Student Loans / Podcast

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

Posted on by Caitlin Boyle

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

Episode Summary

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

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

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

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

Key Points from the Episode

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

Episode Highlights

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

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

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

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

Mentioned in Today’s Episode

Episode Transcript

[00:00:00]

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

Tim Ulbrich: I.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Tim Baker: Yeah.

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

Tim Baker: Right.

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

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

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

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

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

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

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

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

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

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

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

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

Tim Baker: I.

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

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

Tim Baker: Right.

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

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

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

Tim Baker: Yeah.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Tim Baker: Yeah.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Tim Baker: Okay

Tim Ulbrich: fees?

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

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

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

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

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

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

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

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

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

Tim Baker: Um, so yep.

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

[END]

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YFP 331: How One Couple Paid Off $208k of Student Loans

Posted on by Tim U

On this episode, Jackie Boyle, PharmD, MBA and Paul Boyle share their journey paying off $208k of student loans.

Episode Summary

Debt can be an overwhelming weight on one’s shoulders, but imagine paying off an astounding $208,000 of it! This week on the podcast, we are joined by the inspirational duo, Jackie and Paul Boyle. They recount their journey from being neck-deep in student loans to paying them off entirely. This episode delves into their personal and collective strategies, their highs and lows, the financial compromises made, and how they kept the momentum to reach the finish line. From Paul’s decision to be a stay-at-home dad to Jackie’s reflections on missed opportunities with the PSLF program, their experiences provide invaluable insights for anyone navigating their own debt repayment process. We also dive into the emotional and financial challenges they encountered, especially when transitioning to a single-income household. Yet, their story isn’t just about the hurdles; it’s brimming with actionable takeaways and advice for those on similar paths. As Paul and Jackie demonstrate, with determination, strategic financial planning, and mutual support, even the heftiest of student loans can be overcome. So whether you’re struggling with student loans, seeking motivation, or just curious about the Boyles’ debt-free journey, this episode is a must-listen. Join us and discover how you too can rewrite your financial story!

About Today’s Guest

Jackie Boyle is a pharmacy educator by day and coaches pharmacists and pharmacies in a part-time capacity. She received her Doctor of Pharmacy from Northeast Ohio Medical University in 2012, MBA from University of Findlay in 2016, and Master and Bachelor degrees from THE Ohio State University (O-H!) She is highly involved in professional organizations including ASHP and AACP, and also loves spending time with her husband and two daughters, Gianna and Giulia. In her free time, she loves spinning, yoga, and enjoying a warm cup of coffee.

Paul Boyle is a Client Service Associate out of the Cleveland, Ohio area where he has had a diverse career of over 20 years, mostly taking care of customers and clients in various fields of service ranging from manufacturing to professional baseball. He received a Bachelor’s degree in Sport Management from The University of Akron in 2020, while taking time away from the workforce to raise his children. Paul spends most of his free time with his wife, Jackie, and two daughters, Gianna and Giulia. An avid Cleveland sports fan, musician and aspiring podcaster. When not supporting his local teams he likes to enjoy the occasional motorcycle ride, which is another longtime passion.

Key Points From the Episode

Get to know Jackie and Paul, and their student loan debt repayment journey.
The shared decision for Paul to be a stay-at-home dad and finish his degree.
A reminder that you can make mistakes and still achieve your debt repayment goals.
The extensive student loan debt that Paul inherited when he married Jackie.
Having a baby and becoming a single-income household.
How the emotional weight of student loans shifted throughout their debt journey.
Why Paul always maintained confidence in their plan and abilities.
Jackie’s income-based debt repayment strategy during her residency.
Her biggest regret: not using the PSLF program.
The challenge of staying motivated during an aggressive repayment journey.
How Jackie and Paul maintained momentum.
The value of budgeting and breaking repayment down into smaller goals.
Why everyone’s debt repayment journey is different.
Finding the right balance between debt repayment and investing in the future.
How to assess your priorities and allocate your finances.
Using your side hustle to pay for additional expenses.
Refinancing your student loans and taking advantage of lower interest rates.
Advice for new graduates as interest on student loans returns after the pandemic freeze.
What’s next for Jackie and Paul now that they have their student loans behind them.

