Podcast

YFP 119: Ask a YFP CFP®

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Ask a YFP CFP®

Christina Slavonik, CFP® at Your Financial Pharmacist, joins Tim Ulbrich for a new installment of the YFP podcast, Ask a YFP CFP®. Christina answers financial questions from the Your Financial Pharmacist community covering topics such as student loans, investing and the inverted yield curve.

Summary

Christina Slavonik, CFP®, is a team member of Your Financial Pharmacist and offers fee-only comprehensive financial planning. In this podcast episode, Christina answers questions from the YFP community in a rapid fire format.

To start, Christina explains that fee-only financial planning means that we’re not getting extra commissions as many traditional firms are. Christina explains that YFP believes the best way to measure non-conflict of interest is to provide fee-only services where clients are only paying for the advice they receive. YFP also upholds to the fiduciary standard where the clients’ best interests are really the focus.

Christina answers several questions from diverse topics such as student loans, investing and the inverted yield curve. Two of the asked questions are below:

Andre asks if he’s sacrificing a lot of immediate short term investment opportunities like having a house or saving for retirement in order to pay off student loans more quickly through refinancing. Christina explains that it really depends on your goals and life plan. While there may be some comprises that have to be made, YFP believes there should be a balance of today and tomorrow so that you’re enjoying your life along the way to meeting your financial goals.

Amanda asks, “I’ve heard that given the inverted yield curve as well as many other factors that we may be entering a recession. How can I best prepare? Should I be picking up lots of extra shifts at my 2nd job to boost my emergency savings (currently 3 months) or should I continue focusing on student loan debt?” Christina responds by saying that there will always be recessions. There have been 47 recessions in the U.S. and the average recession lasts about 1 ½ years. She explains that the markets are cyclical and recessions are part of the process. The best way to cover yourself in any situation, whether we’re in a recession or not, is to be diversified in your investments and also your income. Having a second job or side hustle and having an emergency fund with 3 to 6 months of income for emergency expenses are all good practices.

If you have a question you’d like answered, email [email protected] or send us a message on Facebook or Instagram.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? Welcome to this week’s episode of the Your Financial Pharmacist podcast, excited to be here live on Facebook for the first installment of a new segment that we’re doing, Ask a YFP CFP, standing for Certified Financial Planner, where we’re going to be taking your questions on a regular basis going forward, and we’re going to ask those questions to one of our Certified Financial Planners, Tim Baker or joining me this evening, Christina Slavonik. So Christina, thank you so much for joining.

Christina Slavonik: Yes, thanks so much for having me, Tim. I’m excited.

Tim Ulbrich: Excited to do this. We’ve got some great questions that we’re going to answer this evening. And before we jump into those, I know some of our audience and community members with your background you’ve had — you’ve been on the show before — but some may not be, so give us a quick introduction and talk about some of the work that you’re doing over at YFP.

Christina Slavonik: Sure. Well, I’ve been in the industry doing various roles for the past 13 years and really just hit the planning piece the last several years, became a Certified Financial Planner in 2017 and was working with the more traditional side of investment management, which you hear about fee-based and fee-only, this was a little bit of both mixed. And so when I had the opportunity to come on board with Your Financial Pharmacist, it’s a niche. I love working with younger professionals, and it just seems like a great segway into the next stage.

Tim Ulbrich: Well, we’re certainly excited to have you as a part of the team. And you mentioned fee-based, fee-only, we talk a lot on the show about the importance of the credential of Certified Financial Planner but also the importance of being fee-only. Break that down for us real quick. Why is fee-only so important? And what does the credential CFP even mean?

Christina Slavonik: Sure. So fee-only, when that comes to mind is you’re paying us just for the advice. We’re not getting any extra commissions, no extra fees being paid on Assets Under Management, which is how a lot of traditional firms are paid and a lot of advisors. Nothing wrong with that, but we just believe that the best way to measure a non-conflict of interest is to provide that fee-only service, which is you’re just paying us for our advice and being a Certified Financial Planner, we are held to that higher standard, the fiduciary standard, so to speak. And we’re supposed to be holding our clients’ best interests at heart.

Tim Ulbrich: Yeah, and I think one of the examples I use often that is in the pharmacy world, you know, we tend to think that OK, everyone is licensed as a pharmacist, everyone has their doctorate of pharmacy, and therefore, we’re all obligated to act in the best interests of our patients. That’s what we do. And so it was a shocker to me when I first entered into this just over about four years ago to really learn that the industry in the financial planning world is very much not the case, even that really the opposite. And for those of you that want to learn more about this topic of fiduciary, fee-only, we’ve got lots of information on the website. But I think also John Oliver has a great segment on fiduciary and fee-only that I think is worth watching. And he really breaks this down in a way that’s easy to understand. So if you’re not already familiar, we offer fee-only comprehensive financial planning over at Your Financial Pharmacist. As I mentioned, we have two Certified Financial Planners, Christina and Tim Baker. And you can learn more over at YFPPlanning.com. And so we’re going to be taking your questions on a regular basis. Some of the questions that came in this evening came via email, our Facebook group, Instagram, so you can reach us at [email protected] or you can shoot us a question in one of those social media outlets as well. In terms of format, I’m going to rapid-fire these questions to Christina, so I’m going to put her on the hot seat. We have lots of questions, student loans, investing, inverted yield curves, which is the cool term these days, so we’re going to talk about lots of different things. And certainly, if you’re on live now and you have a question, throw it out there and we’d love to answer that as well. You ready?

Christina Slavonik: I’m ready. Let’s get going.

Tim Ulbrich: Awesome. Let’s do this. We’ve got some good questions, so this is exciting.

Christina Slavonik: I’m very impressed with the lineup.

Tim Ulbrich: So Andre — first question comes from Andre, and he has two questions. He’s a new member of our Facebook group, so Andre, welcome to the community. We’re excited to have you. His first question is traditionally, most people pursue PSLF, standing for Public Service Loan Forgiveness, or refinance their student loans. But his question is are there other, non-traditional methods to consider beyond PSLF or refinance?

Christina Slavonik: Yeah, this is a really great question, Andre. So one of the things that we’re seeing more and more is non-traditional method. Some employers are actually offering reimbursement to help you pay off your loans faster in various forms and fashions. So that’s actually something to look into with your current employer. And there’s always the non-PSLF forgiveness. I know some people kind of forget about that one. Of course, you would have to pay the tax hit once that forgiveness is sent your way. It is counted as income on your tax return. But still, it is a forgiveness. And I think some people forget about that kind of forgiveness. Side hustles, you know, other nontraditional ways, I know some people have talked about giving away plasma. I wouldn’t go as far as selling an organ, but hey, you know, the sky’s the limit if you’re that committed to paying off those loans. Cutting certain expenses, just fairly small changes can move the needle in a big way over a sustained period of time.

Tim Ulbrich: Yeah, and one of the things we preach, Christina, you know this in working with clients is that unfortunately, when it comes to choosing a student loan repayment strategy, it’s probably way more complicated than it needs to be. Multiple options in the federal system, income-based repayment, standard monthly payments, extended, graduated, forgiveness, non-forgiveness, PSLF, non-PSLF, and then you’ve also got the whole host of options you see in the private market with refinance.

Christina Slavonik: Right.

Tim Ulbrich: And I think because of that confusion, I know what happened for me in my personal journey, I see with lots of pharmacists, is there’s often that paralysis by analysis where people default into the standard 10-year or maybe go into income-based repayment but wander into that and don’t really think about why or what they’re trying to do. And if you’re talking about six-figure+ student loan debt, we now know the average graduating student is facing about $173,000 on average, which is mind-blowing. But this is not a decision that you want to wander into. And we’ve seen with clients, with individuals, intentionality in this choice can be the difference of tens of thousands of dollars, especially when you consider in the context of the rest of your financial plan. So I would point our listeners, if you haven’t already checked out — shoutout to Tim Church, he did an awesome job on this piece — if you go to YourFinancialPharmacist.com/ultimate, he’s got the ultimate guide to repaying back your student loans. It talks through a lot of those options and gives you additional information. Second question from Andre, Christina, he asks, “Am I sacrificing a lot of immediate, short-term investment opportunities such a house, retirement, kids, etc. in order to pay off student loans more quickly through refinancing?” What are your thoughts on that?

Christina Slavonik: Yeah, that’s always a tough one to navigate, especially when it’s staring at you right in the face. Hard to put a price tag on that clarity and peace of mind, totally get that. But being able to be with an accountability partner that can help you put all these things on the table, it all goes back to your life plan, what goals you have for yourself. And your financial plan should be built around that life plan. Once we kind of get that clarification, it’s much easier to see where the other things will fall into place. And it can be quite a transformative experience, and your priorities become more defined. Some of the questions I ask myself is trying to find that balance, what keeps you awake the most at night? And kind of prioritizing it that way and then working with this through a Certified Financial Planner or a life coach that can help you navigate which path you should take. There’s some compromises that may be worth sacrificing up front. Just some ideas, especially little kids. I don’t know how old your children are or if you’re just planning to have kids, but there’s so many ways you can have fun when they’re young, and you don’t have to spend a whole lot of money. So there’s just different ways to think out of the box when it comes to those opportunities.

Tim Ulbrich: Yeah, and I love the approach that you and Tim take on this that there has to be a balance of today and tomorrow. Right? I mean, we have to take care of our financial house today, but if we do a great job with that for 30 or 40 years and we never enjoy it along the way, then I think we’re losing, right? We have to find this balance between living a rich life today and living a rich life in the future. And I think that happens through asking some of those probing questions that really get at the things, you know, what do you care about most? What are you passionate about? What really gets you excited each and every day? And ultimately, why does this whole topic of money even matter? And I think that’s a great question to ask before you even get into the x’s and o’s of your financial plan. And I’ll never forget, I think it was Episode 032 and 033, maybe 031 and 032, where Tim Baker interview Jess and I, talking about this concept of find your why. When you really start to challenge and say, OK, we’re paying down debt, we’re saving, we’re doing all of these things, but why are we doing these things? What are the things that really matter? And I think that’s what Andre is getting to in this question here. Alright, next one’s a big one. So to Christina from Christina, and it’s a really multi-part question that’s got some investing pieces, student loan pieces, FSA dependent savings account, so I’m going to break this down and collectively, we’ll tackle this one. So Christina asks, “I just started working at a not-for-profit hospital. As soon as that happened, I switched to PAYE, Pay As You Earn, loan and have already submitted my PSLF loan forgiveness employment verification form to the DOE, Department of Education.” Lots of acronyms here in this question. “I maxed out by 403b so that I can hit the $19,000 limit.” The question from Christina is, “Can I also contribute to my traditional IRA? Or is it one or the other?”

Christina Slavonik: Well, my answer is yes, Christina, from Christina, you can contribute to max out your 401k or 403b up to that $19,000 as well as max out an IRA. So the way I like to think about it is one is provided by your employer, the other is provided personally to yourself. So both have maximum limits. The IRA, of course, you can choose between a Roth and a traditional. You can only max one of those out or just a combination of those two. But yes, to answer that question, you can.

Tim Ulbrich: Yeah, so great point. I mean, 401k, 403b, those are employer-sponsored, one for-profit, one not-for-profit. IRA, the I standing for Individual, right? So that’s your individual retirement account. So second part of this, then, is, “I am also a working PRN” — nerdy pharmacy lingo here — so “as needed at my retail job. And I left that at a 6% contribution for my 401k since that is what they match. What happens if I get extra shifts and end up contributing more? Is there a penalty? I tried to calculate and plan on watching it very closely, but I would like to know in the event it happens.”

Christina Slavonik: Well, yeah, it’s good that you’re being proactive and not waiting. You really have until your tax filing deadline of April 15 to make any corrections if you need to. And yes, there is a penalty involved. There’s typically a 6% excise tax as well as some other double taxation issues if you cannot get that amount out in time before you file your taxes. So yes, just keep tracking on both pay stubs, maybe even getting your HR person involved if possible. But yeah, you may just have to totally not contribute to one of those altogether for the rest of the year since the year is almost over and approaching that tax deadline.

Tim Ulbrich: And I think relatively a good problem to be thinking about, right? If you’re worried about exceeding the maximum contribution.

Christina Slavonik: Yes.

Tim Ulbrich: So let’s not lose that fact, Christina, great job on making these contributions. Next part of this is, “There was also a dependent FSA, Flexible Savings Account, offered that I opted into for child care expenses. I’m trying to max as much as possible so that I can decrease my AGI, Adjusted Gross Income, for my PAYE, Pay As You Earn, loan. How do you determine when to file married separate or married jointly?” This is a great question. We get this all the time.

Christina Slavonik: Yeah, it is a fabulous question and one that’s best suited for someone, an enrolled agent or CPA that deals with taxes on a regular basis. There are so many pieces that wag the tax dog. And it’s just hard to give a specific recommendation without seeing the whole situation. Sometimes, it does make sense to file separately when doing the Pay As You Earn as the other spouse’s income does not count. But again, there are other factors to consider as well.

Tim Ulbrich: And I think for me, that’s the take-home point when I get a question like this is that making sure that those that are in an income-based repayment plan, especially those that are pursuing Public Service Loan Forgiveness, that you understand there can be a difference. And from there, you really dig deeper with an enrolled agent, with a tax professional, because they can look at the rest of your financial plan to understand the rest of your financial situation, understand what might be best. And we’re also grateful that we have Paul on our team, who is an enrolled agent, that can supplement the financial planning services that you and Tim are doing as well. OK, last part here from Christina is, “And for dependents’ savings account that are offered through your employer, is there a max that each person can use? Is it $5,000 per family and only $2,500 per person? Or can one do the full $5,000?”

Christina Slavonik: Sure, this is a really good question and one that we’ve actually seen before. Yes, the maximum is $5,000 to contribute. But really, any person in that family can utilize that. I know Tim Baker has mentioned that there are state-specific rules when it comes to FSAs, but in general, you can use it on qualified expenses for the physical care, the day care, child care, yeah. Just keep the receipts, keep good records of what you actually used it for. And one other side note with that: I know you’re wanting to lower your AGI by doing this. And sometimes, employers will also offer the Health Savings Account component for a high-deductible health plan. Sometimes having a limited purpose FSA will allow you to have an HSA as well, which can increase the deduction you can put towards lowering your AGI, so that’s another way to check into some more tax savings.

Tim Ulbrich: And good news we got back from Christina as a follow-up to this question. She says, “We max out our deductions for a total of $55,000 going into the 403b, TSA, IRAs, DSA, which should bring us to just under $100,000 of Adjusted Gross Income for the year. Thank you for reaching out and for all the help with the group.” I love that because I think that what I see through Christina’s questions is intentionality. And I see her digging in, I see her trying to understand the tax situations, understand what’s going on with the rest of the financial plan as it relates to student loans. And let me encourage those that are listening that they hear 401k, 403b, Roth IRA, FSA, HSA, DSA, and you’re following, great. But for those that are hearing some of those terms for the first time, we have a lot that we’ve covered in the investing realm on the podcast. Episode 072-076 back in fall 2018, we did an entire series on investing for this reason, so I would encourage you to check that out and certainly get more information that will help you with the rest of this decision as you’re looking at loan forgiveness and some of these situations. OK, from Stephanie, this question comes from Instagram: “Recommendations for personal loan lenders for the intention of consolidating credit card debt?” What are your thoughts on that one, Christina?

Christina Slavonik: Sure, well, congratulations, Stephanie, being one of the 2019 graduates. Like many graduates, I’m sure you’ve had your share of transitional expenses, such as the job moving, job search, budget changes. While we can’t generally recommend any specific lender, we do recommend starting with a current banking relationship as the best way to tackle that, including a credit union. They can normally give you pretty good rates. Try being careful. Some things to look out for when consolidating credit card debt is make sure that there may be a minimum that you have to consolidate. And sometimes you may not meet that minimum. So having to make sure you know that. Try not to take more than five years to pay off that loan just because the shorter we can keep that, the better. And know if there are going to be any origination fees or what those flat fees or any flat fees that are involved. Sometimes it’s a percentage of what you consolidate, sometimes there isn’t. And don’t — try not to use the credit cards once you consolidate. I know that’s one of the hardest things, but I’ve seen that happen time and time again. And I know the snowball method — now we’re venturing into Dave Ramsey territory, that’s one of the things he says — once you’re paying off those credit cards, try not to use them. You’re trying to get rid of that debt. So other items to consider, maybe a home equity line of credit is another way to approach that. And revisiting the budget. If you can avoid taking on a consolidation loan altogether, the extra steps are worth it and just finding ways that you can walk through your budget and maybe cut some extra expenses. I do want to give out a shout to Tom Eraz (?), he’s our accounting budgeting nerd at YFP Planning. And he’s helped many, many of our clients with questions just like this, what should I do in this situation? And he’s been very helpful with giving some suggestions.

Tim Ulbrich: To say Tom is a budgeting nerd is an understatement. I mean, he gets jacked up about budgeting.

Christina Slavonik: Yeah, I’ve never seen someone so excited about spreadsheets.

Tim Ulbrich: Yeah, I think he loves helping people in that area. Alright, time to get nerdy, and we’re going to talk about inverted yield curves. And I swear about a month ago, this was like the cool thing to talk about on NPR and the Wall Street Journal. Everybody was talking about inverted yield curves. So Amanda asks, “I’ve heard that given the inverted yield curve as well as many other factors that we may be entering a recession.” So the question is, “How can I best prepare? Should I be picking up lots of extra shifts at my second job to boost my emergency savings currently at three months? Or should I continue focusing on student loan debt? Thank you for your help.”

Christina Slavonik: Sure, Amanda. Yeah. And I know sometimes it’s hard not to listen to the talking heads and the people when they comment on inverted yield curves and what those indicators may mean. Typically, it may or may not say that a recession’s on the way. That’s just one of the indicators that we kind of look at. But again, it’s not something to hang your laurels on. There always will be recessions. I know we’ve had about 47 recessions in the U.S. history. Average one lasts about one and a half years, so just a little bit of feedback on that. The markets are cyclical, so what goes up will go down. That’s just part of the process. But just know that I believe you are already covering yourself the best way you can. Recession or not, it’s always great to be diversified, not just in your investments but also how you have your cash flow coming in to you. So even though you’re picking up those side hustles, working those second jobs, you’re not getting stuck in the 9-5, which is fantastic. Having a second side hustle or flow of income coming through and having that emergency fund already saved up at 3-6 months of emergency expenses for those non-discretionary items. These are great behaviors just to keep consistent during good and bad markets. So never really a bad idea to keep paying towards debt as it overall increases your net worth over time. And just be careful to keep reevaluating your lifestyle creep is a good exercise as well. So very good. Very good.

Tim Ulbrich: Yeah, I agree. When I saw this question, I mean, I think boosting emergency savings and paying down debt is good practice regardless of a pending recession or not. So I think it’s important to think about those foundational items. So Jeff asks, again, kind of along this idea of low interest rates, potentially a pending recession, “How should a prolonged period of extremely low or even negative interest rates be considered in your financial plan?”

Christina Slavonik: Sure, and one thing I like to think about first is where are you at in your life cycle? Are you approaching retirement? Are you a retiree who would have to look at those cash alternatives such as a bond ladder, which is where you can match cash flow with the demand for cash via multi-maturing layerings, and that’s a whole other topic. But yeah, mostly when dealing with young professionals, you’re generally saving for those long-term goals and objectives, so saving for retirement. And the period of a downside should really have little consequence with the long-term strategy, so I try not to get too wrapped up if you see prolonged periods of market drops. Generally, if you’re trying to borrow money, now would be a great time to do that, an extreme or low, negative interest rate environments. And capitalize on the securities and the equities, especially during the down times because you’re buying at a bargain. And so by the time the market does go back up again, you know you’re going to be well ahead if you had decided not to do that, instead take your investment ball and go home. So again, just really determining your objectives and having an investment allocation that matches that objective. Short-term goals, you may need to dial back a little bit, CDs, Money Market funds or whatnot. But yeah, just in general, I wouldn’t worry too much if you have a long-term strategy.

Tim Ulbrich: Yeah, I think that’s an important point: long-term strategy. And building off of the previous question with the inverted curve and looking at interest rates and other things, I think it is hard to take the noise out of it. I mean, I meant to keep them and I forgot to do so, but I’m still that guy who gets a newspaper delivered at home every day. And literally, you know, I was thinking back in December, January, it was like every day, it was the front page of one day the market was going up, the next it was going down.

Christina Slavonik: It’s always going on.

