love about this too, Young, too, it’s just a methodical, steady approach to getting that first deal done, learning from it, building from it, developing the team, you know, that’s the value of the BRRRR method. You’re getting your cash back out or as much as you can. Obviously through the refinance, going onto the second, going onto the third. And I suggest you’re just getting started. You know, my next question, as I suspect if you and I were to talk in three years, it’s probably not three properties but maybe it’s 10 or 20 properties and you’re probably helping and coaching others along this as well, is I mentioned two objections that I often hear, which were, “Hey, I don’t have the money to get started,” and, “I don’t feel like I have the knowledge or the experience to get started.” The third one I would add to that would be time. So as I hear you kind of going through all this, I think, man, where are you finding time to do all this not only in getting the deals done but then also in managing them? Talk to us about your approach to saving time, especially once you have them rehabs done and then you’re obviously managing these properties longer term. What have you done to minimize your time that’s invested?

Young Park: Good question. So first of all, I live in Hawaii and invest in Kansas City. So we are four or five time zones behind, so I start really early in the day. I usually wake up around 5 a.m. and get started and spend maybe an hour or hour and a half either analyzing or talking to my property manager or realtor or wholesaler or sending out emails and working on that. So I do that. Some days I come home and then if I see some properties that came through the email, I analyze them. And the other portion as far as maximizing my time, I have my property manager, who is managing everything. I would not recommend anyone to get into managing their own properties because your time is important. Yeah, you might be saving 8-10% of the rent, but you know, if you’re analyzing everything correctly and have that number included into your analysis, hey, it all works out. Another thing is I think more recently, I found a realtor that I really like, who is willing to write these low offers because most realtors think it’s a waste of time with the offers that they don’t think it’s going to go through. And you know, most of the time, it doesn’t. They’re correct. But if they find an investor who can actually close on the property, even though they’re on the lower price point, we could do multiple deals with them over the years. So that’s like an incentive for them as well. But kind of going back to that, I have my realtor, I just tell him, “Hey, John, I want to offer $60,000 on this property.” And then he just sends me the documents, and I just sign it online and he forwards it. So that saves a lot of time for me.

Tim Ulbrich: And I’m seeing a theme here of team. You know, you mentioned the mentor, you mentioned the agent that is willing to work with you on that, you mentioned the property management piece, you mentioned the contractors that you’ve gotten comfortable with, so I sense the team here has been incredibly important. And my last question for you is if we were to fast forward five years, what does success look like for you as it relates to your real estate investing?

Young Park: You know, I have to put more thought into that. I definitely — so personally for me, I don’t have x number of properties that I want because you know, number of property doesn’t mean really much. It’s really how much cash flow you’re getting. I would like to have maybe $5,000 worth of cash flow and I would like to go part-time if I can to free up time a little more and spend more time with my family and my loved ones and also be able to help my parents. I think that’s where I would like to be within five years. Sooner the better. We’ll see.

Tim Ulbrich: That’s awesome. And I love how you brought that full circle. I think it’s easy, especially as you’re having some success, you know, you kind of keep going, keep going, but what’s the purpose? Again, back to why you are doing this in the first place. And I sense for you that the time was important, the financial independence was important, the being able to provide for family and making sure that you’re investing in good cash flowing, profitable properties that will allow you to achieve those goals. So Young, thank you so much for taking time to come onto the show to share your story as a new practitioner that’s been active in real estate investing out of the area, what’s worked, and I think your story is going to be an inspiration and perhaps a guide for some that are recent graduates or have been out for awhile and wanting to figure out how they can get started in real estate investing. So again, thank you for coming on the show.

Young Park: Yeah. Thank you so much for having me, Tim.

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