Episode Highlights

“We ended up paying off earlier than I anticipated due to some choices we’ve made. So, yes, it’s very exciting to be on this journey. That said, I know we definitely made mistakes as well.” — Jackie Boyle [0:05:27]

“I never thought inheriting this much debt comes with the territory of a relationship. So that was all brand new.” — Paul Boyle [0:07:57]

“I was so engulfed in residency life that, honestly, [repaying my debt] took a back burner. I should have been doing things way differently during that time.” — Jackie Boyle [0:09:30]

“If you look at that big number, you could be paralyzed by it. But if you look at those smaller numbers, it’s like, ‘okay, over the course of the next three months, I can achieve this goal, and I know how I’m going to achieve it.’” — Jackie Boyle [0:12:49]

“We never felt strapped or that we had to eat ramen for the next couple [of] years to achieve this. That made things better, and that’s motivating in its own [right]. You could see, ‘Hey, we’re doing great.’ We could keep this up as we’re going.” — Paul Boyle [0:15:52]

“Educate yourself. Find a mentor or a financial planner to work with. Get a budget in line. Those basic tools can be really helpful in giving you the motivation to realize that you can do this with a better understanding of your own personal situation and what’s possible.” — Jackie Boyle [0:26:26]

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[00:00:00] TU: Hey, everybody. Tim Ulbrich here, and thank you for listening to the YFP Podcast, where each week we strive to inspire and encourage you on your path towards achieving financial freedom.

This week, I welcome Jackie and Paul Boyle as they share their journey of paying off $208,000 of student loans. We discussed the motivations behind their debt-free journey, how they balanced debt repayment with other financial goals, including investing and buying a home, lessons they learned along the way, strategies they employed to get on the same page, and advice that they have for those that are navigating loan repayment.

Okay, let’s hear a brief message from YFP team member, Justin Woods, and then we’ll hit play on Jackie and Paul Boyle’s debt-free story.

[00:00:40] JW: Hey, Your Financial Pharmacist community. This is Justin Woods here, Director of Business Development at YFP. You may be one of the 13,000 pharmacists that have already signed up for YFP Money Matters, which is our weekly newsletter. But if you’re not, what are you waiting for? I want to invite you to subscribe. We send financial tips, recommendations, the latest podcast episode and money resources, all specifically for pharmacists. It all comes straight to your inbox every Friday morning. So visit yourfinancialpharmacist.com/newsletter, or click the link in the show notes to subscribe today. Again, that’s yourfinancialpharmacist.com/newsletter. See you there.

[INTERVIEW]

[00:01:25] TU: Jackie and Paul, welcome to the show.

[00:01:27] JB: Hello.

[00:01:28] PB: Hey, Tim.

[00:01:29] TU: Well, this is a real treat for me. Many of your listeners may not know. Paul, you are a member of the YFP team, and so we’ve had the opportunity to work with one another here over the last several months. We’re incredibly grateful to have you as a part of the team.

Jackie, you and I have known each other. It’s got to be well over a decade, I think, at this point. I used to be on faculty at NEOMED way back when, and you started there as a student and then a resident. Then we were colleagues. You’re continuing to do great work there, and we’ll talk more about that here in a moment.

So this is a treat to be able to have both of you on as friends, as well as to share with our community your debt-free story. So congratulations to both of you and excited to dig into a little bit of what went behind that, how much debt you paid off, what were the motivations, what worked, what didn’t work, and what lies ahead for you guys now that you’ve got this big milestone achieved.

Paul, let’s start with you. Tell us a little bit more about your background, your career, and the work that you’re doing now.

[00:02:26] PB: Yes. So like you mentioned, I am part of the YFP team now as a client service associate. Love my job. Love the people I work with. It’s great to be a part of this community. But before that, my last paid job was with a company called Lincoln Electric, and I was a warranty service rep there in my last position. So still kind of helping customers out in that realm. But I chose to – well, we as a family made a decision when we had our first daughter that we wanted one of us to stay at home.

So me being the lesser income earner and with this topic, it’s student debt, we decided that my wife was going to continue to work and that I was going to be a stay-at-home dad. I used that time to go back to school, finish my degree in sports management and, yes, never looked back. Since then enjoyed the time with my kids. Being a stay-at-home dad was probably the best job that I’ve ever had so.

[00:03:23] TU: That’s awesome. Jackie, I just scratched the surface on my mention of your training at NEOMED and your residency and your faculty role. But tell us more about your pharmacy journey. What led you into the profession, including the work that you’re doing now?

[00:03:36] JB: Oh, thank you, Tim. This is such an exciting thing to be on your podcast, Tim. My relationship has gone on for so many years and so many different capacities. So I’m just so excited to be talking with you here today. My background is a bit of a mix of ambulatory care practice and education. So I started out my career in practice-based faculty roles and a few different settings in ambulatory care and then actually took a full-time position at the college at Northeast Ohio Medical University here in 2019. So I’ve been here for the past four years.