Tim Ulbrich: And the projections of why this was going on, and even though I’ve got a plan and I’m sticking to it, like it’s still hard to ignore the noise, and it starts to have that subconscious effect over time. But I think your point’s a good one here when we talk about negative low interest rates, really think about — the two areas that come to mind, especially for a lot of our community members, would be mortgage interest rates and whether it’s a new home or refinancing on a home, I think now is the time is probably to be looking at that if you haven’t done so in awhile. You know, when you look at a 30-year mortgage, a point on that loan can be really significant on a $300,000-400,000 house and looking at what would be your break-even on a refinance, and then also refinance on the student loans. We preach over and over again that refinancing student loans is not for everyone. So if you’re pursuing Public Service Loan Forgiveness, absolutely not. There’s certain provisions you want to consider and be looking for when you’re doing a refinance. But for those that the math makes sense and they’re really doing all of those things they need to be thinking about, you know, a point or two on your student loans obviously can be really significant. And as we see student loans still at 6, 7, 8% for many graduates, and we’re seeing refi rates continue to come down. I think it’s a good opportunity to look at those. OK, Kelsey asks, back into the student loan category, “Question about re-certifying my IBR income-based replacement income — income-based repayment income. I’m seeing that PAYE and RePAYE may be a better option for those that qualify. I’m due to re-certify for IBR this month. But would changing to PAYE or RePAYE affect anything in regards to qualifying for PSLF in the future? I’m five years in, and I don’t want to mess anything up. I’ve read the horror stories from those who’ve submitted for forgiveness, and they say not to change anything. But I’m hoping to make my payment a little lower this year if I can. Any thoughts, suggestions, or advice?”

Christina Slavonik: Yes. Three words: student loan analysis. This is one of those bigger picture things. So yeah, looking at the bigger picture, definitely changing from an IBR to a Pay As You Earn or RePAYE would not affect qualifying for the student loan forgiveness itself, but you would need to figure out which loans in particular would qualify and how to navigate that process. So that’s probably where people say if it’s not broke, don’t fix it. Stay where you’re at. So I wouldn’t want you to consolidate as that could restart the forgiveness clock all over again since you are five years in. I typically wouldn’t touch it unless you’re willing to do a little more digging and get that analysis done. As a side note, we did have a client that did go through the analysis, and she was in the IBR, went through the analysis program, and we did discover that she would be a good candidate to switch to the PAYE or RePAYE. And we were able to walk her through the steps. So in general, yes, the PAYE, RePAYE, can be more beneficial, meaning it can lower your payments, but it’s hard to say a firm yes or no without looking under the hood of the car, so to speak.

Tim Ulbrich: Yeah, and I think most of the horror stories that I’ve seen and heard and read about have been because of the consolidation piece that for many people, restarted the PSLF clock. Certainly, there’s been some qualified employer issues that have been out there. But I think if you really dig deep on this — and we talked about this in Episode 078 where we broke down is pursuing Public Service Loan Forgiveness a waste? And this really came out of the NPR story that was famous that we still have questions about. Every time we’re speaking, we’re quoting 99% of applicants that were denied. And really, when you dug into that a lot deeper, we talked about that on that episode, you know, many of those were incomplete applications, many people that weren’t in a qualifying repayment plan, and many people that ran into issues around consolidation or other things. And I think it’s important to reiterate here that this program, in terms of those that are actually qualified and eligible for forgiveness, is still relatively new. So 2007, this program was started, meaning 2017 was the first group that was up for forgiveness to take place. And I think the information that people have today and a lot of things we talk about in terms of what you need to be doing to cross your t’s, dot your i’s, is very different than the information that was available before. So I think our take is as we talk about many times when it comes to student loans, look at all your options, do the math, see how you feel about it, and make sure certainly if it’s PSLF that you’re doing all the details that you need to do to make sure you qualify. Alright, last question we have here, of course, somebody, we had to talk about the Dave Ramsey baby steps and the Dave Ramsey program. So Andrea asks — and it’s a good one — “Here’s my question. I’m starting the Dave Ramsey program at my church tonight. What are good points in his program” — so I’m pretty sure she’s referring to Financial Peace University — “that I should really focus on. Are there parts of the program that you disagree with or have a different opinion? I love his baby steps but not knowing exactly where to start.” So what are your thoughts on the Ramsey baby steps and the Ramsey plan?

Christina Slavonik: Yeah, and Andrea, I’m so excited. I love Dave Ramsey and what he has done in society in general just making people more aware on the forefront that you can get in control of your finances. And this is, I mean, a tremendous, huge first step, especially for those that have had no prior experience getting back to the baby steps, getting into the habit of saving and paying down debt, starting with that $1,000 emergency fund is a really key component to jumpstarting that. And I love the snowball method. That is one thing that we do preach on here is the debt rolldown and how to tackle that debt. We do focus more on the emergency fund part, you know, if you’re comfortable having a $1,000, that’s great. But we try to have at least three months, maybe $10,000 as a buffer, depending on what kind of income you have coming in just to forebode any huge, unexpected things coming your way. And then getting the match in your retirement plan, we think that’s a great thing. I know he preaches that. Getting basic term life insurance, we do recommend just getting basic. There’s no way you can beat that. And then working on what’s the next steps? I know he is a big component of paying down the mortgage. I guess that’s probably one of the places we may deviate a little bit from. And of course, you know, again, what keeps you up at night? It all comes back to that emotional factor. If you feel like paying down your mortgage as soon as possible is the best way to go, but most times, you can be earning a whole lot more putting that extra payments into the market or to another savings goal. You can, however, shave off 10-15 years off of a 30-year loan by just making an extra payment or two each year. So just trying to balance that out. He can be a little extreme in some of the methods he tackles, but again, it’s great. I have nothing bad to say about Dave Ramsey. And he’s really done a great service to many, many people.

Tim Ulbrich: Yeah, I’m not sure, as you know, I went through Financial Peace, Jess and I did, and it was a great experience for us and listened to his podcast for awhile. And I, like you, I think that it provides a great framework. But certainly, there’s nothing that evokes a greater emotional reaction than talking about Dave Ramsey’s baby steps, right? And I think what’s important to remember — and I actually had a chance to go visit Ramsey’s office when I was at the American Pharmacists Association in Nashville a couple years ago and quietly was able to talk to one of their team members who certainly was willing to open up and say, ‘Hey, the reality is Dave’s talking to 5+ million people every day, right? And so when you’re teaching that many people every day, there has to be a simple framework and model.’ And so he’s talking with people that have maybe an income of $20,000-30,000 but of course people that have incomes of $300,000 or more per year. And of course, their situations are going to be very different. But at the end of the day, it’s a stepwise approach, and I think you have to remember that it’s meant for that general audience. I think you also have to remember that it’s predicated on the fact that behavioral aspects related to your financial plan are really what’s going to get many people hung up. It’s not necessarily always the math, but it could be the behavioral piece. And for even the people here listening tonight, I think some people, that model and framework as is may be great to have the discipline, even if it means leaving some of the dollars, some of the math on the table. For other people, maybe that’s not an issue, and they’re going to really adjust, move things around, and create a plan of their own. So I think it very much depends on how much do you need that stepwise approach? How much does that model really resonate with you? And where are you at in the financial planning? Do you really feel like you need that motivation and reminder along the way? I, too, like you — and we talked about this Episode 068, we went back and forth a little bit on the pros and cons of the Dave Ramsey steps, and we hope to have him on the show someday, maybe doing that episode if he were to come on the show, I don’t know.

Christina Slavonik: That would be great.

Tim Ulbrich: But one of the things we talked about, of course, was employer retirement match, which is something that I disagree with him on that. For most people with few exceptions, I think we’re talking about free money. And I think the other thing that you mentioned, the mortgage. I think for some people, paying off the home really makes a whole lot of sense. I think for other people, depending on your interest rate, depending on what’s going on else in your plan, maybe not so much. I think some people are taking that home out 30 years at a low interest rate so they can free up money to do other types of investing, and they’re calculating risk appropriately. Other people maybe not so much. So again, it depends. And I think of course, the big variable and difference is that Dave’s audience is not on average facing $173,000 of student loan debt, right?

Christina Slavonik: Very good point.

Tim Ulbrich: So that’s a very unique factor. And when you think about his framework and model, baby steps, really paying off all debt before you build up a full emergency fund, I think we would agree that some of that needs to be happening in tandem because somebody may be in debt for 10+ years paying off student loans. So great stuff there, Christina. We actually had another question come in that I’m going to read. And just a reminder to those that are on live as well, if you have a question before we jump off, we’d love to answer it. Question relates to PSLF and picking up extra hours at a non-qualifying employer. So question is, “Can you work on the side at a retail pharmacy, which would be a for-profit, non-qualifying employer while enrolled and working with the Public Service Loan Forgiveness employer?” So imagine a situation here where somebody’s working full-time for a not-for-profit hospital, and then they’re picking up extra shifts at a for-profit. Is there extra penalty for making more money from the side retail job? Of course besides it having an impact on your Adjusted Gross Income and therefore, impacting your payments.

Christina Slavonik: Yeah, that’s a good question. And the answer is no. As long as you’re working at a 501c3, the forgiveness should still be OK. I mean, you have many people out there pursuing different side hustles and whatnot just to help make ends meet. And so yeah, the short answer would be no, it shouldn’t affect the PSLF. Is that what was the question?

Tim Ulbrich: That is. I think the other obvious component here if I’m understanding this correctly would be making more money of course would increase the AGI.

Christina Slavonik: It would.

Tim Ulbrich: Which would change the monthly payment, right?

Christina Slavonik: It could, definitely. Yeah. So that is one aspect of that.

Tim Ulbrich: Awesome. Well, Christina, thank you so much. We’re going to be doing this hopefully a lot more often in the future. And just a reminder to the community, shoot us your question that you have, we’d love to have it answered by Christina or Tim Baker, again, our Certified Financial Planners. You can shoot us an email at [email protected]. You can hit us up in the YFP Facebook group or on Instagram as well. And again, as I mentioned at the very beginning of the call, if you’re not already familiar, we offer fee-only comprehensive financial planning over at Your Financial Pharmacist. So you can learn more about that and working with Christina or Tim over at YFPPlanning.com. So Christina, thank you so much. And to everyone else, have a great rest of your night.

Christina Slavonik: Thank you so much, Tim.

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YFP 118: What Would You Do With an Extra $1,000 a Month?

Posted on by yfpadmin

What Would You Do With an Extra $1,000 a Month?

On this week’s podcast episode, Tim Ulbrich takes you through an exercise to envision what you would do with an extra $1,000 a month and what steps you could take to make it a reality.

Summary

Tim Ulbrich flies solo on this week’s podcast episode to take you through an exercise to envision what you would you do with an extra $1,000 a month and what steps you would need to take to make it a reality.

The context behind this exercise comes from Andrew Yang, a 2020 Presidential Candidate. Yang proposes the Freedom Dividend, or Universal Basic Income, in which every U.S. citizen 18 years or older would receive $1,000 a month. Your Financial Pharmacist does not endorse Andrew Yang and does not want the focus of this episode to be about politics or the implementation of the Freedom Dividend, but instead encourages listeners to dive into the questions posed,

Tim begins by asking this question: What would you do with an extra $1,000 a month? The more you think about it or write your answers, the more that come to mind. Perhaps you’d put the money toward paying off debt or maybe you’d save it or donate it or invest it. Maybe you’d spread it over multiple competing priorities. Maybe you’d use the additional money to pay off your mortgage sooner. Tim shares several responses to this question from the YFP Facebook group in which he hears dreams, hope, peace of mind, and accelerated financial plans. In these responses, he also hears that some may feel that their goals, hopes and dreams are out of reach.

So, how can you change your financial position so that you have an extra $1,000 a month? Tim encourages a mindset shift from what if to how, from I hope so to how can I, from I wish to one step to make this happen is….

Tim explains that this fundamental mind shift may allow you to explore opportunities to bring in additional income that you may not have thought about before. He also suggests that the focus doesn’t have to be to gain $1,000 extra a month but instead aiming for $100 or $200. Refinancing your mortgage or student loans, taking on a side hustle, working extra shifts or moonlighting, trimming your spending, downsizing your home or selling a car you don’t really need, or asking for a raise are all potential avenues to help increase your income each month.

To close, Tim reshapes theses questions: 1) What will you do with an extra $1,000 a month and 2) When will it happen, what will it look like, and who will hold you accountable to get there? The team at YFP has created a lot of resources to help, including offering fee-only financial planning services with Tim Baker or Christina Slavonik, who are both Certified Financial Planners.

Mentioned on the Show

CommonBond
Ask a YFP CFP – Email Your Questions: [email protected]
Freedom Dividend
Your Financial Pharmacist Facebook Group
Start.: Punch Fear in the Face, Escape Average, and Do Work That Matters by Jon Acuff
Refinance Your Student Loans
YFP Resources
YFP Calculators
YFP Blog
YFP Podcast
YFP Planning

Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? Welcome to this week’s episode of the Your Financial Pharmacist podcast. And before we jump into today’s show, I’m excited to announce that we are going to be taking more of your questions on the podcast through a new segment we’re doing called Ask a YFP CFP. Yes, one of our CFPs, one of our Certified Financial Planners over at Your Financial Pharmacist, Tim Baker or Christina Slavonik, will be answering listener questions on a regular basis. So we’re ready for your questions. You can send them in by shooting us an email over at [email protected]. Again, that’s [email protected]. And in the subject line, you can write, “Ask a YFP CFP.” Please don’t be shy. Likely if you’re thinking of a question, I’m sure many others of our listeners are thinking the same.

OK, so for this week, I’m flying solo to talk about two questions, two questions that I’m encouraging every listener to consider. No. 1, what would you do with an extra $1,000 per month? And No. 2, what steps do you need to take to make this a reality? Again, No. 1, what would you do with an extra $1,000 per month? And No. 2, what steps do you need to take to make this a reality?

So let’s start with some important context for where this idea, where these two questions are coming from. And I’m going to intentionally be very brief here as I have no intent for this episode to have a political slant, but rather I want to use an idea that was recently presented by one of the presidential candidates to help spark a conversation. So I’m not, YFP is not, endorsing this presidential candidate or his ideas. So I would ask that you fight the urge to rebuke the idea and rather embrace the exercise. This is a conversation that is not necessarily about the implementation of this candidate’s ideas but rather using this idea as an exercise to dream a little bit, to think about what would it look like if you were to get out of the rut that often we find ourselves in month-to-month and take a step back and dream about the bigger picture and the goals that you have as it relates to your financial plan.

So who am I talking about? What am I talking about? After watching one of the recent presidential debates, there was 10 candidates who were up on stage. One of those candidates was Andrew Yang. And he has out there a proposed Freedom Dividend. And essentially, this is a form of universal basic income, and what he’s proposing is that it would provide all U.S. citizens over the age of 18 with $1,000 per month. So again, that’s called the Freedom Dividend, and it’s a form of universal basic income. And he’s proposing to provide all U.S. citizens over the age of 18 with $1,000 per month, regardless of income, regardless of current financial situations.

So when I heard this, it got me thinking about what would I do with an extra $1,000 per month? So again, regardless of politics and whether or not you agree with this concept of a Freedom Dividend, this is a fun exercise that I think we can walk through together. And for those that want to learn about this concept, we’ll make sure to link to some information in the show notes.

So first question here: What would you do if you had an extra $1,000 per month? So regardless of the source, whether it was the Freedom Dividend, whether it was a major slashing of taxes that were to happen — obviously, that would have to be pretty major — whether it was a significant raise, whether it was investing in real estate, whether it was maybe starting your own business or starting a side hustle, maybe it’s walking into an inheritance. Whatever may be the case, regardless of how this came to be, the question here is what would you do if you had an extra $1,000 per month? And I want you to take a moment and think about this question. Now, for those that are driving, I don’t want you to think too hard. But for those that are listening at home, I want you to write it down. Again, what would you do if you had an extra $1,000 per month? And I think this question is an interesting one. And the more you think about it, I think you’ll find that similar to me, the more ideas that will come to be, the more ideas that will come to mind, dreams will get bigger and the excitement starts brewing.

So would you put it towards one area? Maybe it’s paying off student loans. Maybe it’s paying off a credit card or paying down a mortgage early. Maybe it’s saving for a rainy day or giving or putting more towards investing. So would you put it towards one of those areas, or would you try to spread it out over multiple priorities that you’re working on? I think it’s important to get specific here as when we talk about the second question, which is how will this become a reality? Getting specific will then put you in the mindset to begin to think about what would it look like, what would it feel like if this were to become a reality?

Now, I want you to think about — and as I mentioned, I want you to think about and ultimately ask yourself, how would you feel and how would this accelerate or change your financial plan? So for example, if you were wanting to put this money towards making extra mortgage payments, let’s say you currently have 20 years left on your mortgage and you put an extra $1,000 per month, run a calculator. What would that look like? How would that change your payoff date? And again, how would that make you feel?

So I posed this question to the YFP Facebook community this past weekend. And in short, it really was incredible to see the responses that were out there. And the engagement from that post really told me something about the power of asking questions such as this one, which allows you to dream a little bit about your financial plan. And here’s some of the responses that came in from the group.

Tyson said, “I’d put the $1,000, I’d put a little bit of it towards debt, charity, and save. It would take away the living paycheck-to-paycheck of life.”

Katie says, “We’d pay off medical and student loan debt.”

Isaac says, “I’d use it to kickstart my own company.”
AJ says, “Student loans, helping parents retire, and charity.”

Joe says, “I’d use it to enroll in online education to pursue my dream of becoming an animator. I refuse to go through a traditional school and put myself into a crazy amount of debt.”

Jacob says, “It would lower the risk of financial ruin and allow my wife and I to pursue several business ideas as well as construction projects around the house.”
Debbie says, “10% to my church, 70% to my debt, and 20% to travel.”

Beth says, “To pay off debt, pre-pay bills, home repairs, vocal lessons for a child, dental, vision, and savings. Definitely spend each month in my community,” with a heart.

Hartley says, “The first thing I would do is get a better vehicle. We currently have a quickly falling apart truck he drives to work, and I walk. My work is closer to where we live. Next I’d begin paying off debts, get my credit in order. And third, I’d put opening our business finally into the works.”

Rebecca says, “I’d pay off my house a lot faster and become debt-free sooner.”

Tiffany says, “I’d pay off personal, medical, and student debt, get my son into some activities, buy new shoes I’ve been putting off, put money into new house savings, retirement, and my son’s savings. Probably actually go on a vacation once a year, not cringe when I pay $200 for my son’s inhaler. Lots of stuff.”

Jimmy says, “12,000 a year plus $12,000 for my wife=$24,000 a year straight to debt. We save enough for projects, funds, and travel outside of this, so $24,000 would be a nice chunk to battle all debt and still enjoy the quality of life.”

Joe says, “I’d create more jobs as this would allow me to take more risks with my ideas without threatening my family’s security.”

And Holly says, “I’d pay off my house within three years and then travel and put away more for retirement.”

Robert says, “I would invest it in real estate.”

And Denise says, “If I had $1,000 per month, I would get long-awaited treatment for my injuries I had to put on hold while helping three injured daughters with medical issues. They are nearly grown, and treatment would allow me to have longevity and start working on dreams I could not work on while raising six children into adulthood alone, working two and three jobs, putting myself through school with minimal child support. Yes, I would heal first, then get an e-commerce business more profitable to fund my philanthropic endeavors.” Wow.

Do you hear what I hear in these responses and in reading between the lines when we asked the question, what would you do with an extra $1,000 per month? I hear dreams. I hear a sense of hope and excitement. I sense peace of mind that $1,000 would take off the edge, help people get caught up, help accelerate a plan or help to invest in starting a business. I hear people getting out of the month-to-month mindset and rut that is so easy for all of us to get stuck in, myself included. I hear people that have intentional goals in mind, who have thought of this. But I also hear in a sense that some feel those goals, hopes and dreams are out of reach, that there’s no different path than the one currently being taken. That short of something like the Freedom Dividend, these goals aren’t going to become a reality, which takes us to our second question. The first being we discussed what would you do with an extra $1,000 per month? The second question is how can you change your financial position so that you have an extra $1,000 per month?

So now that we have a sense of what the goal is with an extra $1,000 per month, I would challenge you to shift the mindset from ‘what if’ to ‘how,’ from ‘I hope to’ to ‘how can I,’ from ‘I wish’ to ‘what’s one step I can take today to,’ from ‘I hope the Freedom Dividend comes’ to ‘I’ll figure out my own Freedom Dividend, and if it comes, it will be a bonus.’ There’s a fundamental mindset shift in those statements. One that is a sense of waiting, one that’s a sense of hoping and dreaming but also has a sense that it may not become real. The other being a sense of action, a mindset of making that dream a reality. So again, how can you get an extra $1,000 a month is the second question that we’re reflecting on. Of course, we aren’t necessarily talking about a clean $1,000 per month. Maybe it’s that, but this is one example. Maybe it’s starting with $100 or $200 a month and going from there. As John Ackhoff says, one of my favorite authors and he that wrote the book “Start,” you just have to start. So maybe it’s $100. Maybe it’s $200. Maybe it is $1,000 that’s going to make this become a reality.