Around 2017, though, I started getting a little bit of an entrepreneurial itch. Of course, as Tim is one of my greatest mentors, I started talking with him about ideas for part-time work and actually got connected to an awesome entrepreneur, Alex Barker, who was starting a career coaching company at the time and have been career and business coaching pharmacists now for about six years, which plays into our story as well. It’s just been a ton of fun.

So, yes, a little bit of a few different things. I love being a jack of all trades and kind of exploring what’s out there in pharmacy. So, yes, this journey has been a long one, but I hope that we could share some of our mistakes, some of our wins, maybe inspire a few people along the way.

[00:04:59] TU: So, Jackie, let’s start with the juicy details around the student loans. How much did you end up paying off between the two of you when it was all said and done?

[00:05:09] JB: Yes. I think it was about $208,000. As the CFO of our family, I was keenly keeping an eye on our balances as they went down over time. It’s awesome to think back now how much we started with and where we ended up. We ended up paying off earlier than I anticipated due to some choices we’ve made. So, yes, it’s very exciting to be on this journey. That said, I know we definitely made mistakes as well, and I wish – for example, like PSLF. I probably could have taken advantage of that, but I didn’t even know that was a thing. So I’m here to say that you can make mistakes and still achieve the goal eventually as well.

[00:05:53] TU: Yes. That’s such a good reminder, Jackie. I think there’s so much pressure around this decision. We have the opportunity to talk with pharmacy students, new grads on a regular basis. We talk about the importance of really understanding these loan repayment options and getting that decision that’s best for your personal situation. I think that can feel weighty at times, right? Because it can have big implications, whether it’s a PSLF strategy or another strategy.

But, also, what you shared, I think, is such an important reminder is that mistakes are inevitable part of the financial plan. It’s going to happen. They happen on the regular and giving ourselves some grace and learning from those mistakes. We’re not always going to get it according to the textbook, and that’s okay, right? That’s part of this journey is to learn as well.

Paul, I want to start with you but really a question for both of you. As you think about your journey and the student loans, did your feelings around the student loans change over time? Some people we talk with, when I say give me the 0 to 10 student loan pain scale, where zero is the – no. They are what they are. They’re going to take care of themselves. Ten is the house is on fire, right? No right or wrong answer, but everyone is different on that journey. I’m just curious. Like for you, did that change at all along your journey, right? As you guys grew in terms of a family and your careers, tell us more about the emotions and feelings around the student loan debt.

[00:07:21] PB: Yes, absolutely. It’s intimidating for me at the beginning because when Jackie and I met, she had just graduated. So she went into residency. As everybody knows out there, residency pay is not quite the same as full pharmacist pay. But I was working full-time at the time, too. But just realizing like the massive amount of that compared to mine, I think what Jackie – I don’t know how much mine was at the time. I only had a couple thousand left to pay off on mine, and we paid it off first.

But kind of we got engaged, and I was like okay. I never thought like inheriting this much debt like comes with the territory of a relationship. So that was all kind of brand new.

[00:08:04] JB: I came with a lot of baggage.

[00:08:06] PB: Yes. It’s not bad baggage, but it’s just something that you never thought you had to plan for, right? So before even like our wedding and taking on a mortgage and stuff like that, here’s this amount of debt that amounts to a house. I think I took it pretty seriously, but I don’t think I felt like it was a pain point quite yet because, again, we were both working full-time. We figured, okay, we could come up with a plan to handle this.

But as it progressed and as I left work and we became a single-income household, it kind of went up there to like a seven or an eight maybe, just because of that weight like of all that debt, and like will we get there, and then we started a family and added expenses and stuff. So I wouldn’t say I lost sleep over it because I had kind of confidence in especially Jackie as our CFO and her earning potential that we could kind of navigate it.

[00:09:03] JB: Yes. I think, for me, I was in denial for the first two years. So during residency, I did income-based repayment, which meant that my monthly payments were zero. But the interest was accumulating rapidly, as you all know. So those first two years, I should have been at a seven or eight. But I was at like a zero to one because I’m like, “Oh, this is not – it’s not a problem right now. I don’t need to be paying attention to it.” I was so engulfed in residency life that, honestly, it took a back burner. I should have been doing things way differently during that time.

Like Paul said, during like the year of our engagement and then leading up to marriage and our first child, that’s when it became more of like a house on fire seven or eight-plus for me. I was so determined to start attacking this thing. Once I realized that I should have been doing things way differently, and I had already made a few big mistakes with not going to the PSLF program. So, yes, definitely changed for me over time and perhaps that denial factor didn’t help us for the first two years.

[00:10:07] PB: It was kind of out of sight, out of mind type of thing. We had, like I said, paid off mine, and we’re like, “Oh, hey. That’s a great feeling.” So we kind of did in our minds know, hey, with us, with the DINK lifestyle, right? Like we can kind of tackle some of these other debts that we had, and I knew Jackie wasn’t a fan of debt to begin with. So we had a couple small wins there. But still, like I wasn’t thinking about the big one quite yet.

[00:10:37] TU: Jackie, remind me. Year of residency completed was what?

[00:10:42] JB: So two years and it was done in 2014.

[00:10:45] TU: 2014. Okay. So when we think about that journey, 2014, obviously, you mentioned the income-based repayment. Paul, you mentioned your loan. But 2014 to 2023, that’s a period of time where you’re waiting through this. You’ve got a young family. Other expenses are creeping up. Many of our listeners can relate to this feeling. Momentum can be very hard to sustain for a long period of time, right? We had a pharmacist on recently that paid off a little over $345,000 of debt in five years. Very, very aggressive repayment journey. I asked her the same question I’m going to ask you, which is when you think about paying off over $200,000 of debt over a sustained period of time, it’s hard to keep the motivation and the momentum going.

For you, Jackie, let’s start with you. For the two of you, for your family, like how were you able to keep that momentum and motivation going? What was the why that was fueling you guys as you were trying to really make sure you persisted through this over that period of time?

[00:11:47] JB: Well, before starting to dive into financial topics, our one session about this topic, student loans, was the last day of our P4 year. We had an hour-and-a-half session about what our debt was, our repayment options. Again, it was just so overwhelming at that time that it got shoved back away. Once we got oriented towards like what our life goals were and that we wanted to not only gain financial freedom but set up our kids for success, be able to do things like giving, pay off things as quickly as possible, then I think breaking it down into smaller goals was the only way that it felt achievable.

I actually started writing down small goals every morning in the increments of like $5,000 to say, okay, if I can get the loan balance under this, like I’ve achieved another goal. As achievement-oriented person, like that felt really good to do. It might sound silly, but it also made the overall goal feel manageable because if you look at that big number, you could be paralyzed by it. But if you look at those smaller numbers, it’s like, okay, over the course of the next three months, I can achieve this goal, and I know how I’m going to achieve it.

I think the other helpful thing we started doing once we got married was to start budgeting and just to even have a handle around what are our finances, what our expenses, how much money do we have left over at the end of the month that’s not left with a purpose, and starting to really allocate like, okay, where are all of our dollars going. Where does this extra money contribute to the financial plan or not?

Thankfully, with all the resources that your team has developed, Tim, and all the education you were providing, we were able to start learning about different options, different ideas, how we can start tackling it.

[00:13:37] TU: A couple things I heard there which are really good. You mentioned, obviously, the budget being an important part for the two of you. I suggest if you are like most couples, right? Budgeting is a process that takes time to make sure that you’re in alignment with the bigger vision and the goals. But such an important part of, hey, this is the shared vision that we have for our financial plan. I think that was really key.

The other thing you mentioned which I thought is really important is breaking it down into smaller goals, right? So $208,000, that’s big. It’s scary. It’s overwhelming. We talk about the same thing when it comes to saving for retirement 20, 30, 40 years in the future. If you punch numbers in the calculator that show you’re going to have to save two, three, four, five million dollars, whoa, like what do I need to do? What does that actually mean today, right?

So that $5,000 milestone, these goals that are along the way can really help with making it not only realistic but also providing some of the momentum along the way of, hey, we accomplish that. Let’s take a moment to pause, stop, celebrate. Maybe there’s even something that’s planned in there. Maybe there’s not. But just to realize that, yes, this is going to take some time. But we are making progress towards this journey.

Paul, what about for you? Anything else here to add as it relates to the motivation and the momentum?

[00:14:51] PB: Yes. Everything that Jackie said was great. The small wins. I was not the one who was looking at the number quite a lot because she is the bill payer for us. So I would check in every once in a while and be like, “Where are we at,” and kind of provide emotional support throughout that part of the journey because I never wanted her to feel like – and, again, as the person who kind of inherited this debt with her, like, well, it’s not her fault or anything like that. That I want to feel like it was hers. It was ours together. Yes. But seeing those numbers kind of go down.