So how can you get an extra $1,000 per month? I want you to think about that question, reflect on that question, and write it down. Maybe it’s refinancing your mortgage or your student loans. We’re in historically low interest rates, and maybe that’s an area you haven’t reevaluated. Perhaps you bought a home, let’s say a year and a half, two years ago, at an interest rate of 4.5%. You might be able to get that down lower to 3%. Maybe you have student loans that are at 6-8%, and if refinancing is a good fit for you, there may be significant savings there that can happen month-to-month. So maybe it’s refinancing your mortgage or student loans. Maybe it’s starting a side hustle or a business. Maybe it’s picking up extra shifts with your employer if that’s an option or even moonlighting at another institution. Maybe it’s trimming your spending, and these be small cuts here or there, cutting the cable or lawn service. Or maybe, maybe it’s a more dramatic move like downsizing the home, selling the car, offloading the boat. Maybe it’s asking for a raise besides accepting cost of living adjustments. Really evaluating what value do you bring to your employer and really asking for appropriate compensation for that if you feel like that’s warranted. Maybe it’s spending a little to earn more, such as investing in real estate. But rather than just one of those, likely it’s a combination of one or more of these factors or others that I didn’t even list in that short list. I hope it’s a combination of both growing the income, growing the top line and cutting expenses because I think that’s where the magic happens. While cutting is good, I think cutting without a mindset for growth can be a dead end. And I think that’s important to say again: Cutting has its place. Cutting is important, and it can be good and it can be necessary, but cutting without a mindset for growth can be a dead end, can have a ceiling to what you’re able to achieve.

As with almost anything in life, I think this comes down to finding a balance. Here, we’re looking for that balance between what would it mean, how would it feel, what would it look like for you to achieve this goal that we’re talking about of what you would be doing with an extra $1,000 per month and balancing that against what would you be giving up. For example, if $1,000 per month is what you’re going to put toward paying off the mortgage and that would change your payoff time from let’s say 25 years to 15 years, so you cut 10 years off and you decide that in order to make that a reality, you’re going to pick up extra shifts and cut expenses to grow the top line, cut expenses, the question is, is it worth it? Is that extra time invested, that extra money earned and what comes potentially with a sacrifice of time, is it worth it to cut 10 years off your mortgage? And I think the answer is it depends. It depends on how much you value your time, how important it is to pay off the home early, and how much you enjoy the things that you’d be giving up. There’s no right answer here.

So let me wrap up our time together by reshaping the questions we started with and then letting you know how we, the YFP team and the YFP community, are here to help. So remember, we started with the question, what would you do with an extra $1,000 per month? And we followed that up with how can you change your financial position so that you’d have an extra $1,000 per month? So instead of what would you do with an extra $1,000 per month, I would encourage you to shift that to what will you do with an extra $1,000 per month? One implies a hope, a wish, a dream that may or may not become a reality. The second is a different mindset of a plan of making that come to be. And second, not just how you can change your financial position, but when will that happen? What will it look like? And who will be keeping you accountable in that process?

So in terms of YFP, how are we here to help as a team and as a community at large? First, we’re here to support you through a host of resources that we have on our website, everything from free guides, calculators, extensive blog posts on a variety of topics, your weekly podcasts such as the one that you’re listening to here right now. Our mission at YFP, you’ve heard us say it before, is to help you as the pharmacy professional on your path towards financial freedom. And we talk about that term financial freedom all the time. And for each person, I think that can mean something very different, something unique, and I’m hopeful that through this exercise today, you’re one step closer to determining what financial freedom means to you. Second, we can help you through our Facebook group, which is now more than 4,000 pharmacy professionals that are committed to helping one another on this journey towards financial freedom. This community is there to help, whether it’s to answer a question that you have or to give you a place to share a win or keep you accountable on your own journey. So if you’re not already part of the community, I hope you will join us over at the Your Financial Pharmacist Facebook group. And third, we at Your Financial Pharmacist offer fee-only comprehensive financial planning that is customized to the pharmacy professional. So whether you want to pay off your student loans, whether you want to make the right investment decisions, or you simply want to build a solid financial plan, our certified financial planners Tim Baker and Christina Slavonik are here to help you get your income working for you. And you can learn more about that at YFPPlanning.com. Again, that’s YFPPlanning.com.

So as we wrap up this week’s episode of the Your Financial Pharmacist podcast, we need your help in spreading the news about the revolution that is happening among pharmacy professionals that are committed to taking control of their financial future. And you can help us with this by helping others find our show that we release each and every week. And you can do that by leaving a rating and review in Apple Podcasts or wherever you listen to your podcasts. As always, thank you so much for joining us, and we look forward to having you join us again next week. Have a great rest of your week.

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YFP 117: Three Bold Predictions for the Future of Pharmacy

Posted on by yfpadmin

Three Bold Predictions for the Future of Pharmacy

Blair Thielemier, PharmD, founder of BT Pharmacy Consulting and creator of the Pharmapreneur Academy, joins Tim Ulbrich on this week’s podcast episode. Blair shares about how she unexpectedly lost her full-time job as a clinical hospital pharmacist when she was 6 months pregnant, how she dove into entrepreneurship with MTM consulting, and her three bold predictions for the future of pharmacy practice.

About Today’s Guest

After graduating with her Doctor of Pharmacy from the University of Arkansas for the Medical Sciences in 2011, Blair unexpectedly lost her full-time income as a clinical hospital pharmacist in 2014. She was asked to serve as an independent Medication Therapy Management Consultant Pharmacist, a niche position that was entirely new to her at the time but would be instrumental to her future success and entrepreneurial journey. For the past three years, Blair has been focusing on elevating the profession of pharmacy through advanced clinical services. In 2015, she founded a pharmacy consulting business BT Pharmacy Consulting, LLC and currently trains and coaches other pharmacists looking to start their own consulting businesses through an online e-course and membership site at the PharmapreneurAcademy.com. In April 2017, she launched the first online pharmacy conference in the industry. In 2018, based on the success of the first summit, she hosted a five day encore event in partnership with the National Community Pharmacists Association’s Innovation Center. The Elevate Pharmacy Virtual Summit featured pharmacists of various backgrounds practicing pharmacy at the peak of the profession. She is also the author of the Amazon bestselling book How to Build a Pharmacy Consulting Business.

Summary

Blair Thielemier, founder of BT Pharmacy Consulting and the creator of the Pharmapreneur Academy, joins Tim Ulbrich to discuss her three bold predictions for the future of pharmacy practice.

First, Blair shares how she lost her full-time job as a clinical hospital pharmacist in 2014 when she was 6 months pregnant. She describes that she felt disillusioned when she was working as a clinical pharmacist; she didn’t love her job but was terrified to lose it. Now that she had, she didn’t know where to turn. She started working with independent community pharmacists and fell in love with doing MTM. In 2015, she built BT Pharmacy Consulting, a MTM consulting business that works with independent community pharmacies that are doing MTM programs and helping get clinical programs set up. Blair enjoyed it and wanted to grow the business.

Blair says that pharmacists are experiencing a “career climate change” and sees that the job market is shrinking or is becoming saturated, there are more graduates coming into the workforce, older pharmacists are being pushed out due to ageism or because of their high salaries, and new graduates are forced to take lower paying jobs because they have no choice. She explains that pharmacy is currently a product centric business which is a commodity. She says that what isn’t a commodity is the drug knowledge and skills that pharmacists have. Blair explains that pharmacy needs to shift to a service centric system and has to be rebranded. The questions pharmacists need to ask themselves are, “How can we add value? What do patients want? How can I leverage what I know and create programs people want?”

Blair then dives into her three bold predictions for the future of pharmacy. Her first prediction is that dispensing of medication and the distribution process have a high likelihood of becoming automated. She says that instead of fighting this, new revenue streams need to be added like services. She also explains that pharmacists can shift away from dispensing medications and that there are opportunities in preventative medicine.

Her second prediction is a shift to an appointment based model. Blair shares that innovative community pharmacists are already doing this, but her vision is that pharmacists can help counsel on health, wellness and prevention.

Blair’s third prediction is that pharmacists will be embedded in every primary care setting. She explains that primary care physicians have issues with medication related quality metrics that pharmacists can help with, such as medicine reconciliation, pharmacogenetic tests, and creating aligned programs.

Blair then discusses her Business Blueprint in the Pharmapreneur Academy that teaches the places pharmacy entrepreneurs can make the biggest impact, identify pain points and learn how to start conversations. There are modules for narrowing opportunities for pharmacists to three pathways: physician/office, pharmacy/clinical and patient pay.

Mentioned on the Show

CommonBond
YFP 039: One Pharmacy Entrepreneur’s Journey to Maximizing Income and Paying off Debt w/ Blair Thielemier
YFP 089: From Unemployed to Successful Pharmacy Entrepreneur w/ Blair Thielemier
Pharmapreneur Academy
BT Pharmacy Consulting
AACP 2019 Graduate Student Survey
The End of Jobs: Money, Meaning and Freedom Without the 9-to-5 by Taylor Pearson
Pharmacy Workforce
Pharmacist Moms Facebook Group

Mentioned on the Show

Tim Ulbrich: Hey, what’s up, everybody? And welcome, as I have a special guest with me today, Dr. Blair Thielemier, who you may have heard from before on the podcast, episodes 039 and 089. We’re going to have her share some of her story for those of you that may not be familiar with her work. But we’re also going to spend most of our time talking about her bold predictions for the future of pharmacy practice. Obviously, a timely topic as we’ll outline here in a few moments. She’s got some great ideas about where we’re heading as a profession into the future, so much so that she was hosting a webinar recently on this topic and as we’ve found out, it’s not just Ralph that breaks the Internet, it’s also Dr. Blair Thielemier that breaks the Internet. So Blair, how are you doing?

Blair Thielemier: Doing well, yes. That was a blessing and a curse, I guess.

Tim Ulbrich: It was the first thing I thought of when you sent out some of those messages about, we had over 1,100 people register and we literally broke the Internet. My boys love “Ralph Breaks the Internet” movie, but certainly obviously I think that shows the importance of this topic, and it’s something that we need to continue having a conversation about as a profession in terms of what are some of the challenges that we’re facing as a profession but also what is some of the innovation that’s happening in the profession? With any challenge comes opportunity for innovation, for entrepreneurship, and I think certainly this is the case for us here in 2019, and so we’re going to talk about your bold predictions and then also what people can begin to do to think about how they can put themselves on the path towards being a part of that innovation. So why don’t we start, again, you’ve been on the podcast before, episodes 039 and 089, so we’ve talked a little bit about your journey, the Pharmapreneur Academy, but some listening may not know that story in terms of how you got started in pharmacy but then also how you jumped into starting your own consulting firm and then the academy. So why don’t you take us through some of that.

Blair Thielemier: Yeah, so I was one of those people — we’ve been hearing about Walmart cuts, we’ve been hearing about Walgreens closing — I was one of those people that my position was eliminated. And this happened back in 2014, so this was awhile ago. I was about six months pregnant with my daughter at the time, and I got the news: “Mrs. Thielemier, we regret to inform you that your position is being eliminated. All your benefits are being removed, and you’re cut back to peer in status.” So you know, at that time, being six months pregnant, I was like, “Oh my goodness, what am I going to do?” And I was really disillusioned. It was like one of those things that I talked about on the call last night was as much as I didn’t really love my job and what I was doing, I was still terrified of losing it. And I think a lot of us can relate to that too. It’s like even if you’re lucky enough to have a position right now, you may not be feeling fulfilled, you may not be 100% satisfied. But then also you’re scared of what’s on the other side of that. So I was forced into entrepreneurship. I didn’t go willingly. What happened afterwards, though, it definitely changed my life because I started working with these independent community pharmacies and then in 2015, I built this MTM consulting business where I was going out, working with independent community pharmacies, doing their MTM programs and helping them get set up with clinical programs. I enjoyed that so much that I said, “This is going to be something I want to do. I want to grow this business. How do I do that?” And that’s where this really led me to this billable pharmacist services. What are the opportunities that we have for building innovative programs leveraging our existing clinical skills, so that really led me to MTM consulting and eventually billable pharmacy services in the ambulatory care setting as well.

Tim Ulbrich: And so we’ll talk later on about your academy as I certainly think that’s a great example of a community that is really being innovative in their approach and that you’re really fostering that innovation and sharing of ideas as people I would say kind of moving this next evolution of our profession. And while you were kind of forced into it, I think there’s many that are listening right now or certainly I’m sure many that were on your webinar as well that are finding themselves maybe in a position of I haven’t had my hours cut, I haven’t lost my job, but I feel this itch — right? I mean, it’s called the entrepreneurial itch — I feel this itch to do something different or to supplement what I’m doing or I really see this problem that could be solved, and I really feel like I have a solution, but I don’t necessarily know where to start. I don’t know what it looks like and I’m scared and all of those questions that come from that. And we’ll talk about those here in a few minutes. One of the things I love — and I’ve shared this with you before, I’ve shared with others, and I have a lot of respect for the work that you’re doing — is I think there’s so much negativity right now in the profession. And what I love about your approach is that I think you are honest with what the data says. I mean, if we look at the data around the market and in terms of where we’re at with jobs and the reality of some positions getting cut and others losing hours, I mean, those are facts, right? And we’re certainly seeing new graduates that are struggling in some areas, but with you, the conversation doesn’t stop there. And that’s what I’m excited about here today is that it’s about, OK, so what are we going to do about it? How can you as a pharmacist potentially reinvent yourself, re-pioneer the work that you’re doing, what’s the skill set that you’ve been given, what are the opportunities that area head? And as you and I both know, when it comes to any great movement, idea, or business, it always comes down to solving a problem and in finding a solution and a solution that is one that people care about. And I think as we look at some of the challenges we’re facing today in terms of the dispensing process and automation and PBMs and all these things, two ways of looking at that. One is certainly it presents a problem; the other is there’s great opportunity for innovation. So what do you make of the climate today? I mean, just to rattle off some of the facts that come to mind, we think about some of the announcements we’ve heard around Walgreens, around Walmart, Kroger and Harris Teeter cutting hours. I was recently reading the AACP Graduating Student Survey where about 22% of graduates said they strongly disagreed or disagreed with the statement that they would reenter pharmacy school if that were to be their choice all over again. We know the average student loan debt is $173,000. So it’s easy to look at all that and say, “Wow, we’re dealing with a lot.” I mean, what do you make of that data and also the opportunities that we have going forward?

Blair Thielemier: So I call this career climate change, and I think it’s occurring right now for several different reasons. I think Tim Baker said on the recent Your Financial Pharmacist podcast that pharmacy’s really right-sizing right now. So what I’m seeing is the job market shrinking or at least becoming saturated, more and more people graduating, older pharmacists being pushed out of their positions due to ageism or just too high salaries and then new graduates who are graduating being forced to take these lower paying positions because they don’t have a choice. They’re drowning in debt. $175,000 in student loans is absolutely insane. And so there’s not a lot of other options. So what I see in pharmacy having this kind of product-centric business model is it’s a commodity, right? What isn’t a commodity is our drug knowledge, is our medication management knowledge, our pharmacokinetics and pharmacology and biochemistry. How can we leverage and take what we already know and already understand, how we’re trained so differently from any other healthcare provider, and create programs that people actually want? You know, I think that pharmacists, we don’t articulate our value very well.

Tim Ulbrich: Yes.

Blair Thielemier: And a lot of times, it’s like, well I’m the medication expert. Well how does that really help anyone else, you know? That almost makes it sound like you’re the most important person in this scenario when really, it should be the person in front of you, so whoever you’re wanting to help and wanting to buy this service. And so that’s really what I’ve tried to shift the idea and rebrand pharmacy as like how can we actually add value? What are the quality metrics that physicians in primary care are being graded on now in the new pay-for-performance model? What are things that payers want in terms of preventative services for patients? What are things that patients want? You know, anti-aging and help with nutrition and weight management. So shifting this idea of like people are going to come to the pharmacy when they’re at their very most sick to what can we actually do before those people get to that point and what are some programs we can create that will help them that are innovative, that are entrepreneurial? Because my great-grandfather was a pharmacist in Chicago in the 1940s, and I think that kind of getting back to our roots, the drugists back then, they were entrepreneurs. Like they had to market and sell their services. They built the industry mostly on independent community pharmacies. So this whole idea of a chain pharmacy is a relatively new concept, but as we’re seeing kind of the job market right-size, as Tim said, what are other opportunities and what are other avenues that we can still take our drug knowledge, take our clinical skills, and apply them to things that people actually want, programs that people want to buy?

Tim Ulbrich: Yeah, and as you mentioned, I think that’s a stark difference. Even though it goes back all the way to the roots, it’s a stark difference for how many of us were trained. And we’re seeing an evolution that’s happening in PharmD education to have more of those entrepreneurial types of training and skill set. You know, I firmly believe that every graduate today needs to come out ready and prepared to know how to justify a position that they’re in, which means aligning yourself with quality metrics, which means communicating value, which means making yourself an integral member of the team, all the things. But if we think back to our PharmD training, that wasn’t what we were doing, right? I mean, we packed knowledge into our brain. And I know for me, graduating in 2008, we were walking out into a market that was basically, you as the graduate were calling your shots. So whether we can consciously or subconsciously admit it, I think there very much was a climate that I was a part of and others where you didn’t necessarily have to figure out how to justify and learn some of those skills. And I think we certainly are seeing a shift of that, and it reminds me — I don’t know if you’ve read the book, “End of Jobs,” but I recently read it. And it talks about how to your point about a commodity and kind of shifting from where we are to where we are today, he talks about this concept that here we are today, really in an age of entrepreneurship. And I really believe that the term ‘entrepreneurship’ I think for many pharmacists makes them feel very overwhelmed, you start to think about the Mark Zuckerbergs, the Elon Musks of the world, maybe one that hits a little bit home for us, the TJ Packers of the world, some that it’s unattainable, I have to start my own business. But it’s really about the entrepreneurial mindset, whether you’re starting your own thing or you’re working for a big-box pharmacy, that’s the skill set, as he articulates in that book, that’s the skill set that today’s graduate needs. And I think a lot of the work that you’re doing and we’ll talk about here at the end as well the Academy members I think is really starting to address that mindset and skill set. So let’s jump into your bold predictions. So three bold predictions for the future of pharmacy. And No. 1 here is we’re talking about this concept of the dispensing of medications and the distribution process and the likelihood of much of that becoming automated in the future. So tell me more about your prediction here.

Blair Thielemier: Right, you talked about my boy. That’s Elon Musk. So I am a big fan. I mean, I love everything he does.

Tim Ulbrich: So he sent a Tesla into space. What do you got? Are you going to send something pharmacy-related into space then or what?

Blair Thielemier: That’s a good idea. I mean, I did bury a time capsule of these three predictions, so maybe I should shoot one into space as well. But yeah, this is my time capsule of these three predictions. If you saw that silly Facebook video of me, I ran ads too, I was burying this time capsule in my backyard with my three predictions for the future of pharmacy. So yeah, the first one was definitely that dispensing, the process, a lot of it can be automated. So you mentioned we’re seeing the tech model and technician verification. We’re only a few steps removed of that even being remote verification and things like that. So my thing is instead of fighting this, instead of saying, “No, we are hanging onto dispensing, we’re hanging onto our current product-centric business model,” looking at, OK, let’s just say what would happen if we let that go and free up time for other types of services? So what I’m suggesting is shifting or at least adding a new revenue stream so it’s not just dispensing services only is the only way that pharmacies make money. So dispensing plus services to make money. And so that’s what I mean by shifting from the product-centric to a service-centric business model.

Tim Ulbrich: So one of the things — to play devil’s advocate to that, you know, I think of the recent workforce survey. I think it’s 44-45% of all practitioners are in the community setting and most of them in a traditional chain setting, maybe a smaller portion in an independent setting, so when you think about that much of the workforce — and certainly, as you mentioned, we’re seeing some right-sizing correction of that potentially, and then you think about what’s happening with Amazon’s acquisition of PillPack, the challenges we’re having with PBM pricing and transparency and a lot of medications being dispensed in terms of under-reimbursement of what it costs them to do that, so the sustained ability of that business model I think is very much in question. So one of the counterarguments, which I think is great that we’re having this discussion here is so what is the timeline of this? You know, my wife and I have this conversation all the time that her and I order pretty much anything we can first on Amazon. So I’ll be the first to admit that I am probably, my kids, me, are probably not walking through the doors of a pharmacy to get my medication unless that looks different in some way, shape, or form, which I think is kind of what you’re getting to in terms of some of the clinical services and add-on things to the dispensing process. But how far away do you think are we from that? And then what does that mean for 44% of the workforce?