It was nice throughout the whole process, at least for me, to realize, okay, we have a budget. It’s not a very serious budget. We’re not always letting that hang over our heads like, “Oh, we’re out somewhere doing this. Is this in the budget or not?” We never really had that pop up for us. So throughout this whole time, reaching many milestones, while also kind of living the life that we wanted to at that time, we never felt strapped or that we had to eat ramen for the next couple years to achieve this. That made things better, and that’s motivating in its own. Well, you could see, hey, we’re doing great. We could kind of keep this up as we’re going, right?

[00:16:07] TU: Yes. I’m really glad you mention that, Paul, because I think that’s a good segue into everyone’s journey is different, right? So there’s a spectrum of how you can tackle these loans. You could be very aggressive. It could even be more aggressive, right? Someone could pay off $208,000 of debt in three, four, five years. Maybe in that case they say, “Hey, debt is the only thing I’m focused on. I’m not buying a home. I’m not investing. I’m not saving. I’m not doing other things.” We could debate like what are the pros, what are the cons of that approach.

There’s the other end of the spectrum. You can take federal loans out 25 years, right? It could be a longer period of time. For some people, that is the pathway they choose, whether it’s a forgiveness pathway or not, so that their monthly payment is as low as possible, and they’re able to allocate dollars towards other parts of the financial plan. It sounds like for the two of you, it was somewhat in the middle, right? It was a fairly short timeline. That’s a large chunk of money in a 9, 10-year period.

But, Paul, to your point, it sounds like, hey, there was also still the life that you were living, and there was some sacrifice, obviously. Otherwise, you wouldn’t have gotten to this point in time. But you were able to do some other things that you wanted to do, whether that be buy a home, whether that be investing, saving for the future, going on vacation, investing in experiences as a family. If I heard you right, Paul, it really felt like you were able to do both of those at once. Is that fair?

[00:17:30] PB: Yes, absolutely. I think it never reached the point at any moment for me like where we would have to make any kind of major lifestyle change or change up what we were doing throughout the whole process.

[00:17:42] TU: Jackie, and this is one of the most common questions I get from new grads is should I pay off the debt or should I invest in the future. Then you add on top of that a home purchase is often a common thing, very challenging right now with what’s happening with home prices and interest rates. I think there’s this or mentality. Should I do this? Or should I do that? Or should I do this? Typically, as is the case in your journey, it’s more of an and often. So tell us about your feelings surrounding the aggressiveness or the length of time for the debt repayment.

[00:18:15] JB: Yes. I think to your point, Tim, like the and and trying to make some financial compromises could help you set up your situation to be what you want it to be. So for example, like we got approved for a home loan of like $445,000 when we were looking at houses. Paul and I were like, “Wow, that’s a lot of money.” Then looking at homes at that time in 2014, the market was a bit different for houses. The houses that were at that value, we’re like, “We don’t need a home that’s $445,000. We can look for homes maybe around half that level and still get a really nice place to live and grow our family and everything.”

So we ended up finding our house. Our purchase price was 225. So that alone was huge savings, compromising with we wanted discretionary funds to be able to go out and do things. Just we love like going out to eat, and hanging out with friends and family, and spending a little bit of money on things for vacation. That’s really important for us to have experiences with our family as well. So I think it’s talking with your partner. Or if you don’t have a partner, like thinking for yourself and your priorities in your life and where you want to allocate your finances.

I think, for me, because I was so interested in like still getting this paid off quickly on a single income for most of the time, honestly, was to think of other outside-of-the-box ways to be able to make those extra payments happen. So picking up that side hustle of coaching, which, honestly, doesn’t feel like a job to me. It’s really fun. But all of the extra income we earn from that went towards typically our student loans.

There are things we could have done differently with that as well with contract work and taxes and tax planning. There’s still so much that I have to learn that, thankfully, again, the YFP team is going to be helping us with. But thinking of how can you increase that income dollar for yourself and your family to work more aggressively if you want to or if you’re motivated by that as well.

[00:20:32] TU: Yes I’m. glad you mentioned the extra income, right? We see that often where people are going through a debt repayment journey, and it will be a side hustle, extra shifts, extra income maybe for a long period of time, maybe for a short period of time. But that can really be a boost to, wow, we feel like we’re making some more progress, and maybe this is now a 9 or 8 or 7-year instead of a 10, 11, 12-year. Sometimes, the extra 100 or 200 bucks or 300 bucks, whatever the dollar amount is, may not seem significant. But we tend to forget the momentum that that can provide behaviorally, as well as a part of the plan.

I just love what you guys shared about for you, for the two of you, for your family, you decided on that this was best, right? This approach of, hey, we’re going to pay off the debt. It’s pretty big payments. But we’re also going to find this balance of living our life. There’s no right or wrong answer here, and I think it’s so easy to fall into the trap of, hey, what’s the right way to do this.

There’s a mathematical quote right answer, but we don’t live our lives according to just mathematically correct answers, right? So we’ve got to run the math, true. But we also have to think about what does it mean to live a rich life, and how do we find the balance between these two things? That’s true not only for debt repayment, but that’s true for all parts of the financial plan.

[00:21:46] PB: If I could add to that, for me, kind of the extra money, the side hustle type of thing, we’ve always kind of thought of our income kind of separating those things. So before I left work, in my job, we had a bonus structure that we had a pretty hefty bonus that came at the end of the year. So what I found a lot of people running into trouble is that they relied on that bonus to pay for their regular everyday every year budget. For me, you take that mentality. Okay, here’s my salary. That’s my salary for the year. Let’s pretend that the bonus doesn’t exist, right?

The same thing with side hustle money, then when that becomes extra like, okay, that’s all of our goal money, right? It’s stuff to – like we paid for our wedding from my bonus. So any of those extra things that we know they’re going to cost a little bit extra more, that’s where kind of that side hustle, the extra income goes straight to that stuff.

[00:22:41] JB: One other thing I wanted to mention here was that we refinanced our loan twice throughout the journey. So that savings on interest rate declined, which I know that interest rates are not great right now. But when we refinanced, well, I basically just kept checking every two years or so to see, okay, are there better interest rates available. Can we decrease that if possible? Because over time, that interest just adds up. Oh, there’s nothing that could make you more fired up than extra interest on your student loan. That was something that was also a great change to the process.

[00:23:19] PB: Yes. Her last refinance. Sorry, Tim. Her last refinance was a big motivator, at least for me, because when she said, “Hey, look how much we knocked off,” and we looked at like the saving that we got through there, and I’m like, “Holy cow.” It was a significant amount. We’ve always kind of –

[00:23:35] JB: I think it was $33,000.

[00:23:37] PB: Yes. It was crazy. So that was a big, big win, again, extra motivation to say, “Hey, we’re on the way. We’re going to do this.” Yes. Because I’m a big fan of paying off higher interest stuff first and kind of – she hates debt no matter what, so I always try to have that conversation like, “Well, if it’s a low, like we got 0.9 on our car right now. It’s like, hey, being ultra-aggressive may not be the best way, but we like to kick it out. But, yes, I mean, seeing lower interest rates is huge.

[00:24:08] TU: Yes. Hopefully, we see those interest rates come back down. Right now, it’s – especially for those that only have federal loans, that’s probably the best place to be for most people, just because of some of the benefits that come with federal loans. But I’m guessing your first refinance was way before the pandemic. Is that correct?

[00:24:24] JB: Oh, yes. Yes.

[00:24:25] TU: Okay. So you already kind of had pulled yourself out of that where you weren’t negatively impacted in any significant way through the freeze because that decision was already made. Then at that point, it was really about, hey, how can we get the best interest rate that we can. It sounds like that led to some significant savings.

At the time of this recording, we’re at the time period where student loan interest is turning back on. Payments are going to start back up after three and a half years, right? Dating back to March of 2020. I do really feel for the graduates [inaudible 00:24:59] classes that really haven’t yet had to make student loan payments, and this is going to be a somewhat of an abrupt transition. I’m hearing a lot of things like, “Tim, I’m overwhelmed. I’m confused. I’m frustrated. I’m anxious.” Not just about the student loans but also because of things we’ve already talked about. “I want to buy a home. I’ve got other goals I want to achieve. The six-figure income just isn’t really going to go as far as I thought it had.”

I’m just curious to hear from both of you. Jackie, let’s start with you. As you look back on your own journey and things that you’ve either said, “Hey, we did this really well, or maybe these are some things that we’ve done differently,” what advice would you have for these new graduates coming out?

[00:25:40] JB: Oh, so many things. I wish I would have done differently. Just get your budget in line first. I think knowing where you are spending and where you can cut back on expenses and even getting a wrap around that is really helpful and can maybe dismantle some of the doubts that you have about the fact that you can do this, I think. No, I didn’t get – I have no in incentive to say this. But like working with a financial planner like the team at YFP and like the resources that you all have, just even on your website, to check out.