Blair Thielemier: So that’s a great question. And you know, I think what we’re seeing too is this shift away from the dispensing model. I mean, we’re talking maybe in the near future the possibility of 3D printing medications in your own home. So if that is a possibility and the Walgreens are going away or at least moving into more like a mail-order type of model, what can we do in the community, in the local community setting to add value to patients? I mean, people aren’t getting less sick. People aren’t taking less medications.

Tim Ulbrich: That’s right.

Blair Thielemier: There’s opportunities in preventative services as well. I think that the interest is growing in things like nutrition and functional medicine, and those are things that are not easily scalable. I mean, Amazon’s not going to figure out how to help you with a personalized DNA recommendation or pharmacogenomic report anytime soon. So where I see pharmacy is having this opportunity to shift and create new revenue streams and also create new jobs is going back to this less scalable model, which is helping patients more one-on-one.

Tim Ulbrich: Yeah, and I think it’s your second bold prediction around really the evolution from a product-centric service to a clinical service and more specifically, appointment-based model. So tell us more there about what you’re envisioning for the future. And I find it interesting you say less scalable because I would agree at a surface level from dispensing, but from an impact level, especially if you think of value-based contracts and where things are going, that’s where I really feel like you start to make true inroads into being a valuable member of the team that sticks. So tell us about the appointment-based evolution model and what you see there in the future.

Blair Thielemier: So I think that innovative community pharmacies are already this to a point. So looking at, like I mentioned, things like functional medicine, helping counsel people on health and wellness and adding these preventative type services. The biggest thing I hear people say about cash-based services is my patients won’t pay for that. And what I think is interesting about this is from a community and population health standpoint is the same patients that are coming into your pharmacy that are on six or more medications with two or more chronic diseases aren’t exactly the same people that are going to be enrolling in your weight management and your anti-aging functional medicine or BHRT programs. So we’re actually talking about a new customer, a new patient, that you can attract and bring into your pharmacy world. So there’s a time and a place for MTMs, for Medicare beneficiaries, but for the most part when we’re talking about preventative type services, especially cash-based services, I’m talking more the younger patient, catching them 15-20 years before they develop these chronic conditions.

Tim Ulbrich: You know, what I like about that idea and that thought is when you think of market share, you’re now talking about expanding the market of people who would traditionally walk in the doors of a pharmacy, right?

Blair Thielemier: Exactly.

Tim Ulbrich: We’re talking about not just sick care, but the other side of that spectrum. And I think we would all agree, we’re trained to be ready to help in that area in terms of prevention. And we can’t forget the assets and the strengths that we have. You know, I think it’s easy to stop the conversation at the distribution side, but one of the arguments for the brick-and-mortar pharmacy is obviously accessibility, you hear that over and over and over again how accessible pharmacies, how accessible pharmacists are in both hours, in terms of location. So I think there’s certainly the assets that are there and then also back to your point about what is and is not a commodity, I think that’s an excellent discussion for us to brainstorm and think of further because as you think about logistics companies and people like Amazon and PillPack and others, they’re looking at scalability and automation of processes, right?

Blair Thielemier: Right.

Tim Ulbrich: So what is currently happening that is valued by payers that can’t be replaced by that, and how can we grow and scale that and align that with value-based contracts and other things? And as I mentioned to you before we jumped on, we’re working on implementing a new community-based pharmacy course for our Masters students here at Ohio State, and while we tend to lump together community-based practice, I think we’re really doing a disservice when we often do that. I mean, the spectrum of innovation that is happening in community-based practice is really unbelievable and I think we tend to start and stop the conversation around big-box pharmacies and dispensing lots of medications, but there’s really a lot of innovation, as you mentioned, in the community space. And we can’t forget, even though we’re seeing great innovation in the hospital inpatient setting — what is it, 99.9%, whatever percent of time people are spending out in their community at home, whether that’s in their community, at their place of worship, but that’s where they are. So we can meet them there and provide services. No. 3 here, which I think is a really bold vision around where we’re going to see pharmacy going, has to do with pharmacists being positioned and placed in primary care settings. So tell us here what you see for the vision.

Blair Thielemier: So you know, I said on last night’s webinar really, if we’re looking at pharmacy practice in September 2029, my vision is to have an embedded clinical pharmacist in every single primary care practice. So a few things that I have to work with is primary care is — they are having issues with medication-related quality metrics that pharmacists can help with. From a quality care coordinator standpoint, they are having to do medication reconciliations. They now have access to these pharmacogenomic tests with not really sure how to use them, how to integrate them into their practice. So they’re getting more and more data and more and more information, but being able to put it together and create a program that aligns with the quality metrics, that aligns with what the payers want to see as well in the new pay-for-performance thing, they don’t have a member on their team that can do that. And I think that’s where the pharmacist can really come in and a lot of value. So a lot of times, pharmacists in the hospital settings will be on the team that’s making sure that we’re meeting the quality metrics on the hospital team. So did the patient get an antibiotic started within two hours of admission with a diagnosis of pneumonia? That’s one of those things. Or on metoprolol after a STEMI. So looking at pharmacy from a quality standpoint, it’s like how can we add value for payers and physicians’ offices by focusing on quality? That’s where I think we can make the biggest impact. And so I always share that my mom is actually a nurse practitioner, works with a clinic, like an FQHC, and she goes to a lot of primary care conferences. And one of the ones she went to last year in D.C., she came back and she said, “Everyone is talking about pharmacists and speech therapists in primary care.” And so that just made me feel good. It’s like oh, well, I can get behind that.

Tim Ulbrich: Absolutely.

Blair Thielemier: And someone said recently that there was a Florida pharmacists meeting. They actually sent a representative from the American Medical Association to the pharmacists meeting, saying, “Hey, guys, we want more pharmacists trained up to work in primary care, to work with physicians. Let’s try to figure out how we can make this really happen.” And so that’s exactly what we’re doing in the Academy is building business models around preventative services in community pharmacy, in building business models around consulting programs in primary care.

Tim Ulbrich: And I think if you think of that vision of having a pharmacist in every primary care provider across the country, and as I’m sure you’re also aware, the incoming AACP president mentioned a similar vision for the future, and when I think about impact and where things are going from a pay-for-performance and where you have a pharmacist positioned to be able to impact those quality metrics and how they’re intervening in a way that is post-diagnosis but before a patient shows up at the pharmacy, right, where you’re often kind of working back issues and challenges, so I think there’s a huge role there and where we think about, again, pay-for-performance contracts. And I think scalability, you think about OK, the infrastructure is there, there’s opportunity there across the country, but just as quick as you can begin to think and brainstorm, the objections start coming out and people shoot down that idea, right? So how do we scale this when we have NPs and PAs that are a cheaper resource and their enrollment is increasing, they have billing privileges and so forth. How do we scale this when every state has different regulations and requirements around collaborative practice agreements? And the list goes on and on, right? And I think that what we’re doing here is beginning a conversation to say, well, that’s obviously not going to happen tomorrow, but there’s some best practices in cases that are happening, that you build momentum, just like any other model. You know, I think about I’m sure the history of NPs in clinics and how they evolved to be commonplace and depended upon. I’m sure a similar conversation was happening 15, 20, 25 years ago with similar objections. So what do you say to some of those objections that people may point at and say, “It’s not realistic, Blair. It’s not going to happen.”

Blair Thielemier: Oh yeah. I mean, I’ll state all the objections for them. We’re too expensive, we’re not providers until federal Medicare, physicians won’t want to work with me because we’re challenging their turf, they don’t want to see pharmacists add these clinical services or get prescriptive authority or whatever. For every objection, there are pharmacists working in primary care centers right now, and there are physicians saying, “This is helpful to me. It’s helping me be more productive, it’s helping me be more profitable. It was not what maybe I thought it was like in the beginning before we started this pilot program, but now I just want to keep adding to this pharmacist. Like we’re looking for more pharmacists to join the team now.” So that’s what really keeps me going is yes, there are absolutely challenges. There’s state scope of practice challenges, there are federal challenges around billing for pharmacist services in primary care. But for those challenges, we’re still seeing pharmacists doing it, and we’re still seeing them getting great results and having a lot of positive feedback from providers. And part of that I think is having the confidence and being able to go out and pitch your services. And that’s what I’ve really built with this new course in the Pharmapreneur Academy. It’s called “The Pharmapreneur’s Business Blueprint,” and what it does is it teaches you the places you can make the biggest impact, but it also helps you to identify those pain points. It’s like, yes, there’s these challenges here. What are some ideas for overcoming them? And how to start these conversations. So a lot of pharmacists say, “Oh man, I’d love to reach out to my local physician and see if we can collaborate on something, but I just don’t know what to say.” I’m like, “Well, you never know if you don’t ask.” So we’ve got literally scripts for cold calling, like calling up the practice and saying, “Hey, can you meet for a lunch? Or I’ll bring donuts one day and we can have a conversation about this.” So the way that I like to talk about it — because like you mentioned, there’s so many different innovative opportunities — is narrowing them down to the three paths. And we call these the three pharmapreneurial paths. So the first path is the physician’s office path, and in the course, say you’ve chosen to do the physician’s office path, you’ll only go through that module track for the physician’s office path. And it helps you put blinders on. It’s like, yes, there’s a lot of opportunities in functional medicine and cash-based stuff, but I’m on the physician’s office path.

Tim Ulbrich: Which is so important when you’re getting started in anything, right?

Blair Thielemier: It really is.

Tim Ulbrich: Because it’s very easy to go in any direction.

Blair Thielemier: And then your second is like the pharmacy clinical service path. If you’re an independent pharmacy owner and you’re looking at how can we add services here in the pharmacy. And then the third would be the patient pay path. So it’s really kind of like a choose-your-own-adventure of like put your blinders on, just take the first steps to call your potential leads. We have like a framework that we use for customer development interviews that walks them through the four A’s of selling your services so that you can feel like you’re selling and able to articulate your value with confidence, and it doesn’t feel sleazy selling like sales pitch-y.

Tim Ulbrich: And I’ll mention this link again at the very end before we wrap up, but if you go to YourFinancialPharmacist.com/academy, YourFinancialPharmacist.com/academy, that will take you over to learn more about the Pharampreneur Academy, and you can also get $50 off your first month of membership. So again, YourFinancialPharmacist.com/academy. So Blair, I’m thinking of — back to earlier in our conversation, we had mentioned a lot of things we feel like we don’t traditionally get in a pharmacy education, and it feels to me a lot of what we’re talking about here in terms of marketing and selling and justifying and aligning with quality metrics and communicating and practice management and business infrastructure. And I know you just recently went through a renovation — or not a renovation, but an evolution of your course. Talk us more through why you did that, what were you seeing, and the need for some of the additional content that you added.

Blair Thielemier: So whenever I was first building the course, it was all about information around billable pharmacist services. There’s no clinical anything in the Pharmapreneur Academy. It’s focused solely on business models. And what I was building in the beginning is what pharmacists were saying they needed, which was information on CPT codes and diagnosis codes and note templates for the EHR, for documentation, things like that. So over the past four years, I had created that stuff, and then I realized pharmacists were getting stuck in the overwhelm. They were getting stuck in that how do I put blinders on and focus? I want to do all these things at once. So I went back, and what I’ve created in the beginners’ blueprint is this model, this framework that you can go through, and it helps to lead you to the right decision for your business. So I said last night, a lot of people start their business with a logo and a business card.

Tim Ulbrich: I’ve talked about that before, yes.

Blair Thielemier: I am so against business cards. No. I’m not against them, but I think that that’s not the first step. That’s not even like in the first 10 steps of building their business.

Tim Ulbrich: No. Yep, agreed.

Blair Thielemier: So it’s really about identifying which path you’re on, which is essentially identifying your target market or your ideal customer avatar if you’re familiar with that language. So what we do in the beginning is walking through those. We talk about essentials of each paths and timelines because the timeline for starting a program in a community pharmacy setting is much shorter, actually, than starting a program in a physician’s office or really getting momentum in a cash-based service. So looking at timelines, if you need to add a revenue stream like yesterday, it might not be a good idea to try to build a functional medicine cash-based business if you don’t have 6-12 months to build up your clientele. So it helps you avoid these common missteps.

Tim Ulbrich: Yeah, and I think as you and I have talked about many times before, I think when somebody’s excited about a business idea, whether that’s a side hustle or they’re going to jump ship and do something different or work two jobs, whatever, there tends to be the falling back on well, I need to get my corporation set up, and I need my business card, I need my website. And I think sometimes you just have to start, taking one step towards developing the framework, the solution to the problem that you’re working on. It may mean seeing a patient without having a full process fleshed out. There’s so much to learn as you go through that process that will inform what ultimately the business will look like in the future. So who are you seeing that’s coming to the Academy and contributing to the group? Is it people that are looking to start a side hustle? Is it people that are already in their own business and kind of spinning their wheels? Those that are looking to jump to start their own business? What’s the variety of folks so those that are listening might have a better idea of who is a good fit for the Academy and what you’re working on?

Blair Thielemier: Yeah, that’s a great question because what we have tried to create is this kind of peer-led conversation around here’s the opportunities that are out there — and I encourage the Academy members to introduce themselves, to talk about the opportunities that they have in mind. So you know, the most recent post that I responded to this morning was two different pharmacists who had said that they felt like their biggest opportunity was to collaborate with local physicians offices, that they’d actually been approached by local physicians offices about these types of services but just didn’t really know how to implement them and how to put these programs together. So mostly, I would say it’s independent pharmacists who are looking to build these types of practices, whether it’s reaching out to a local private practice physician to go to work in their office or it’s partnering with a local chiropractor to offer nutrition or pharmacogenomic testing in their office. Generally, it’s the individual person. We do have some independent pharmacy owners in there as well who’s looking at OK, I’ve got this pharmacy, but now we are wanting to reach out to physicians and collaborate or offer like point-of-care testing services or tobacco cessation programs or whatever. And they’re looking at how also do I train my staff members to be able to sell these services and offer these services so that I’m not the only person that’s doing them? So we’re seeing a lot of owners also use it to train their staff members as well in these opportunities for these clinical programs. So I’m excited about that too.

Tim Ulbrich: So last question I have for you is September 2029, so we’re going to have hopefully a similar conversation. I don’t know if Facebook Live will be a thing or not, whether we’ll be doing podcasting or whatever.

Blair Thielemier: It will be holographs or something or holograms like on our watches.

Tim Ulbrich: Who knows at that time? What will we be talking about? I mean, do you think that we as a profession are going to face the next 10 years with confidence and really reinvent ourselves and in some way, redefine the role? Or do you think we’re going to see a significant shaping the other way and kind of an evolution towards maybe even further separation of the profession in terms of what an inpatient pharmacist role looks like and a pharmacist who’s in an ambulatory setting? What do you see happening even beyond that 10-year mark?

Blair Thielemier: So really interesting. Someone commented, it was in the Pharmacist Moms Facebook group, and I was talking about this subject and switching from this product-focused business model. And she had mentioned that the banking industry went through similar changes back in the 1800s when their primary method of revenue was selling gold and silver. And when we moved away from the gold standard, they didn’t really have a business model anymore. And they kind of transitioned to now these services and in financial services that what we now think of as the banking industry, if you went in to ask them to buy gold or silver, they’d probably look at your like you were crazy.

Tim Ulbrich: Yeah.

Blair Thielemier: So I’m excited about that. I’m excited about starting these conversations, about reimagining what pharmacy looks like and how do we rebrand pharmacy? So most of the pharmacists that I talk to, they’re like, I want to get my patients off medications. And that’s so counterintuitive because, you know, everyone comes in like, oh, you must be rich because my medications are so expensive. Like no. Anytime somebody asks me for a recommendation for an over-the-counter stool softener or something like that, I’m like, well how much water do you drink? Like that’s usually how I start the conversation is like, let’s talk about water and let’s talk about fiber and let’s talk about all these things. And your last-ditch effort might be an over-the-counter product. So I think a lot of pharmacists can identify with that is that we’re not pushing medications. We’re pushing to get people off medications. We’re looking at how can I — this person’s on 11 medications. How can I combine some of these? Which of these are being used to treat side effects of other medications? How can we get them on the most optimized medication regimen and the least amount of medications as possible for this patient? That’s the conversation I think we’re going to be having in 10 years is like, well, I took my patient from 10 medications down to four. You know? And that’s where I believe we can add value. That’s something that the patients want to see, that’s something that the payers want to see. And physicians, they’re going to be getting better outcomes. They’re going to be seeing reduced readmission rates for their patients. And hospitals, that’s what they’re going to need as well.

Tim Ulbrich: Yeah, and it would be interesting to see — I mean, you used deprescribing as an example, but even more consistent reimbursement for deprescribing, right?

Blair Thielemier: Yes.

Tim Ulbrich: Because I think counterintuitively, obviously you’re reducing revenue to the pharmacy, which is an area I think about if you think about pharmacists in every primary care provider across the country, you know, in theory, that really changes the interaction of a patient coming to a pharmacy. Right? Because you think about ideally, a pharmacist’s role post-diagnosis and then being involved in the prescription process, that really changes a lot of what now is time spent at the pharmacy kind of working back with the physician or providers or you think about a traditional medication therapy management visit, ideally, a lot of that could be happening at the point of prescribing. So how do those intersect and work with one another? What impact do they have on one another? I think what you and I both agree on is that we need more opportunities for constructive, innovative dialogue about what does the future of the profession of pharmacy look like? And I think that there’s unfortunately kind of two camps: one of extreme negativity without constructive dialogue and brainstorming and one of somewhat of an optimistic, idealistic standpoint that doesn’t necessarily acknowledge some of the challenges that are here today. And I think we need both, and we need a space where at Pharmapreneur Academy, at Your Financial Pharmacist, at colleges of pharmacy, at national organizations, in communities that we can have a conversation about hey, if we were to rethink, reinvent pharmacy, all ideas on the table, what might that look like? How could we get reimbursed for it? And what’s the value that we can bring as a profession? And I think that often, these conversations start with a lot of baggage and a lot of loaded opinions, and so I know one of my hopes here today in continuing is to stimulate a conversation and get people thinking more about what the profession holds. So thank you so much for joining. Thank you for your three bold predictions. And again, if you want to learn more about the Pharmapreneur Academy, go to YourFinancialPharmacist.com/academy. You can learn more about what’s involved in the academy, what the community is all about, and what you’ll get. Again, YourFinancialPharmacist.com/academy. And you can get $50 off your first month. So Blair, thank you so much for joining.

Blair Thielemier: Thank you so much for having me.

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YFP 116: Transforming Your Life and Career Through Networking

Posted on by yfpadmin

Transforming Your Life and Career Through Networking

Best-selling author David Burkus joins Tim Ulbrich to talk about the science of networking and how the advice we have been given on how to effectively network needs to be seriously reconsidered and likely thrown out the window. David and Tim talk about his book Friend of a Friend and what the research has to say about a surprisingly simple approach to understanding your hidden networks are key to transforming your life and career.

About Today’s Guest

David Burkus is a best-selling author, a sought after keynote speaker, and Associate Professor of Leadership and Innovation. In 2017, he was named as one of the world’s top business thought leaders by Thinkers50.

His newest book, Friend of a Friend, offers readers a new perspective on how to grow their networks and build key connections—one based on the science of human behavior, not rote networking advice. He is also the author of Under New Management and The Myths of Creativity. David is a regular contributor to Harvard Business Review and his work has been featured in Fast Company, the Financial Times, Inc magazine, Bloomberg BusinessWeek, and CBS This Morning.

David’s innovative views on leadership have earned him invitations to speak to leaders from a variety of organizations. He’s delivered keynote speeches and workshops for Fortune 500 companies such as Microsoft, Google, and Stryker and governmental and military leaders at the U.S. Naval Academy and Naval Postgraduate School. His TED talk has been viewed over 2 million times.

Summary

David Burkus joins Tim Ulbrich on this week’s podcast to talk about his book Friend of a Friend, what the research has to say about a simple approach to understanding your hidden networks, and how the advice we have been given on how to effectively network needs to be seriously reconsidered.

David began studying organizations and learning about how to make working at them better. He learned that every organization is a network leading him to discover network science research. He dove into studying research articles written by physicists, mathematicians, psychologists, sociologists or whoever was studying networks. From there he came to understand that there were two types of work written about networking: advice books written from an autobiographical standpoint and fascination books written by researchers. David felt that there was an unoccupied space in the middle to teach people how networks work and avoids the advice trap.

David discusses that people often think strong ties or close relationships are the way to grow your network, but in reality weak ties are the most helpful. Strong ties are people that you interact with often, like close family, friends, neighbors or coworkers. Weak ties are people that you know but haven’t talked to in a long time. Perhaps they are people that come into the pharmacy once a month; you don’t know them well but you talk to them occasionally. If a situation arises where you are looking for job leads or have another type of emergency, you’ll connect with your strong ties but they don’t have as broad of a network as your weak ties do as they interact with more people you don’t know outside of your connection. Only reaching out to a weak tie in an emergency situation like this would make for awkward conversation. David suggests that you should be regularly checking in with weak ties so that when something comes up that you need help with, it becomes part of a normal conversation instead of a cold one. In short, he says to make weak ties like your old friends.

David delves deeper into weak or dormant ties and also discusses structural holes, super connectors, and meaningful and authentic engagement.

Mentioned on the Show

YFP Planning
David Burkus
Friend of a Friend: Understanding the Hidden Networks that can Transform Your Life and Your Career by David Burkus
David Bukus’ TED Talk
Nicholas Christakis
James Fowler
Duncan Watts
How to Win Friends & Influence People by David Carnegie
Adam Rifkin
Derek Coburn
Levitate
Contactually
Ronald Burt
Adam Grant

Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? Welcome to this week’s episode of the Your Financial Pharmacist podcast, where I have the honor of welcoming David Burkus onto the show. David is a bestselling author, a sought-after keynote speaker, and associate professor of leadership and innovation. And his newest book, “Friend of a Friend: Understanding the Hidden Networks that can Transform Your Life and Your Career” offers readers a new perspective on how to grow their networks and build key connections, one based on the science of human behavior, not broke networking advice. He’s delivered keynotes to leaders of Fortune 500 companies and the future leaders of the United States Naval Academy, and his TED Talk has been viewed over 2 million times. Also a regular contributor to Harvard Business Review, and his work has been featured in Fast Company, Financial Times, INC Magazine, Bloomberg Businessweek, and CBS This Morning. David, welcome to the show.

David Burkus: Thank you so much for having me.

Tim Ulbrich: So really excited about your work and your book “Friend of a Friend,” and before we talk about that book and the research and the impact that it has on us as a community of pharmacy professionals, the work that you’ve done on networking science, I’m curious and want our listeners to know a little bit more about your background. Why study this topic? Why make a career out of it? What intrigues you so much about networking?

David Burkus: Yeah. Well, the jury’s still out over whether or not I make a career out of it. I sort of have intellectual ADHD a lot of times and jump from different subjects. But ultimately, my background, I study organizations or I like to say I study how to make work not suck, right? And that’s in the realm of leadership and management but also creativity and innovation. And in each of those fields, I ran into some of the most powerful research on how organizations was network science research because every organization is a network. And in fact, most organizations you could describe as two different ones. You have the formal org chart network, right? And then you’ve got the informal who actually knows who, whatever. You don’t have to work in an organization to realize — like here at Ohio State, you don’t have to work in an academic institution too long when you realize that the department secretaries are more powerful than the actual chairs and deans, right? Because they know what’s really going on. And all of that is explained by networks. And so that got me in this path where I was just following the rabbit trail of studying all of these different research articles from the physicist, mathematicians, psychologists, sociologists, etc., who were studying networks. And I started to realize that there isn’t really a place for — there really isn’t a place being occupied for a work that would teach people in practitioner terms how to leverage this network science, right? Basically, when you say the word ‘networking,’ you had two categories of books available to you. The first were the sort of advice books. These are great. These are “How to Win Friends and Influence People,” and “Never Eat Alone,” and “How to Work a Room,” and they’re all great. But they’re all advice. And the shortcoming of advice is that it’s autobiographical. It represents the person, usually the man, sometimes the woman, what they did to grow their own personal network and then the promise that if you do this, it’ll work for you. And then that doesn’t address the sort of awkwardness of being someone else, right? You read that, you go to the networking event, you try and implement whatever it is, how to give an elevator pitch or how to say somebody’s name three times so you remember it — that’s never worked for me, by the way, the three times thing — and then you feel inauthentic first because you’re pretending to be somebody else because you read the advice book and you’re pretending to be him. But then sometimes it just doesn’t work because you’re not that person. So that was sort of the norm, most networking books. Then way over in almost published by the scholarly journals and things, you had what I call the sort of fascination books. These were books by the actual researchers, people like Nicholas Christakis and James Fowler, Duncan Watts, and what have you. And they’re fascinating, but they’re fascinating in that way that you watch a TED Talk and you go, wow, that’s fascinating. I have no idea what I’m going to do with my life.

Tim Ulbrich: What do I do with that? Yeah.

David Burkus: Right? But wow, that’s fascinating. So therein was the idea. Hey, there’s this unoccupied space in the middle that maybe if we create something that teaches people how networks work, which is what the fascination books do, describe the network that somebody is in and avoids the advice trap because it’s just saying, this is universally true of all networks, so I know it will be true of your network, but does it in that same practitioner language of one of those advice books. Maybe there’s an opportunity there. And so that was the big bet. About two years ago, we made that bet, started writing the book, put the book out there, and I wish I could tell you here that I’ve sold as many copies as “How to Win Friends and Influence People,” but I’m probably never going to hit that mark because that book is in the bazillions it’s sold. But the letters, the emails, the messages — ironically, mostly on LinkedIn — that I’m getting, the feedback that I’m getting, tells me that we really sort of hit that sweet spot, which is really kind of encouraging about a year after the book came out to hear people go, yeah, I never looked at my network that way or I never looked at the network that I’m a part of that way, thank you so much, that’s been awesome. So you know, we may not have as many people as Dale Carnegie on our side, but we’re teaching people every day how networks work and then how they can put them to work for them.

Tim Ulbrich: Yeah, and I’m really excited to get this out to the pharmacy community. I think we as a profession — I shared with you before we hit interview — we as a profession are really in a unique time where we have some significant pressures that we’re facing in terms of a shifting and evolution of our roles and people that are finding themselves in that job loss, and maybe they thought, forever I’m going to be in this secure position, or I have my hours cut, or I don’t like my job, whatever be the case, and this topic of networking and how to do it effectively and how to really shift your mindset around maybe the traditional advice you’ve always been given isn’t really the best advice, and maybe after all should be thrown out. And one of the things you mentioned that really hit me when I read the book is this concept that all advice is autobiographical. And I think that is so true, and it was really even humbling for me to think about as I’ve mentored other students, like I tend to tell them networking advice based off of what’s worked for me. Well, that may not be very effective for them, for obvious reasons. And so I think this concept of rethinking networking, especially for us in pharmacy where I would say is “traditional networking” is so prevalent, this idea that you’re at a national association meeting and you walk into a big room and you meet people cold and you hope that’s really going to advance your career and you’re going to have that two-way benefit I think is certainly a stretch. So let me start, David, in the beginning of the book, you talk about Adam Rifkin, who’s an entrepreneur that was named by Fortune Magazine in 2011 as the world’s best networker, which I really didn’t know was a thing, which is pretty awesome. So I mean, if somebody is called the world’s best networker, like who is this guy? And what was it about him that made him so successful when it comes to networking?

David Burkus: Yeah, well, so that’s the thing, right? Even if you hear the term, “world’s greatest networker,” you picture like the Dos Equis guy, right? Like this smooth-talking, tall, handsome, dark — I got those in the wrong order — wearing a three-piece suit, able to flip business cards out of the shirt sleeves at a moment’s notice, etc. You think about that person, and Adam Rifkin is not that person. If you ever met him, Adam Rifkin, I mean, he’s average height, he is definitely not average girth, he’s a little bit overweight, he likes to wear hoodies, most often a black hoodie with a white T-shirt underneath, which makes people think of him as a panda bear. And I say this because Adam has actually sort of adopted that term. Like he started a company called PandaWhale. Like he was the panda, his partner was the whale, right? Like he plays to this motif often, which is fine. He’s not that type of person that you would think would be the world’s greatest. He’s not charismatic, etc. What Adam is is Adam is someone who has a PhD in computer science and began to look at the way people interact the same way you linked up computers. And this is what’s amazing about networks is that some of the studies in “Friend of a Friend,” by the way, were not done with traditional human networks. They were done with networks of hyperlinks and computers and all of that sort of stuff. But what’s amazing is that there are certain principles that are universally true of all networks. And this is what Adam really focused in on. And particularly in Adam’s case, the thing he focused most in on is a term called resiliency in network science, that a network or a community is stronger the more links there are going between them. In other words, we think that it pays to be that sort of power broker person who only dishes out introductions seldomly and only makes connections when he or she can control what’s going on and get a piece of it, etc. And that model works a little bit, but it doesn’t work as well as focusing in on taking care of the whole community. So that’s what Adam started to do, started to connect people that he already knew. Eventually, it turned into actually these regular meetings. He was the first person in this Silicon Valley community to start regular meetings. Now, like I get invitations to meet up all the time. But this was 20 years ago when nobody was really worried about this. He started a community called 106 Miles, which is the term for the stretch of highway that is Silicon Valley, and started this community that now has thousands of different tech entrepreneurs and employees and venture capitalists, and all sorts of people coming together on a regular basis to meet each other. And that’s elevated Adam’s status not because he’s the one at the center of the network running the show but because he cared about the actual network, and then it just so happened that people became connected to Adam because they joined into this community that he built. And so fast foward to 2011, Fortune Magazine’s trying to say, well, outside of people who work on LinkedIn, etc., who is the most connected person on LinkedIn, and it was Adam Rifkin. What I think is funny is in truth to Adam Rifkin’s networked ability, the magazine did this experiment, the senior level editors who were at the magazine never really connecting — they’re editing, they’re not running beats, etc. — they were like, I’ve never heard of this person. So they hand it over to the writer who’s assigned to cover Silicon Valley, and they say, “Can you go look into this person, Adam Rifkin, he’s apparently connected to everybody.” And the journalist who covers Silicon Valley was like, “Oh yeah, I know Adam.” Right, because everybody does.

Tim Ulbrich: Right, right.

David Burkus: And I think the big lesson for a lot of us in Adam’s story is twofold. One, pay attention to the network that you’re around, but also take care of that network. Build what we call social capital in that network and trust that it will take care of you over time as well.

Tim Ulbrich: Yeah, and I love that in the book. I think for many pharmacists, this concept of networking is very overwhelming. They may be introverted by nature, and so when you talk about him himself saying, you know, I’m not an extrovert and it’s often not something that he’s thinking about intentionally interacting in those ways, maybe a little bit shy and awkward, but what he does have, to your point, is this understanding of how networks work and the effectiveness that they can serve. So one of the main takeaways I had, David, was this concept of strong ties versus weak ties. And you know, while it may seem counterintuitive, why weak ties tend to be more valuable. And this is something I think I forever will hold with me from this book. So can you define the two? What’s the difference between strong and weak ties? And why is it the case that weak ties may be more valuable?

David Burkus: Yeah, so if you think about your network — or actually, better stated, if you think about the network that you are a part of because it’s not yours, it belongs to the industry or the community, we’re all one big network of 7.4 billion people, right? But if you think about the network around you, you have various different types of relationships. Some are these what we call strong ties, they’re your close contacts, the people you see every day, the people you work directly with, they’re your friends, they’re your family, they’re the people you usually go to first when you have a question or problem or you need to learn more information about something. In a job, again, the people that you work with on a regular basis, maybe they’re assigned to your location, so they’re the people that are on your team, maybe you just see them on a regular basis because of what you do. And then there are the people that you don’t interact with that often — that either you don’t interact with that often or you do, but you don’t know them that well. Like I think about weak ties can be both people you know and used to know well that you haven’t talked to in a really long time — we actually use the term ‘dormant tie’ as a specific sort of subset of weak tie. But these are also the people that like you think about pharmacy, for example, these are the people that come in on a monthly basis and have for the last four or five years. You know them, you might even know their disease, but you don’t know them that well. You don’t even know what they do, what their occupation is, etc. Right? In a lot of organizations, I always make the joke that your weak ties are the people, in terms of an organization, they’re the people you know, but you only see them when there’s cake in the breakroom. Right?

Tim Ulbrich: Yeah.

David Burkus: And because of it, it turns out that when it comes to looking for new information, new ideas, new perspectives, etc., there’s a lot of redundancy among your close contacts. Right? You think about your team, the group of people on your team, well, your team’s already all connected to everybody. Right? And those people are highly likely to be the same people that they’re talking to all of the time. So you’re not going to get a lot of diversity of perspectives, you’re not going to get a lot of potential introductions or referrals through those people because the likelihood that you already know who they’re going to connect you to or what they’re going to recommend to you if you’re thinking about job leads, for example, they’re probably only going to know stuff you already would have known about anyway. So it’s actually your weak ties or your dormant ties who are in a close group of other people that are not you and are not your community that are more likely to be different from you, and hence, they’re more likely to have differing information, different opportunities, different potential introductions, sort of all of that. And the lesson of the strength of weak ties really isn’t this idea of like, OK, when you’re faced with an emergency, right, like oh, now I’m out of a job, go back and reach out to weak ties, which is how other people have talked about this concept of weak ties in the past. The problem with that is that it gets kind of awkward, right? You haven’t talked to someone in two years, and now you’re reaching back out to them because you just were invited to be successful at a different company by your organization or something like that. That can be an awkward conversation. So to me, the lesson of weak and dormant ties is to actually be regularly checking in with a lot of those people that you’ve identified as this is not someone I talk to often, but I could be important to them, they could be important to me, let me put in a system where I’m checking in with them on a regular basis, every three months, every six months, maybe it’s just once a year, whatever you’re doing to make it a little bit less awkward when they have an issue that they want to come to you to or when you have something you want to come to them with. It’s just another conversation in a series of conversations. The goal is to make weak ties like your old friends, those people who you could pick up the phone and call, and it just feels like no time has passed since the last time you’ve talked to them. The goal is to get to that level of rapport with a lot of different people so that when you’re faced with an issue, you have a lot of different people who have different information and different perspectives to go back and reach out to.

Tim Ulbrich: Yeah, and I’m so glad you brought that up of the importance of maintaining them all along and regularly engaging and being intentional and not just coming when there’s an emergency situation of a job. We can all relate to the situation of you get pinged on LinkedIn, and somebody’s classmate from 10 years ago, and they say, “Hey, you live in an area where there’s jobs available. Can you help me connect with somebody?” And it’s like, I haven’t heard from you in 10 years, right? So I think that regular engagement and maintenance is so important for our listeners to hear that even if you’re in a position where all things are going well and you’re not necessarily currently looking for a job, that you’re being intentional about regularly maintaining those. I want to spend a minute, David, on this concept of specifically the dormant ties as a subset of these weak ties because I found this really interesting, and I’ll share with you in a moment how I have practiced this over the last 3-6 months since learning about your research and work and how powerful it’s been, but in the book, you talk about that the research really shows the benefit of the dormant ties has more to do with the fact of their dormancy than with the perceived expertise of those individuals. So what is it about the dormancy that really brings the power in what those connections can bring?

David Burkus: Yeah, so I mean, ultimately, whether we’re thinking about job leads, we’re thinking about trying to think of a solution to a problem, whatever it is, ultimately what networks provide us is information. It’s why human networks and the network of the world wide web are so analogous to each other is that both are looking for information. You’re looking for new information, different perspectives, yeah, OK, potential referrals to new introductions, etc. And because those people are, you haven’t talked in awhile, it’s not like they don’t exist. To use like a gaming term, they’re not non-playable characters. They’re real people too. They don’t just sit around waiting for you to interact with them. And so because of that, they’re running off somewhere else in the network, interacting with a different group of people, and the likelihood that because of that dormancy, they’re interacting with people who are different than you, who don’t see the world the way you see it, who are aware of opportunities that you’re not aware of, etc., that likelihood increases the more dormant or the further away they are in the network from you. That’s where you end up with a lot more diversity, right? So the dormancy is what provides that. Even if you feel like oh, OK, there’s this other person, and he lives in my city, and yeah, he’s an expert in this exact area. I mean, the mere fact that he lives in your city means that you’re probably going to talk to that person more often and have already benefited from their knowledge. So just in the moment, you’ve already sort of gleaned a lot of it. But in terms of opportunities, perspectives, etc., it’s highly likely you’re going to have a lot more in common than the way, way out dormant person. So it’s a better idea to start with that person. And again, like you said, it’s not a good idea to just start with that person when you’re desperate. It’s a good idea to start with that person on a regular basis checking in with them, recognizing that it’s OK to not talk to everyone all of the time. Some people need to be dormant. That doesn’t mean you ignore them.

Tim Ulbrich: Yeah, and the visual that I have in mind is I’m envisioning these spiderwebs of networks that have the potential to be connected, but we tend to stay in our own lane, and we tend — I’m thinking my own situation of if an opportunity comes up or I’m looking at something in the future where I think about, OK, I need to lean into my network, we tend to go to those strong ties whereas the bridge really lies in the dormancy and the weak ties that’s going to open up other networks and opportunities. I think that concept is really cool. So now the question is, how do you engage with these folks in a genuine, authentic, meaningful way? I mean, is there an opportunity here through social media, through LinkedIn, through Facebook, that that to me would appear to be individuals that if they’re my strong ties, if they’re my closest network, I’m probably regularly interacting with them in a way that’s beyond LinkedIn and Facebook and other mechanisms of social media. But this may be an opportunity to really leverage social media to say, OK, these people are already in my network, and now I can open up that door and further the engagement.

David Burkus: Yeah. So the way that I like to say it is that social media is a supplement to, not a replacement for, your offline networking efforts. But you’re exactly right. When it comes to these dormant ties specifically, it’s a great way just to identify who they are. Right? If you think about Facebook, for example, if you pull up a list of your friends on Facebook, it’s already sorted by how frequently you interact with those people. And in of other places, you can ask for it to sort your existing connections that way. So scroll all the way down to the bottom, boom, we’ve already found some of your dormant ties. Right? Now, there are — the most common probably thing that people do on Facebook to reach back out to dormant ties is the birthday thing. On LinkedIn, it’s the work anniversary thing. Like if you’ve ever had one of these, you get inundated with messages that are actually usually just people clicking a button because Facebook asked them to click the button.

Tim Ulbrich: Canned message, yep.

David Burkus: We don’t necessarily want to do that. If you’re going to wish them a happy birthday — I’ve got a good friend, Derek Coborn, who also wrote a book on networking. And it’s also great, but it’s also advice. Derek Coborn does this thing where you see the birthday thing, and he records a 30-second video on his phone and then direct messages it to the person. Right? Because he’s at least rising above the noise. My favorite thing to do is just not worry about it at that time. People aren’t going to see that you clicked on something, or they’re not going to see that you put one thing in the comments where there’s 100 comments, right? Either take it offline or find a different time. What I like to do is put that person in my mind. I have identified my dormant tie, sometimes I used to go as far as putting their name on my calendar as an all-day event. You know how it sort of floats above the rest of your activities and you see it? And what’s amazing is if you put someone in your mind, you will find things throughout the day that remind you of that person. You’re reading an article, and you’re like, oh, you know, this reminds me of that time we were talking about x. Now you take the 15 seconds to send the article to them. Or you think of a conversation with them or an answer that you never gave or something like that. You end up thinking of this sort of organic reason to reach back out to them by a more personal means, direct message, email, text if you’ve got it, etc. What I tell people, so you get all the way to the end of the day, and you haven’t thought of something, you can send a three-sentence email that will — believe it or not — jumpstart a conversation. The three sentences are: I was thinking about you today. I hope you’re well. No reply needed.

Tim Ulbrich: Oh, that’s great.

David Burkus: The “No reply needed” one’s a little counterintuitive. When you say “No reply needed,” you’re basically saying, “I don’t have an agenda. I’m not looking for a job. I’m not trying to sell you into my new company and recruit you. I have no agenda. I just was thinking about you, and I hope you’re well.” And it sounds weird, but I’ve never been on the receiving end of someone telling me they wish me well and responded with spite.

Tim Ulbrich: Or nothing.

David Burkus: Or responded with awkwardness — or nothing, right? I’m going to reply with something. And more often than not, that turns into a conversation. Now a caveat here. Everything I just said in the last like two minutes, at least 90 seconds, is advice, right? So it may or may not work for you. But it’s a system that I put in place for myself after doing a lot of this research. It’s the way that I applied the research. And the big lesson is whatever is unique and authentic for you that is a system where you’re regularly checking back in with these dormant ties, that will work. You’ve got to be comfortable doing it. But once you do it, stay consistent with it so that over the period of a year, you’ve checked back in with all of those dormant ties. And the next time they need or you need them, it’s not an awkward ice-breaking conversation. It’s just another conversation.