I remember looking at the student loan calculator and the change in interest rate and just playing around with the tools that are on there on your website. Just educate yourself. Find a mentor or a financial planner to work with. Get a budget in line. Those basic tools can be really helpful in giving you the motivation to realize that you can do this with a better understanding of your own personal situation and what’s possible.

[00:26:43] TU: Paul, how about for you?

[00:26:45] PB: Yes. I would add, for anybody who graduated kind of during the pause, you haven’t had to experience like any of your payments kicking in yet. Having a – just budgeted in there, whether you’re paying it or not, right? Kind of figure out what method is best for you. Obviously, tons of research and I have an inside look at this stuff now as far as all the repayment plans. I mean, we’re kind of on fire with it right now. There are so many different ways.

I love seeing how we can save people money because, again, we talk about our experience with, hey, we probably could have done student loan forgiveness. Find every option that’s available to you. Then don’t let it cripple you. Like I said, we lived a comfortable life on a single income; starting new family, buying a new house, getting married, getting married through residency. Just the busyness through that part of your life, there’s ways to do it. Yes. I just – stay motivated. Don’t be intimidated by that big number is kind of the best advice that I could give.

[00:27:48] TU: Yes. I think it goes back to full circle. When you were talking earlier about the budget and breaking it down to smaller goals, making this number mean something today is such an important part and until you work the budget to know what capacity is or isn’t there and how this big rock is going to influence everything else you’re doing. We tend to live in that mental state of frustration. I’m confused. I’m overwhelmed.

I often say, hey, when we put it all on paper, and, Paul, you’ve seen some of the behind the scenes of this, and you look at all the analyses, and we nerd out in the spreadsheet, we may not like the numbers. Nor will they change from this month to the next month. But the peace of mind that comes from knowing we’ve looked at these numbers, knowing what our options are, and knowing what the monthly payment will be. All right. Now, we can work on a plan, right? That is so important to understand. Otherwise, it’s a hope. It’s a wish. It’s a dream. It’s a guess, and that leads to frustration, right? We’re talking here about student loans, but that’s true with all parts of the financial plan.

Let me ask you guys this. This is a huge milestone, a huge milestone. But it is one of many milestones that you’re going to accomplish on your financial journey. I think that for the pharmacists that are listening that are earlier in their career that are feeling some of the stress and the weight of their own student loans, they’re like, “Man, I just can’t wait until I get to that finish line, right?” That finish line where Jackie and Paul are. It’s a great accomplishment, but it’s not the finish line. You guys are just getting warmed up.

So my question here is what’s next for you. Now that we’ve got the student loans behind us, when you fast forward and say, “Hey, five years from now, September 2028, like what does success look like for the Boyle family? Now that we’ve moved this big rock out of the way, we can start looking towards other parts of the plan.” Paul, let’s start with you.

[00:29:34] PB: Yes. I’d say getting our retirement on track, that’s kind of top of mind. We still have our mortgage as far as debt, and we still have one car payment. But we’re going to knock out our car here pretty soon, and that’s going to be another win that gives us like, “Hey, we only have a mortgage.” That we don’t necessarily – you don’t need to pay that off as quick as you would think so. Just with that freedom, it’s like, “Holy cow, what are we going to do with this extra income?” I’m working again. That’s extra income.

So, yes, I think saving for retirement, making sure that that is lined up and then maybe some home projects. I don’t know. Maybe I get something recreational or fun for me as a short-term goal if Jackie lets me. But we really don’t splurge on a lot of things and we haven’t for the past 10 years. So maybe it’s discussing do we have any kind of bigger fun things that we want to do within the next five years, and then look at the time beyond that, and make sure that us and our children kind of are set up for a comfortable life, our vision of what a comfortable life is.

[00:30:42] JB: Oh, yes. I think to add, figuring out – I have so many questions about like investing in 529s or educational funds. We don’t really know what to do with that piece yet. We know we want to set up our kids for success for the future and whatever that looks like for them. I’ve always had dreams of like having a vacation home and somewhere we can go or rent out or like collaborate with friends or family on to have a place to make memories.

Then I think the last piece is like giving back and determining where we can contribute to our community and just pay it forward in that direction as well. So, yes, we’re really excited. We just started working with the planning team at YFP. Yes. It’s been so enlightening so far. We’ve only had one meeting and I’ve just – I’m like in awe of how much we’ve learned in one short hour. So I’m sure it’s just the beginning of an awesome journey and lots of great things on the horizon.