Tim Ulbrich: So building on that example, couple examples you gave there of thinking about people and interacting with them, looking for opportunities, things they’re posting already, naturally, people are putting content out there, photos out there, they’re opening the door to have that conversation. You mentioned putting a holding place on an Outlook calendar. I want to talk for a moment more about this idea of operationalizing this research and making it practical and maybe even what you do in terms of a system because I think that the manual process of thinking of people, putting them on an Outlook calendar, could work for some time. But all of a sudden, you identify hundreds of these dormant ties and you want to engage them maybe on a quarterly basis, twice a year, even more. Are there systems, tools, things out there that can help people or maybe that you even use in this process of trying to both identify and engage with these individuals?

David Burkus: Yeah, so there are. There are a bunch of different digital tools. There’s two that come to mind immediately. There’s a tool called Levitate, which basically sits on top of your email and monitors who you’re talking to and how frequently you’re talking to them. And there’s a tool called Contactually, which does the same thing plus I believe Twitter, and they’re working on LinkedIn. So they’re trying to have it penetrate into social media too. And the idea is you then tell the system, you pull up your whole list of contacts, and you tell them, here’s how frequently I want to make sure I’m interacting with that person. And you’ll get an email — I mean, if you’re really off, you’ll get an email every single morning that says, “Here’s the new people that it’s been 90 days or six months or a year since you’ve spoken with.” And now you know who to put in the front of your mind for that day or those couple days. The interesting thing is I find that — so I’ve used a lot of those. I’m a big fan of Contactually, the founder is a friend of mine, etc., so that’s my full disclosure type of thing. And they work really, really well. What I’ve found is that if you use them for a year to two years, you start to not need them because you start doing that organic, you know, this person popped into my head and I took the 20 seconds to fire off an email or a text message to them. We’re not talking about a huge amount of time and a computer reaching back out to everybody all at once. We’re talking about a couple seconds every single day to check back in with people. And then yeah, making the time to have a conversation a couple days later, etc. And so what I’ve found, like on Contactually, for example, I still get an email every morning because I set it to do that. And every morning, I get an email that says, “You have zero tasks today.” I mean, every once in awhile, I’m like, ‘Oh, somebody fell through the cracks,’ and I actually get a reminder, which is great. But if you start to develop that habit, right, of slowing down when a name pops into your head and just taking the 20 seconds to reach back out to them, you end up not needing a lot of these tools. They’re a great place to start, they eventually teach you that habit, and then you’re good to go.

Tim Ulbrich: So as I mentioned to you earlier, before I had a chance to talk to you, I wanted to practice this after learning about your research. And so I was out there doing a little bit of a search, and I didn’t run across Levitate. I think I saw Contactually, and I also ran across a tool called UpHabit. And what was incredible is it identified people, you know, to this whole idea of dormancy and weak ties, it identified people that at one point in time, these were individuals that I maybe spent a year with on a longitudinal leadership program or I’d worked on research projects with or I’d worked with, had very strong relationships, had invested in making those relationships, and just out of the busyness of life, moving, and other things, haven’t kept in touch with them. And just the simple messages you alluded to reaching out to them sparked an entire conversation and even led to other things and collaborations. And so I would encourage our listeners, you know, whether you do this manually, whether you find a tool, give it a try for three months, six months, and see what happens. And I think really seeing your research come alive in practice has been a whole lot of fun for me personally and I think will be the case for others as well. So David, it just makes me think as we talk about tools and apps and systems to build connections, some people out there may be thinking, oh, this feels kind of impersonal, like I’m really trying to get people to be a part of my network and really see what value I can get out of it, which I don’t think is what you’re saying. What would you say to those that say setting up a system or trying to identify who you have to have contact with and scheduling them and those types of things just doesn’t feel very personal?

David Burkus: Yeah. Yeah, yeah, yeah. I get it. It’s one of my anticipated questions whenever I give a talk is the, ‘Well, this feels inauthentic.’ And I totally get that. But let me take you back from the dormant tie over to the close contacts. Right? I have reminder on my phone, I have my wife’s birthday on my phone, and then I have a reminder set seven days out of when her birthday is. Why? Well, I need to make a restaurant reservation, I might need to look for a gift, etc. Right? The fact that I set that reminder, does that make me inauthentic? No. I care enough to make sure that I don’t forget. And that’s I think the same thing that applies to those tools. We put systems in place to make sure that we seal out of our close contacts in our — for lack of a better term — real life or in our friend and family life — that’s why actually the book is called “Friend of a Friend” as opposed to any other sort of work term. The big lesson is that it’s about the whole network. There is no work and life bucket. It’s all just friends of yours, connections of yours, and we take the time to care enough about these other people, and sometimes it means putting a system in place. Why wouldn’t we do that with our professional contact as well? It’s not that we’re doing this so that we can be inauthentic. Now, you can use these tools to be inauthentic by just, again, doing the thing where you’re just saying happy birthday every year or clicking the little button that says, “Congrats on your work anniversary” on LinkedIn. You can do that. What we’re talking about is setting systems in place to remind you to then organically, authentically, and with intention, reach back out to people because you’ve declared that your relationship with them matters so much that you’re willing to put in the effort.

Tim Ulbrich: Yeah, I love that, the idea that creating a system and operationalizing the system really shows the value and the effort in the relationships and how much you care. One of the concepts in the book, David, you talk about is referred to as structural holes. And I find this very interesting and timely for our profession of pharmacy where I think it’s easy that we get caught up in connecting with like-minded pharmacy professionals when really, in fact, I believe we need to be branching out beyond the walls of pharmacy to other healthcare professionals, the business community, others beyond that, to really be able to effectively address the complex problems that we’re facing in healthcare. Talk to us more about this concept of structural holes.

David Burkus: Yeah. So networks are not egalitarian, right? You already figured it out because you have close contacts, and you have weak ties, that people cluster. We cluster by — I mean, the No. 1 way we cluster is literally proximity. So you work in a university system. Two fascinating studies of universities shows that professors, the people that are most likely to co-author a paper with, are the people they work in the same office with. And like literally if I move you to a different floor, the likelihood of collaboration drops. So proximity is one, right, but then even by function, it’s easier to have conversations with people who were trained in the same thing that we do, work in the same department with us, and so we end up spending a disproportionate amount of time. Over time in an organization, that creates the silos, the politics, the turf wars, all of that sort of stuff. In the bigger network that is our industry or our country or our world, people still tend to cluster around similar ideas, similar ideologies, similar training, similar backgrounds, etc. That creates what the sociologist Ronald Burt coined the term, structural hole, a gap in the network where there isn’t someone connecting one cluster to another cluster. And these are a huge problem for information flow because, I mean, ultimately, like I said, the idea about networks, networks exist to transfer information. That’s why you want to get involved in. You need information. But you also have information to share. And the other thing that happens, we know about — my first book was about creativity and innovation. We know that innovation is much more likely when you have a diversity of ideas and voices contributing to something. So structural holes become a huge problem. So if you take it upon yourself to close one of those structural holes, there’s a tremendous amount of value that gets unlocked for you. We would call you a broker in that situation, someone who’s decided to broker the connection between one cluster and another, to build a bridge. Usually, you start it through looking at those weak ties, those people you know who are in a different part of the healthcare industry, for example, or a different part of the organization, and being deliberate and intentional about reaching back out to them, that builds the relationship, and now suddenly, this cluster is better connected — both of the clusters are better connected to each other than they were before. That puts you in a broker relationship. Ronald Burt, actually — I love this quote — Ronald Burt wrote that the people who sit in the gap, the brokers that occupy the structural holes, are at the greatest risk of having great ideas. Right? So you think about the pharmacy industry, for example, it used to be that it never changed. It was a pretty consistent model. Right? It was the same thing as medicine. My wife works as an ER doctor, same deal. It used to be that nothing ever changed. And then suddenly, boom, everything is shifting around, the roles are shifting, it’s a much consultative role than it was before and we’re using AI and machines to outsource the stuff that doesn’t take a lot of highly critical thinking, etc. What will be the currency of navigating that change will be ideas. It will be information, and so the people who are at the greatest risk of staying employed are going to be those people who are occupying those structural holes.

Tim Ulbrich: That’s what I was just thinking about as you were talking about structural holes and those that broker it is that if somebody’s listening and they want to make sure they’re an invaluable asset to the community, to the organization they live in, or even if they decide to leave, you know, they’re going to be that much more valuable when they go to their future employer and they’re negotiating that opportunity is find a way to fill those structural holes. I think here at Ohio State, we have a university of 50,000+ students and just in the health professions, you’ve got medicine and pharmacy and optometry and vet med and dentistry, all relatively siloed. But there’s very few people, but they exist, who really can intentionally sit in those gaps. And it’s amazing what happens when you really start to open up those opportunities for collaboration through filling those holes. You also talk about — and this builds off of the example we mentioned at the beginning in terms of those that really have a disproportionate to connect with others. And you refer to them as ‘super-connectors.’ And I think this is interesting. When I first heard this concept, the first thing I thought of was the concept of compound interest, obviously relating to finance, and that really, over time kind of takes a life of its own because as you connect with more and more individuals, especially if you get to a certain level, of course, those networks are then going to be reaching out to you, and it just begins to take on a life of its own. So talk to us about this concept of super-connectors and who are those people and why they become that.

David Burkus: Yeah. So it’s actually sort of two concepts in one, right? So super-connectors, those are the people that are already well connected in an industry. These are the people you look at and you’re like, ugh, networking comes so easy to them. These are the people you silently hate, even when you cheer for them to succeed because it all just comes so easily to them. They’re the people who have a disproportionate amount of connections, the 80-20 Rule, the Power Lull, etc., exists when we graph the number of connections that individuals have. A small group of people are connected to lots of people, and the rest of us fit the down the long tail of that distribution. What’s interesting to me isn’t that super-connectors exist, what’s interesting to me is how they got there. And that’s where another phenomenon in network science called preferential attachment starts to develop. And it is literally compound interest, if you want to think about it that way. What happens is that as networks grow, evolve, as new people enter the network — just think about it in your own organization. As new people enter a company, who are they most likely to meet? Well yes, they’re going to meet the people they work directly with, but within the first week, they will probably meet the best connected person in that organization.

Tim Ulbrich: Absolutely.

David Burkus: Why? Because all of those other connections are going to introduce them to that person. So what we find is that super-connectors grow their network to a disproportionate level. It often happens organically because they have managed to hit this sort of critical mass where now everything compounds without them having to work. And if you talk to — like from the book, I profile a couple different friends of mine who are these sort of super-connector persons, and I specifically wanted to write about them because I wanted to address a thing they say that I always hated, which is they’ll say things like, “Oh, the key to a good network is subtraction, not addition.” Like well, yes. That’s easy to say when you have tens of thousands of people on your phone, right? For the rest of us, we’re like, I can’t even figure out how to get connected to someone at Walgreens. So super-connectors are the people who are leveraging preferential attachment. The good news, however, is that preferential attachment, it’s kind of like gravitational pull, it’s kind of like compound interest. It doesn’t matter where you start, it accumulates over time. So if you start to be consistent and deliberate about connecting with new people and also nurturing the relationships that you have, preferential attachment comes into play. So yes, there are definitely people who make it look easy. But they make it look easy because at a certain point in time, it wasn’t. And they put in the work to build to that critical mass to let it take over.

Tim Ulbrich: Yeah, and some of the people I think of as super-connectors in my own world — and you talk about this in the book and you give examples to your community as well — again, this concept of networking is a two-way street, right? It’s not about building your Rolodex, it’s about providing value back to the community and back to the network as well, and we talk about that with social capital. But these people, what I notice they do really well, is they also are constantly connecting people into others within their network or across networks to provide value and service or to help them solve a problem that they’re struggling with. So I think you talked through examples where if you’re in conversation with somebody or somebody else is in conversation with somebody else that they may not necessarily be the best one to be able to solve that problem, but they can help connect them with somebody else, which in turn, obviously expands their network further.

David Burkus: Yeah, that’s exactly right. So if you think about, again, the purpose of networks is information, and if you think about you’re standing in front of somebody, whether you’re talking to them for the first time or the 500th time, they’re facing a problem, they’re facing an issue, just the statistical likelihood that you are the person that has the information that they need is very, very small. You’re telling me about a problem you’re having with your electric work at your house, I’ve got nothing. I’ve got a phone number of a guy you should call. That’s all I got. Right?

Tim Ulbrich: Yeah.

David Burkus: But in reality, that’s all of us almost all of the time. The likelihood that our experiences are going to be what could help them is small compared to the likelihood that we know someone who actually has that expertise. And so the best way we can provide value to individuals is usually through the network, the group of connections that we’ve already built up, the people that we already know, and offer to make that introduction. Now, what’s amazing about that is that also helps the network when we make those connections. This goes back to Adam Rifkin and the idea that a network, the more resilient it gets, the more people interconnected inside of that community, the stronger it is. It also builds what we would call social capital, the value of all of the connections you have, and it builds your own reputation as sort of a generous person as well, which makes it more likely that new connections are coming your way. You don’t have to be that sort of — Adam Grant would use the term “Master” where you’re, ‘I introduce you to somebody, now you owe me.’ You just take care of the network, and over time, the network takes care of you.

Tim Ulbrich: Yes. Absolutely. One of the common sayings connecting this to personal finance is that someone’s network will ultimately be reflected in their net worth. And I was thinking about why that may be the case. I mean, there’s so many potential reasons from some of the things we’ve talked about where as you meet more people and you’re building that network and providing value and vice versa, that’s going to take on a life of its own, which of course is going to open up more doors, you’re building your personal brand, you’re probably increasing your confidence and that can translate to negotiation and all types of things. Do you think there’s a direct connection between somebody’s network and their financial position and where that may come from?

David Burkus: Yeah. I mean, I generally love to debunk trite phrases like that, but this is one where it does tend to work out that way. And the reason, again, is that information idea. It’s twofold, right? You’re looking for information to grow your own career, you’re looking for a new — I don’t know — investment opportunity, whatever it is, you end up having access to more information and hence, more options because of that. The other thing is that, quite frankly, people rub off on other people. We respond to the social norms of the people that are around us. There’s some research that actually suggests this is not just our close contacts, but it’s a ripple effect out three degrees of separation, so the people that they know and the people that they know. So the communities that we’re a part of have a big effect on this as well. The example, Tim, to use an adjacent field, to go into my wife and I in medicine, there’s a lot of people, especially in ER, who work a ton and have zero net worth. Right?

Tim Ulbrich: Yeah.

David Burkus: And the reason is that they bought the boat and the lake house and all that other stuff, and they figured out like, oh, I can just work extra shifts, I can do overtime, and I can pay for it all. And the irony is then they’re in the community of people that own the boat and do the lake house and do the whatever, right?

Tim Ulbrich: That’s right.

David Burkus: And it’s actually the people that are pulled out of that community that are in the well, what matters is paying off my house. What matters is getting rid of all of this student loan debt, all of the stuff that got us there, those sort of things matter. That community that you’re a part of shapes your decisions as well. So and that’s the short term. The short term is that it shapes your decisions. The long term is that when you’re looking for opportunities or opportunities just find you, they’re much more likely to find you when you’ve got a broad, diverse network — again, I should rephrase that — when you’re a part of a broad and diverse network of people.

Tim Ulbrich: So David, in addition to getting a copy of your book, “Friend of a Friend,” which is available on Amazon, Barnes & Noble, Indiebound, where can our listeners go to learn more about the work that you’re doing?

David Burkus: Yeah, so the single best place to go would be the Your Financial Pharmacist podcast show notes.

Tim Ulbrich: That’s right.

David Burkus: Because my website’s great, it’s DavidBurkus.com. But if you can’t remember that, Burkus on Google, I’m like the only one with a web presence, which has been amazing and probably won’t last. But there’s a bunch of different links that you can click, but they’re going to be in the show notes anyway. While you’re there, you might even click over and leave us a rating if you really liked this or click over and buy the book because if you liked this, you’ll love that too. If you hated it, you’ll hate that too. So I would actually say go there first. And then yeah, if you want to go to DavidBurkus.com too, that would be great.

Tim Ulbrich: Well, I really appreciate it. I thank you so much for your time. And again, genuinely, your work, your research, has had a positive impact on me. And I know that’s going to be the case as well for many of our listeners. So thank you so much.

David Burkus: Oh, it’s my pleasure. Thank you again so much for having me.

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YFP 115: Financial Considerations for Job Loss or Reduced Hours

Posted on by yfpadmin

Financial Considerations for Job Loss or Reduced Hours

On this week’s episode, Tim Ulbrich and Tim Baker talk through financial considerations for those that find themselves in a financial hardship due to job loss, hours being cut or wages being reduced. With the recent news of some big box pharmacies planning to close stores and cut their workforce and many other employers cutting back hours for full-time pharmacy employees, this conversation of how to navigate a current hardship or be ready to weather a future storm is more important than ever.

Summary

Tim and Tim talk through several financial considerations for job loss or reduced hours. Some pharmacists are facing potential job loss, cut hours or a reduction in wages. Companies like Walgreens, Walmart, Kroger and Harris Teether are either closing their pharmacy doors or reducing hours significantly, leaving many pharmacists to question how secure their jobs are. If you’re in this position, what should you do or be thinking about? Tim and Tim discuss emergency funds, what to do with your student loans during a financial hardship, health insurance, what to focus on with retirement savings, the value and importance of a side hustle and networking.

Tim Baker shares that while many of this is out of a pharmacist’s control, you can start by looking at your foundation. How much credit card debt do you have? Is your emergency fund where it needs to be? By reducing credit card debt and having an emergency fund to cover 3-6 months of non discretionary expenses like rent, utilities, mortgage and loans, you’re setting yourself to be protected in case you face financial hardships like many are in the field today.

Next they discuss federal loans and when to use forbearance, deferment, or choosing an income based repayment plan. Tim Baker says that first deferment should be explored and then forbearance if needed as your interest will capitalize greatly with the latter.

In regards to health insurance when losing your job or having a change in your benefits, there are several options to consider including COBRA, short-term health insurance, exploring the federal marketplace, healthcare sharing, or HSAs.

When looking at retirement savings, Tim Baker says that typically, if you are in your 30s, there is plenty of time to right a ship that’s off course but that it’s also important to keep the fees associated with your investments low. They also talk about the importance of diversifying not only your investments but also your income by taking on a side hustle or entrepreneurial venture. This allows you to make money and also put the extra money into different savings goals depending on your passions. Tim and Tim also talk through how networking can help in times like these and the membership offer APhA has to those facing financial hardships.

Mentioned on the Show

Refinance Your Student Loans
RxRadio
RxRadio: Pharmacy’s Podcast – Episode 71: Cancel Student Loan Debt???
YFP 114: Presidential Candidates’ Plans for Student Loan Forgiveness w/ Richard Waithe
Thoughts on the Walmart Layoffs by Richard Waithe
YFP 026: Baby Stepping Your Financial Plan – The 2 Things to Focus on First
Ally
Cobra Coverage
Marketplace Insurance
Medi-Share
Liberty Healthshare
YFP Planning
YFP 112: Why One PhD Pharmacist is Taking on Two Side Hustles w/ Dr. Brent Rollins
Tony Guerra
David Burkus
Friend of a Friend…: Understanding the Hidden Networks That Can Transform Your Life and Your Career by David Burkus
APhA
APhA Membership Offer
Email APhA: [email protected]
Enter YFP’s Entrepreneurial Toolkit Giveaway

Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? Welcome to this week’s episode of the Your Financial Pharmacist podcast. And I have with me back on the mic the one and only Tim Baker, fee-only Certified Financial Planner for Your Financial Pharmacist. Tim, it’s been awhile. How are you doing?

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

Tim Ulbrich: Good. So before we jump in, it’s been awhile since you’ve been on the show. And big news for the Baker family with the addition of a baby. Give us the good news and tell us how everyone’s doing.

Tim Baker: Yeah, everyone’s doing well. And August 2, we welcomed Liam Baker to the fold. So we have Olivia who’s 4, turns 5 in October. And now we have Liam. And everyone’s doing well. I’ve got to give major props to my wife, Shea. She experienced 40 hours of labor, and we finally got to meet him on the 2nd. So it was a lot of stress I think leading up to it, but we’re happy and healthy baby, healthy mom, and now we’re kind of going through the storm of — I shouldn’t say storm, that’s probably a bad way to say it — but in-laws here and family here and trying to get into a routine and everything like that. So all good things, though, and thanks for asking.

Tim Ulbrich: Yeah. When people ask about like the birth of a child, I always feel like it’s easy to think of it as like the most chaotic, most joyous moments of your life, all wrapped into one.

Tim Baker: Yeah. And I’ll tell you what — and this came I think straight from you guys, you and Jess, like I don’t think I could have done it without our doulas. So shoutout to our doulas, our doulas were unbelievable and I think if I looked back on that experience, if they weren’t there to support Shea and myself, I think we would have been lost. And it’s just one of those things where you don’t know what you don’t know. It’s almost like a financial planner, you know, these individuals are just lovely people who are there to help coach you and advocate for you and in a world sometimes in labor and delivery where it’s almost like it’s very medicalized, if that makes sense, and sometimes, the things we manage to the lowest common denominator — obviously we want a healthy baby — but do we have to do this procedure? Do we have to do this? Or it gives us some time to think about it, and I think that really when we compare Shea’s birthing experience for Olivia versus Liam, they’re so different. I think the doulas are a big part of that. So not to get on a tangent about that, but that was a great process or great to have them on the team.

Tim Ulbrich: Yeah, and the value of a coach is real, right? Especially in this situation and this exciting time in life but also very stressful one. And a shoutout to YFP team member Caitlyn, who helps us with the podcast and lots of things with YFP who is also a doula, helping people up in the northeast Ohio area. So let’s transition and talk about this week financial considerations for those that are facing potentially a job loss, hours that are being cut, a reduction in wage, and this topic I think is really more important than ever in the profession if you think about the recent announcement by Walgreens and its plan to close 200 stores in the U.S. Obviously, we have others; this isn’t an isolated story. WalMart had made similar announcements. We have many others that have cut hours, notably would Kroeger and Harris Teeter. It seems like 32 is really becoming more of the norm when it comes to a community pharmacy practice, and we’re seeing certainly wages that are being reduced as well. And so I think this conversation about what should one be thinking about if they find themselves in this situation, whether that be a job loss, whether that be hours cut, or whether that be a reduction in wage. And oh, of course we’re not seeing a slowing down of the student indebtedness with the most recent data from the class of 2019 showing now an average just over $172,000. So Tim, before we jump into the strategies and what one should be thinking, what do you make of all this and what we’re seeing out there in the profession?

Tim Baker: It’s a great question, Tim. I mean, I am not — I think you and I have stated multiple times and just in our view on things is that I think we are very much the optimist. But I’ve seen it with clients that have come through my door where they’ll — it’s like OK, we’re talking about their financial plan and their net worth and income, and I’ll say, “OK, what’s your annual income?” And I work with two full-time community pharmacists, and they’re making in the $70s each. And you know, at the end of the day, I think this is all cyclical. Like I think right now, we’re in a position or the profession is in a place where it’s kind of right-sizing, and I think we’re going to see that from a job perspective, probably even an education perspective. So I think that this is something that we definitely have to I think talk about and talk through. And I think that’s where YFP I think can play a role is kind of talk through these issues and what we can do financially, but I think also what we can do as a profession — and this is me as an outsider speaking about pharmacy. But it concerns me, I think. You know, when you’re looking at a full-time job of $70,000-80,000, and you still are carrying $170,000, $270,000, $300,000+ in loans, which I see, that’s concerning, you know. And the political climate out there is such that our leaders, at least what you see on the Democratic side, and we’ve heard it from President Trump, I think there’s attention that is at least being paid to this crisis, or whatever you want to talk about. But at the end of the day, there’s a lot of things that we can’t control. And there are things that we can control, and I think what we want to do is kind of shine a light on the things that we ultimately can control and at least get something to think about and to chew on, and I think that’s really our purpose in this episode.

Tim Ulbrich: Yeah, absolutely. And we’re going to jump into those things that we can really focus on and one can control. And before doing that, I want to give a shoutout to Richard Waithe from RxRadio. And him and I talked on our podcast last week and also on his show about the debt cancellation that’s being proposed by the 2020 candidates. But what I want to mention here — and we’ll link to our show notes — I think he did an awesome job, to your point about starting and sparking a conversation, he wrote a great post on Medium that we’ll link to that talks about some of the WalMart news and other cuts and what we should be thinking about as a profession and those within that profession. And I think I’m with you. We need to have a constructive conversation, and I feel like there really isn’t a great venue for that to happen right now. But I think that’s where we’re going to see really a lot of creativity and innovation in what we can be doing going forward. So let’s jump in. What can people control? And I think No. 1 what comes to mind, Tim, for me is really developing a sound financial base. So here, I’m really thinking prevention that if somebody were to find themselves in this position, if they have their financial house “in order” or those that aren’t yet in this position but maybe find themselves in that position in the future that they can really weather a storm like this or maybe even put themselves in a position to be more opportunistic if they’re dissatisfied with their work or they want to find something else to do. And we talk on this show all the time about having a sound financial base, having your financial house in order. So when you’re working with clients, what does this really entail in terms of putting yourself in a good position?

Tim Baker: Yeah, so I think the thing — and we talked about this in Episode 026, Baby Stepping Into a Financial Plan, which I look back at I think with this episode is it’s so long ago that I think we talked about it, it’s worth bringing up again. I think the two things that I look at when I first kind of do a once-over to someone’s financial situation is what does the consumer debt look like? So I’m not even really concerned about the student loans as much because there’s a lot of things that we can do to kind of mitigate the cash flow or the repayment of those loans. The thing that I look at is what essentially do the credit cards look like? And unfortunately, I feel like more and more pharmacists that come through my door, we have a good amount — I’m talking $10,000 or more — of credit card debt that we have to really reconcile. So you know, I think figuring that out is probably first and foremost. I think secondarily is it goes back to the emergency fund. So typically when we don’t have an emergency fund, that’s when we’re reaching for the credit card when something comes up. So the emergency fund really allows us to have peace of mind so we have cash money set aside in case something were to happen, it allows our investments to keep kind of working. So we don’t want to be pulling money out of our 401k or any of our investments that are really tailored to more of a long-term approach.

Tim Ulbrich: Right.

Tim Baker: And it allows us to avoid the credit card debt, so we’ve talked about at length of why this is important, and this is typically 3-6 months of non-discretionary monthly expenses, which are just a fancy way to say if you lose your job or your hours get cut back, these are the expenses you’re going to have regardless: your rent, your mortgage, utilities, your loan payments, that type of stuff. So I think at the end of the day, those two things, from a foundational standpoint, is the consumer debt in check? And you know, is the emergency fund in place or at least phase one? Sometimes I’ll say, “Hey, client, you need $30,000 in an emergency fund,” and they’re like, they might have $10,000 worth of debt, so we kind of take it in bite-sized chunks so we can achieve that goal.

Tim Ulbrich: That’s one of the things you boo, right? Go home, Tim Baker.

Tim Baker: Yeah, yeah. And the thing about it, and I kind of talk about this at length with regard to the investments, it’s really boring to pay off a debt, right? It’s just boring. There’s nothing exciting about it. It’s really boring to save money in an account. I mean, I like doing it because I like to see my interest payments go up, I know interest rates have gone down, so we’re big Ally nerds, and I think their interest rate has gone down to 1.9%, but it’s still 20 times better than the next guy. But that’s really not — a lot of people would compare it to watching paint dry. But I think sound financial planning for the most part is super boring. So yeah, I might get booed off the stage when I say, “Hey, pay off this debt,” or “Save this money,” or “Be really, really boring with regard to your investments,” but at the end of the day, I think it’s kind of the best interests of the client.

Tim Ulbrich: Well, I think there’s a great opportunity for people to reflect, myself included, yourself included, that you know, while you may not have been impacted by some of the recent cuts or job layoffs, any one of us is vulnerable to this at any given point in time.

Tim Baker: Yeah.

Tim Ulbrich: And obviously, there’s things we can do to help protect ourselves, but if you can envision a situation where if you find yourself in a job loss or hours cut or wages reduced, and you imagine Scenario A where you’ve got $20,000 of credit card debt, no emergency fund, Scenario B where you’ve got no credit card debt and a fully funded emergency fund, the stress associated with those two scenarios is very, very, very different. And so I think that’s a great reminder, as you mentioned, Episode 026, we talked about it. The other thing I think worth mentioning here — and we talk about this a lot in terms of budgeting and really thinking about the future — is these are moments where, again, even if you haven’t been impacted, to just take a step back and say, “What can I do to create margin in the month-to-month?” so that if I were to find myself in a position like this, either you can weather it or it may not necessarily hurt as much or you can work through having several months where you may not find yourself having an income coming in. So again, you think about if somebody’s in a situation where they’re used to making $7,000 of net income per month, and they’re spending $7,000 or more of net income per month, versus somebody’s who’s maybe only spending $3,000 or $4,000 of that net income per month because of house payments and car payments and all of the other things that we’ve talked about before, obviously, again, those are two very different scenarios. So I think there’s wisdom in all of us hearing this message and taking a look at our financial plan to say hey, what can we do to build margin and take some of the pressure off if we would find ourselves in a situation like this.

Tim Baker: Absolutely. Yeah, I mean, one of the things that we kind of brushed over here recently is about interest rates. I mean, some of that margin could come from just restructuring debt. So you know, if you bought a home, and your interest payment is 4.75%, you might be able to — if we consider closing costs and things like that, it might make sense for you to do something like that. I mean, that’s something that doesn’t really test your kind of putting you outside of your comfort zone, so a lot of things when we examine inflows like making more money or outflows, cutting expenses and tightening the belt, it’s typically outside of our comfort zone, and we don’t like to do it. But it might be something as savvy as that, taking advantage of where interest rates are to kind of create that margin. But there’s lot of ways to do it.

Tim Ulbrich: Second area I want to talk about is potential need for deferment or forbearance of loans. So obviously, we have people that are listening that have been impacted by this, may currently find themselves in a position where hey, I don’t have work or I have such reduced hours or wages that I just cannot make the payments that I have. And so here inserts this option of potentially deferring or forbearing loans, which we know is not the ideal scenario but may be the reality for some people. So talk us through what is deferment, forbearance? What’s the difference? And what are some of the considerations here?
Tim Baker: Yeah, and when we typically talk like deferment, forbearance, grace period can be like also rolled up into this, it’s essentially periods of time where you don’t have to pay off your loans, where you’re basically out of school, sometimes you might be in additional training, so that’s where we talked about — and this is one of the things that I love we talk about, Tim, moving the needle. I rarely come across a resident that I work with that will automatically say, “Oh, I’m deferring my loans,” which makes me happy because I know when we first talking on the subject, I would ask a resident, “Did you defer your loans during residency?” or “Are you doing it?” Yeah, I feel like the majority of them would. So I feel like that message has come out. So like we say about the grace period, it’s not very gracious, you know, the deferment and forbearance, they’re not good. We’re really look at these as really stopgaps, like you said, Tim, when we can’t make the payment. So I typically follow the alphabet and go, deferment first — D before F — and then forbearance, typically because of how interest accrues. On some loans like Perkins and subsidized Stafford loans or direct loans, in the deferment period you may not be responsible for paying off the interest that accrues. And typically, it accrues during those deferment periods or forbearance periods and then the interest capitalizes, meaning it moves from the interest column to the principal column. And then when you’re paying back that amount of money is now bearing more interest on the bad side of things. So you know, the big thing to remember is that ultimately, one of these is typically going to be available to you, either deferment or forbearance. And I would say look at deferment first, go to forbearance second, because typically, the forbearance is for a financial hardship, that type of thing, but the deferment will be a little more gracious. So I would say if this is a you need to do this, which I would advise against, but sometimes you have to do what you have to do, go that route because it’s going to give you a little bit more runway to get your financial house in order, try to figure out ways to make the income, find a job, side hustle, whatever it is. The big con is ultimately not only are you not putting a dent into the loans, they’re growing, unfortunately. And for the amount of loans that we’re talking about with pharmacists, it can grow substantially. So you could wake up — and the terms vary. Sometimes it could be 12 months, I think some deferment periods can last up to three years. That’s a long time for you to be sitting on a loan that on average, 6-6.5% interest, that can really add up over time. So at the end of the day, what you want to do is on the federal side of things, with federal loans, this is a no-brainer. This is actually one of the benefits that the federal loan system provides is that if during a hardship or during a period of time where you can’t make the payments, they’re going to work with you. And the reason for that is that loans are not discharged during bankruptcy proceedings, so they’re not going away. Even if they do, the federal loan program is backed by the full faith and credit of the U.S. government, which has us as taxpayers to be able to support the. So this is kind of a no-brainer. And at the end of the day, the government collects more in interest the longer that you pay off or the longer that you defer. On the private side of things, it’s a different ball game altogether.

Tim Ulbrich: Yeah, and I think that’s worth noting because when we talk about on the private side of things, obviously you’re now at the mercy of the private lender — and mercy may not be the right word, that makes it sound terrible — but the reality is that we talk about this all the time: When it comes to refinancing your loans with a private lender, full transparency, you have to consider both the pros and cons in that. And while many of these lenders have really come into line with having all of the benefits — or many, if not all — of the benefits of the federal system, one of them that you have to consider is one important one here that we’re talking about is if you were to find yourself in this position, what’s going to be the option if you don’t have a deferment/forbearance option with a private loan? So how have you handled that with clients? Or what advice might you have for them? Because they’re probably not going to just throw this out there and market it and say, yes, we’re going to offer you forbearance or deferment. So you’re probably going to have to dig a little bit deeper here.

Tim Baker: Yeah, one of the risks moving from — although we believe that — so when I first started advising clients on student loans, basically, what we were told is never have the client move from the federal system to the private system. So never have them refinance. And obviously, the big reason was because of all the federal protections: They forgive upon death or disability, there’s forgiveness, there’s lots of different plans that you could pay off the debt, that’s also hardship. Now, because this is a $1.5 trillion issue that affects 45+ million Americans, a lot of these companies have said, hey — the CommonBonds, the SoFis, the LendKeys of the world — have said, “Hey, we’ll match those benefits. We’ll forgive upon death and disability, we’ll try to make you basically as similar to the federal system as we can.” Now, one of the things where I think they fall short a lot of times is a lot of these companies don’t necessarily advertise that they’ll work with you on a hardship. Kind of behind closed doors, I think that they will because at the end of the day, they want what you want. They don’t want you to — you can’t really default on the loan. Well, you can default on the loan. But it’s not going to go away. So eventually, what the companies will do is they’ll sell the loan for pennies on the dollar to a collector, and then they kind of hound you for it. They don’t want that because they want to get as much of the interest and principal paid back as possible. So what I would say to someone that has private loans that is struggling to make the payments is just level with them. I think pharmacists have a little bit more cash because you have a professional degree, you have the ability to make a good income, even if it’s not now but in the future once you kind of get sorted out. So to me, it’s just level with them and say, “Hey, I want what you want. I want to be able to pay this back, but I need some time to figure this out, or I need some grace.” And I think more often than not, they’ll figure it out. But at the same time, they are running a business. And they are not backed by the full faith and credit of the U.S. taxpayers, so sometimes they might call you on the loan, and then you’re kind of left paying with it. So it’s a little bit of give-and-take. Obviously, when you move from the federal system, you’re getting a better rate, but there’s a little bit less flexibility in repayment. And sometimes, a hardship is chalking that up to that.

Tim Ulbrich: Yeah, Tim, I think that’s a great point in terms of the private companies and at the end of the day, they’re running a business. I think this is also a good time to remind our listeners that are in the federal system that maybe haven’t refinanced their loans to the private sector that before they go through and pursue a deferment or forbearance option, is to see whether or not one of the income-driven repayment plans, if they’re not already in an income-driven repayment plan, would allow them to right-size their payment to match the income in terms of the time period that they may have a reduced wage or have lost their job. Of course, deferment/forbearance always being an option, but not overlooking the income-driven repayment plans that might provide some temporary relief without having to go into a deferment or forbearance situation.

Tim Baker: Yeah, and I think one of the — we often talk about — especially on the federal side — there’s lots of flexibility in repayment, and I often say it’s almost too much flexibility because there’s so many different options with the different repayment plans and deferment and forbearance. And what it typically does is it just confuses people in terms of like what they should actually do in practice when things are normal. But when they’re not normal or when things aren’t going as well from an income perspective, it’s actually a good thing on the federal side. And just to recap, like I said, the private companies, they do want you to pay back the loans, so they’ll try to work with you I think the best they can. But sometimes, they’re not going to be as flexible as the federal system. So again, lots of flexibility in the federal system. But I think there’s typically an avenue for everybody that might hurt the long-term gain or long-term approach to the student loans but can give you some relief in the short term.

Tim Ulbrich: Yeah, and I think to wrap up this section here as we continue to reemphasize the importance that when you’re refinancing student loans or looking into refinance, of course, interest rate is a big variable. You want to calculate the savings. But it has to be the savings plus looking at some of these other variables. And I think that’s more important than ever now as we see rates continue to drop. Those refinance offers are going to become attractive. Here we are in September, end of August 2019, that making sure you’re looking at OK, what are some of these other benefits that you may be losing from the federal system, although you’ve talked about those have really equalized across the board. But certainly it’s not an apples-to-apples comparison between the two.

Tim Baker: Sure.

Tim Ulbrich: So again, as we continue this journey talking about financial considerations for those that have potentially a job loss, hours cut, or reduced wages, we’ve talked about first developing a sound financial base, really the prevention aspect. Then we talked about loan deferment or forbearance. I think the next thing, Tim, we need to talk about is if somebody ends up in a situation where they lose their job or potentially they get hours cut to a part-time where they no longer have access to health insurance benefits, or I know we have several side hustlers out there that may make the decision to say, hey, I’m going to jump ship from my day job and ultimately, they carry the responsibility of health insurance coverage. But this factor, especially if you’ve always been used to having employer-provided health insurance, is a huge consideration. I mean, the cost of this is no joke, right, Tim, when you look at this relative to the rest of the plan?

Tim Baker: Yeah, absolutely. And this is one that’s going to be dependent on the region or the state that you live in in terms of the coverage. This one’s a hard nut to crack, and I’m of the belief hopefully that eventually, the employment will be separated from this benefit and that everyone can get coverage separate from who their employer is because I think it is one of those things that sometimes, it prevents people from moving away from a job that isn’t necessarily a good fit for them and they feel stuck. But it’s either looking at the exchange per state — and some states, you can really find something that can fit your needs, and other states, there’s almost nothing available. But the big one — and Tim, I think you have some experience with this here recently — is going to be COBRA and what that basically provides for people in kind of a transitionary period.

Tim Ulbrich: Yeah, and I think this question’s really interesting because I think it’s just a good activity for everyone to look at, even if you’re not foreseeing a situation where you leave a job is to look at what you’re paying out of pocket per month for your plan and what percentage that is of the overall cost. I mean, most likely, the employer is carrying about 90% of that, right? You know, varying degrees, obviously less or more, varying degrees depending on how catastrophic the coverage is or not or high deductibles, all those things. But at the end of the day, again, it’s easy to get lulled into this is one of the real benefits, just like we’ll talk about here in a moment with retirement where if you have a match provided and then all of a sudden that’s fully on your back, you’ve really got to factor that in, especially for those that are thinking about making a jump that’s of their own choice, especially to pursue some type of entrepreneurial option or side hustles. You’ve really got to factor this in when you’re thinking about your business, pricing your services, all of those things because often, people will say, “OK, I’m making $100,000. I need to replace $100,000.” And obviously, we know it’s probably more like $150,000-200,000 when you factor in all those other things. So yeah, Jess and I actually had a little bit of experience with this last year when we made the transition down here to Columbus from northeast Ohio, and we were looking at, OK, what are our options for health insurance coverage? And the reason why we were looking at this is we made a really specific decision for our family that we’re going to take two months off in the transition, which was awesome. And then we had the holy cow moment of oh, wait a minute, we have three kids, and we’re not going to have any health insurance, so what’s the game plan? So the most obvious option we ran into is Cobra, which is essentially extending your employer coverage that is offered to you for a period of time, but you’re going to really foot the bill for doing that. And this allows you to take out the plan you have now, you know who’s in network, you know who’s not in network, especially if you’re staying in the area, you’re comfortable with the offering of what’s there, so it’s essentially the continuation of your coverage that was being fully funded by your employer or a combination of employer and you, and now you’re able to continue that offering, have access to that offering, but really, the cost is going to be on you to do so. And the reason we didn’t go through this — and this is really a good bridge option for many people, especially if this is only a 3-6 month period is that the plan that we had offered at my previous employer was so rich and we necessarily weren’t really using a lot of those benefits that we looked at the cost and said, “Wow, like we don’t really want that,” and I think this really highlights us having the opportunity to talk about the importance of an emergency fund that if you have a fully funded emergency fund and you’ve been relatively healthy, you may not necessarily want to pay out of pocket for an expensive Cobra coverage. Or if you’re looking at options in the exchange, you may be able to take on something that has a little bit higher deductible or that has more catastrophic coverage because of the other savings and funds that you have. So Cobra is certainly an option. The other option that I honestly, Tim, wasn’t aware of, is short-term health insurance. And we ended up doing this when we took a couple months off between jobs because at the end of the day, it was cheaper than Cobra, and for us, it really just provided what we needed, which was catastrophic coverage. So the cost of this was really, really significant in terms of the savings, pretty simple to get signed up, simple to find, so for those that are relatively healthy, have a good savings in place, I think this is a good option. If you’re looking longer term, I think of course the exchange, all those you mentioned, state-to-state you’re going to see a significant variety. From my experience looking at some of those, those policies, many of them are very expensive, even just for catastrophic type of coverage. But obviously, healthcare.gov is a place to go to look there. Then the other one that I think is often overlooked are some of the healthcare sharing service organizations that are out there. You probably have heard of terms such as MediShare, Liberty HealthShare, these are essentially individuals that are coming together, a lot of them are faith-based organizations that come together with the idea that you as a community are, through contributions, sharing in the cost and essentially pooling together money and resources that can help fund one another. So that, of course, has upsides and downsides. And then if somebody moves into the route of being self-employed through opening up their own business, then of course, you have the opportunity to open and provide health insurance coverage through yourself and the tax advantages and benefits that come with that as well. So I think at the end of the day, for most people that are listening that may find themselves as one of those pharmacists that either is losing their position or is getting cut down to part-time hours, doesn’t have healthcare coverage, most likely, they’re going to be looking at either Cobra coverage for that transition period or potentially some short-term health insurance really would probably be the two predominant options.

Tim Baker: Yeah. The other thing that we talk about more is almost like a longer term stealth IRA is the HSA where that’s something that if push comes to shove, you can use for medical expenses in the near term. We talk about as a triple tax benefit account that can almost act as a secondary retirement account. But if push comes to shove and we need to dip into that, I mean, by all means. I think having that as part of the overall thing to tap into is something to look at as well.

Tim Ulbrich: That’s a great point. Next bucket, Tim, is this idea that people in this situation may find themselves with a loss of the option of saving for retirement through an employer-sponsored account. So if they no longer have their job, they can no longer access a 401k or 403b, maybe they’re losing the match, or even just the option to contribute to that beyond the match or even in the absence of a match. So if you’re working with a client who’s in this situation, how would you handle this in terms of evaluating, OK, are we just going to put on pause through this temporary time of hardship, and what are the things we’re going to be looking at? Or if we do want to continue to save, what are the other options that are out there?

Tim Baker: Yeah, I mean, typically, when we’re looking at a situation like this where it’s either job loss or maybe even significant cutback in hours, you know, this is kind of an emergency situation where we might not look at even getting the match. Most of the time, I would say, get the match as best you can. But I think this is where some people can get in trouble with kind of the longer term because it’s really hard to put numbers and calculate, OK, if this happens, what are the long-term repercussions? So one of the exercises that I think we do at YFP Planning, which I really think kind of turns the light on, is actually just taking a client through a nest egg calculation and showing them, OK, if we give a set of certain assumptions and kind of we can see what your current savings rate is, what you have saved, how long we have until retirement, we can kind of see are we on track or off track? And then we can take some of those variables and change them to say, OK, if before, we were putting 8% in and now we drop that to 4%, how does that change the overall bottom line? So I think if I was working with a client, that’s essentially what we would do. And most of the time — I wouldn’t say all the time — but most of the time, given the fact that the majority of the pharmacists that we work with are kind of in their 30s, there’s a lot of time between now and retirement to kind of right a ship that’s not necessarily on the right track, but my belief is that from an investment perspective when it comes to retirement investment is trust in the market. It will take care of you over long periods of time. So my thought is to be fairly aggressive with those accounts and make sure that expenses are low. So I think when you couple those two together — I had a couple recently that they felt, I think they were in their late 20s, didn’t have a whole lot saved for retirement, just getting started out, and we kind of went through the numbers, and I think they were like flabbergasted that they weren’t like 10 or 20 years behind. So I think when we actually do the numbers, it can be a powerful reassurance to see if the variables change, how that changes the overall thing. But you know, I think, again, this wouldn’t be something that I would necessarily fret at in the short term if we were in this scenario because I think at the end of the day, this could be figured out.

Tim Ulbrich: So Tim, I think it’s worth talking through here, you know, somebody who finds themself in a situation like a job loss, maybe even a time period before they find another opportunity, so they have this 401k or 403b account that’s sitting there. What do you typically advise — or maybe better yet, what are the factors or variables you’re helping a client think through in terms of determining, do I leave those monies there as is until I may have a new position that I can make that decision to compare what I might get in an IRA versus what my new employer offers? Do you move forward with a rollover into an IRA? How do you typically work that through with a client?

Tim Baker: Yeah, so to me, this decision really begins and ends with expense. So in a 403b, 401k environment, I always say that we have to operate within the sandbox that the employer and the custodian, whether it’s Fidelity, Vanguard, whoever it is, allows us to basically play in. So in those retirement plans, you typically have 20 or 30 different investments that you can put your money towards, and that’s it. In an IRA environment, the world’s your oyster. You can invest in just about anything that you’d like. So but I think the big difference is that in the 401k, 403b environment, it’s not as transparent as we would like. So most people, they sign in, they say, oh, I’m putting 5% in, here’s x amount of funds, I like these four or five or six funds, and then that’s it. But what they don’t know is there’s typically a lot of fees that are associated with that that are very opaque to them. So I actually did an analysis with a client here in Baltimore. He’s one of the clients that is not a pharmacist, but he has a 401k with a major company here, and basically, when we went through his analysis, I had not yet analyzed his 401k yet, but he has an IRA with us, and I say, “Look. Depending on when we do the analysis, depending on what comes back in terms of like how expensive your 401k is, is going to really determine if we should contribute future dollars to the 401k or to the IRA.” So when I did the analysis this morning, and his 401k was about five times more expensive than the IRA that we have. So basically, the move was to keep his 401k contribution static, so basically get the match. And then as he increases his contribution to his retirement account, it will go into the IRA until we max that out. So this is kind of — and sometimes, this can be shades of gray. This is like looking at expense ratios of .1% versus .05%, so it’s very, very minimal. But if we’re talking hundreds of thousands of dollars or even millions of dollars over the course of a career, that stuff definitely adds up. So the decision, longer answer, Tim, the decision to move those monies is going to be dependent on the actual plan themselves. You know, if you’re in a TSP, as an example, those are really efficient funds. But what most financial planners will say is they’ll say, “Hey, move the funds for me to manage,” because that’s typically how they get paid is the investments that they’re managing. So it’s typically sound advice, but not advice that is not necessarily in the client’s best interest. So I say it just depends on what the analysis shows, if that makes sense.

Tim Ulbrich: Yeah, absolutely. I appreciate the insight. I think fees, at the end of the day, we’ve talked before on this show, the impact those can have. And with a few exceptions, I think you mentioned the TSP being one, and maybe there’s a couple others out there. I mean, more often than not, what we’ve seen is that employer-sponsored accounts just typically don’t always have as low of fees as you can get out there in the open market through index funds and other things. But I think being aware of where the advice is coming from is really important as well. The next one we have here is the value and importance of a side hustle. And obviously, we’ve talked at length on this show, we’ve had lots of examples as recent as Brett Rollins coming on the show to talk about his two side hustles in writing for Pro Football Sports and then doing some work around expert witnesses and his area of expertise. But when it comes to side hustling, especially for those that are potentially in a time period of loss of job, reduced income, reduced wages, what do you see as the value of this side hustle in addition to, of course, just what they’re going to get from potentially the monetary income?

Tim Baker: Yeah, you know, when we talk through like a savings plan for a client, when we do goal-setting, we’ll talk about things like, what are the things that are important to you? And a lot of people will say, you know, it could be travel, it could be starting a side business, it could be whatever that — retiring at a certain age. So we typically like to marry up what they’re actually passionate about in life and what they want to do with kind of how we’re deploying our savings and our money. So one of the things I like to kind of point to is basically a savings plan. So the baseline or the bedrock of that is going to be the emergency fund, but it might be where we have a savings plan for our trip to Disney World. We have a savings plan for Benji, our dog, so when he gets sick or he needs grooming. So one of the things I really like about the savings plan is that it clearly shows where the money comes from. So for nine out of 10 of us, it’s going to be like a paycheck, right?

Tim Ulbrich: Right.

Tim Baker: So when we talked about at length with Shea and I, when we basically funded our trips to Disney World, Brazil, and Iceland through Airbnb and Rover, in our savings plan, that’s what we outlined was that everything else was paycheck except for those two things or that one thing was all going to be from those dollars. So what I like to clearly show to clients is that typically, all of our proverbial income eggs are in one basket. It’s going to be WalMart, like we talked about in the beginning of the show, or it’s going to be a hospital, or it’s going to be CVS, whatever it is. We’re at risk because if a decision is made in a boardroom in some city in the country, it can affect all of us. So my belief — and I understand that I’m biased because I’m an entrepreneur, Tim, you’re an entrepreneur — but it should be to not only diversify our investments but to diversify our income streams. One of the conversations that we’re having in our household is, Tim, is about YFP profit distribution. So as we distribute profits to the business owners, Shea, what should we be doing with this money? So like for me, it’s like, I really want to buy an RV and travel the United States. So that might go into an RV fund. Or it might be, we really need to catch up on retirement, so it might go strictly into retirement. But I like to clearly delineate lines of income for a purpose. And part of that is to show that most of us are very susceptible to kind of a one-income or two income streams if there’s two people in the household.

Tim Ulbrich: And one of the things I love that you do with your clients — and Jess and I have experienced this firsthand in working with you — is you mention as you’re working through that savings allocation worksheet, if you have a prioritized list of what you’re working on, when that extra income comes in the door, boom. Like there is no question about where that is going. It doesn’t go off into the ether of no-man’s land or expenses come here or there. So I think the clarity, and obviously, that then gives you that feeling of acceleration of your financial goals, which fuels on itself and I think helps things move forward. The other thing I really love — and we’ve experienced this personally, and I know we’ve heard this over and over again from the guests we’ve had on the show — is that while there’s not a direct monetary value necessarily from it, but that value of having a creative outlet, you know, where you can really contribute to something that you’re really passionate about and that you want to implement and to have the fun in terms of the creative side of the business and working through the problem and the challenges. And I think especially for people that find themselves stuck or dissatisfied in their day job, I think beyond the cash, there’s incredible value in being able to have that creative outlet while you may be pursuing other opportunities or even just working through that difficult time.

Tim Baker: Yeah, and I think one of the things that is worth mentioning — and I remember something that I think Tony Guerra said that I’ll paraphrase — is like, he almost set his schedule off the bat at like a 32-hour schedule so that he could have one day of just thinking or working on different progress.

Tim Ulbrich: The entrepreneurial 8.

Tim Baker: Yeah, exactly. So to me, a lot of people sometimes bemoan the fact like, oh, I can only get three days this week or four days this week. To me, I would flip that on its head. It’s like, well now you have a day or two that you have capacity to do something else that you can monetize your time in a different way. So and sometimes, it’s just getting there and getting outside of your head or maybe doing something that you would never do. Like I said, like when I launched my business, Tim, I drove Uber. And it was one of the best jobs because I love to drive, and I love to talk to people. But for me, when I was launching my business, I was just stuck in a room and I was kind of bouncing off the walls. But when I got out and looked at the world in a different space and talked to different people, it made all the difference. But to me, it was to earn income so I could pay my rent and feed myself. But it was also to think through a problem or work through a problem or do something that’s kind of outside your comfort zone. So I think sometimes with a lot of pharmacists that we work with, I say, “Hey, look, whether you’re growing top-line revenue, top-line income or cutting expenses, typically, both of those things are going to be outside of your comfort zone. But I think doing a little bit of both is good, especially to tighten the belt if you’re expecting hey, I thought I was going to make $120,000, but now I’m only making $80,000-90,000. So I think capacity in your workweek is something that we should value and really try to figure out ways to go from there.

Tim Ulbrich: I agree. And one of the last things I think about with a side hustle, which takes us into our last plan around networking and professional development, that I don’t think it’s talked about as much as the extra income and the creative outlet is this idea that as you pursue a side hustle, as you get yourself out there, as you meet more people, you’re naturally going to expand your network, right? And you’re going to take yourself out of your comfort zones, you’re going to have to really talk about the work that you’re doing and why you have a solution to a problem that needs to be solved. And those are skills that if you’re working in a 9-5, let’s say a traditional community pharmacy job is one example, you’re probably not forced to do those things. And your opportunities to expand that network may be a little bit limited unless you take that step above and beyond yourself. So I think this last point here of networking and professional development — and this timing is really good as next on the show, we’re going to have David Burkus, the author of “Friend of a Friend,” to talk about this concept of hidden networks and really redefining how we think about networking and why networking is so important, not when you need it in the moment of holy cow, I don’t have a job, I now need to tap into my network, but why you should be fostering and developing that network all along. So stay tuned to next week, we’re going to talk about that a lot more. I think this is also a good chance, Tim, for us to highlight what APhA is doing here as we continue to partner with them and value their partnership, is they just a couple weeks ago announced that they’re offering complimentary APhA membership to those that have found themselves in a position where they have been laid off or work hours have been significantly reduced, and they’re really positioning this as for people, whether they need CE, whether they’re looking to network, they’re trying to find new opportunities, pursue new skills, that this membership that they feel like will help them do that. And I really commend them for doing that. I think there’s been a lot of discussion nationally about hey, national organizations, where are you in this difficult time? And this is really somebody stepping out there and saying, we’re going to invest in this. And this is one way we’re going to show this is a priority. So for those that find themselves in that position of either a job loss or hours that have been significantly reduced, you can email the APhA membership team at [email protected]. Again, that’s [email protected]. Or you can call APhA as well, and it sounds like they’re going to be able to move that forward, which we’re excited about. So networking, professional development, when you think of your journey, Tim, and the work that you’re doing obviously now with YFP, but formerly Script Financial, I mean, how important — I hear you talk about a thousand cups of coffee all the time, right? I mean, this concept of networking.

Tim Baker: Yeah. No, it’s true. I mean, when I kind of had this Eureka! moment, I’m like, I’m going to start a fee-only financial planning firm for pharmacists for Gen X, Gen Y pharmacists, I’m like, I’ve got a lot to learn. So that 1,000 cups of coffee really put me on the path so when I sit in front of prospective clients, and I say, “Hey, prospective client, these are typically the things that I hear, and by the way, we have a solution to kind of hope ease some of that pain,” most of the time, they’re like, “Wow, Tim, you just described my life. Yeah, I’m struggling with debt. And yes, I’m unsure about my budget or my long-term projections and things like that. So to me, it’s so huge. And I think that any way you can expand your network, not just for — I think looking at it from like how you can help others is the best approach, not necessarily being in it for yourself, is the way to go. So I’m looking forward to that episode.

Tim Ulbrich: Well, great stuff, Tim. I want to remind our listeners if they’re not already aware and if they’re here listening at the very end of August, we’ve got a few days left in our exciting giveaway for the end of this month. So for those that are interested in pursuing something entrepreneurial, building off what we talked about today, or a side hustle, but if you’re not sure where to get started, we’ve got a giveaway for you this month that includes some awesome books and resources that will hopefully help spark some ideas and remove some of the barriers to getting started. So for three different winners, you will receive a copy of some great books: “Will It Fly?” by Pat Flynn, “Failing Forward” by John Maxwell, “The $100 Startup,” “The Freedom Journal,” and, of course, a Hustle Mode T-shirt. What would this be without a Hustle Mode T-shirt? So giveaway ends end of August, Aug. 31, 2019, and for those that are interested, you can sign up at YourFinancialPharmacist.com/giveaway. Again, YourFinancialPharmacist.com/giveaway. And if you’re hearing this after the end of August 2019, don’t worry. You can go to that same URL, and it’s likely we have another giveaway that’s ongoing right now. So Tim, as always, great stuff and looking forward to connecting soon on future episodes.

Tim Baker: Yeah, thanks, Tim.

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YFP 114: Presidential Candidates’ Plans for Student Loan Forgiveness

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Presidential Candidates’ Plans for Student Loan Forgiveness

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

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

About Today’s Guest

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

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

Summary

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

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

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

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

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

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

Mentioned on the Show

Episode Transcript

Richard Waithe: Tim, how’s it going?

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

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

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

Richard Waithe: That should be in the rules.

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

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

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

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

Tim Ulbrich: Yeah.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Richard Waithe: So like a lifestyle tax almost.

Tim Ulbrich: Yeah, that’s right.

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

Tim Ulbrich: Yeah.

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

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

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

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

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

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

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

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

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

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

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

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

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

Tim Ulbrich: Yeah.

Richard Waithe: That’s a lot of information.

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

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

Tim Ulbrich: Yeah.

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

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

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

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

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

Tim Ulbrich: Yeah.

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

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

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

Tim Ulbrich: Thanks, Richard, appreciate it.

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YFP 113: Is Your Home an Asset or Liability?

Posted on by yfpadmin

Is Your Home an Asset or Liability?

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

About Today’s Guest

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

Summary

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

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

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

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

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

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

Mentioned on the Show

Episode Transcript

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

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

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

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

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

Nate Hedrick: Exactly.

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

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

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

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

Tim Ulbrich: Yeah.

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

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

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

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

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

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

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

Tim Ulbrich: Oh, for the love…

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

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

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

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

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

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

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

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

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

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

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

Tim Ulbrich: Wow, wow.

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

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

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

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

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

Tim Ulbrich: Yes. Yes.

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

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

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

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

Nate Hedrick: Yeah, exactly.

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

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

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

Nate Hedrick: Yeah, thanks for having me.

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

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Why One PhD Pharmacist is Taking on Two Side Hustles

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

About Today’s Guest

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

Summary

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

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

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

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

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

Mentioned on the Show

Episode Transcript

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

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

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

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

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

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

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

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

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

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

Tim Ulbrich: That network, yep.

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

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

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

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

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

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

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

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

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

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

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

Tim Ulbrich: Amen to that. Yeah.

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

Tim Ulbrich: Yeah.

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

Tim Ulbrich: Great wisdom.

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

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

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

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

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

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

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

Tim Ulbrich: Right.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Tim Ulbrich: Yeah.

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

Tim Ulbrich: Automation.

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

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

Brent Rollins: Thanks, appreciate it.

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YFP 111: How One New Practitioner is on FIRE

Posted on by yfpadmin

One New Practitioner and His FIRE Journey

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

About Today’s Guest

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

Summary

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

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

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

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

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

Mentioned on the Show

Episode Transcript

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

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

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

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

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

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

Tim Ulbrich: Well done, yes.

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

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

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

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

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

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

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

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

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

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

Jared Wonders: Exactly.

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

Jared Wonders: Oh yeah, congratulations.

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

Jared Wonders: It’s crazy.

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

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

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

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

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

Tim Ulbrich: Amen.

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

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

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

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

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

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

Jared Wonders: Yep.

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

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

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

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

Jared Wonders: What’s that?

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

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

Tim Ulbrich: Yeah, right?

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

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

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

Tim Ulbrich: Is it a single family?

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

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

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

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

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

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

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

Tim Ulbrich: OK.

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

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

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

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

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

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

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

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

Tim Ulbrich: That’s a good one.

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

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

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

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

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

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

Posted on by yfpadmin

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

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

About Today’s Guests

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

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

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

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

Summary

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

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

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

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

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

Mentioned on the Show

Episode Transcript

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

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

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

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

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

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

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

Casey Hoida: It takes two people.

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

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

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

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

Betsy Hoida: You got it!

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

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

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

Betsy Hoida: Kids.

Casey Hoida: Yeah, I say kids.

Tim Ulbrich: Those kids.

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

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

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

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

Betsy Hoida: No, totally you.

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

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

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

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

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

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

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

Betsy Hoida: Yeah, we did.

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

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

Tim Ulbrich: Yeah.

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

Tim Ulbrich: Appreciate it.

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

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

Betsy Hoida: Amen.

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

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

Betsy Hoida: That’s never worked.

Casey Hoida: No.

Betsy Hoida: On anything.

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

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

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

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

Betsy Hoida: Cohesive plan.

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

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

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

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

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

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

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

Betsy Hoida: Yeah.

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

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

Betsy Hoida: Oh my gosh, yes.

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

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

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

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

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

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

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

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

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

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

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

Betsy Hoida: Yep.

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

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

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

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

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

Betsy Hoida: The cars we drive.

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

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

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

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

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

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

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

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

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