[00:31:41] TU: Well, this has been fantastic. Again, congratulations to the two of you. I am super excited to follow your journey and see where things are going. As I mentioned, I think you’re just getting warmed up. This is a huge, huge accomplishment, one that is certainly worth celebrating but lots of exciting times to come ahead. So, Jackie, Paul, thank you so much for taking time to join the podcast. I appreciate it.

[00:32:01] JB: Thank you.

[00:32:02] PB: Thank you so much, Tim.

[END OF INTERVIEW]

[00:32:04] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archived newsletters, blog posts, and podcasts is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analyses expressed herein are solely those of Your Financial Pharmacist, unless otherwise noted, and constitute judgments as of the dates published. Such information may contain forward-looking statements that are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.

Thank you, again, for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 330: How One Physician Had $550k+ of Loans Forgiven via PSLF

Posted on by Tim U

On this episode, sponsored by FirstHorizon, Brenna Roth, MD, MPH, shares her journey of having over $550k of student loans forgiven tax-free via Public Service Loan Forgiveness (PSLF).

Episode Summary

Are student loan forgiveness programs a beacon of hope for graduates drowning in debt? Joining us this week is Brenna Roth, MD, MPH; a physician who achieved an incredible financial milestone – over $550,000 of student loans wiped clean through the Public Service Loan Forgiveness (PSLF) program. In our conversation, Brenna discusses her background in medicine, the accumulation of her student loan debt, her initial feelings about the debt, and her journey to tax-free forgiveness. She also shares advice for individuals facing high student loan debt and considering PSLF as an option. We also unpack the challenges of dealing with loan servicing companies, the impact of the COVID-19 payment freeze, and the benefits of lower monthly payments through income-driven repayment plans for those pursuing PSLF. If you’re curious about the PSLF program or facing significant student loan debt, Brenna’s inspiring story sheds light on the potential benefits of pursuing loan forgiveness and highlights the changing landscape of student loan repayment.

About Today’s Guest

Brenna Roth, MD, MPH is an infectious disease doctor and public health specialist who works in academic global health and research. She lived and worked in Tanzania for 3 years and has continued to work on international programs and research projects across sub-Saharan Africa since. She has successfully navigated the Public Service Loan Forgiveness Program across multiple loan servicers, jobs, and continents.

Key Points From the Episode

Background about Brenna and her medical career journey.
Discover how Brenna accumulated a large amount of debt.
She shares her approach to tackling the student loan debt mountain.
Her hesitancy toward PSLF and what ultimately changed her mind.
Common pitfalls and mistakes people make regarding repayments.
Challenges with loan servicing companies and documentation.
Recent changes that have improved the PSLF program.
The pros and cons of the PSLF repayment plan.
Ways COVID-19 impacted student loan payments and the freeze on payments.
Brenna’s experience making minimal payments during her time abroad.
Benefits of lowering adjusted gross income through retirement contributions.
How PSLF allowed Brenna to shift her focus towards long-term financial goals.
Advice for recent pharmacy and medical school graduates considering PSLF.

Episode Highlights

“Those high-interest rates building up over the years really impacted the amount [debt].” — Brenna Roth [0:04:53]

“My hesitancy was not knowing for sure, if after all of those years, [my debt] would actually be forgiven.” — Brenna Roth [0:10:51]

“It makes sense to, if you’re going to do PSLF, to pay during residency, fellowship, those kinds of years when you’re not making very much money.” — Brenna Roth [0:20:34]

“I think I would say, definitely give PSLF some serious consideration. I won’t say it’s the right thing for everybody. Obviously, it can depend on how much debt you have and what kind of job you are going into.” — Brenna Roth [0:25:04]

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[0:00:00] TU: Hey, everybody. Tim Ulbrich here, and thank you for listening to the YFP Podcast, for each week we strive to inspire and encourage you on your path towards achieving financial freedom. This week, I welcome Brenna Roth, a physician onto the show, to talk about her public service loan forgiveness (PSLF) journey, where she recently had more than $550,000 of loans forgiven, tax free.

Yes, you heard that right. More than $550,000 of student loans forgiven, tax-free. We talked about how she accumulated that large debt load, her feelings toward the debt, what went as planned, and didn’t go as planned along the way, and advice that she has for those that are facing high student loan debt.

Let’s hear from today’s sponsor, First Horizon, and then we’ll jump into my interview with Brenna Roth.

[SPONSOR MESSAGE]

[0:00:45] TU: Does saving 20% for a down payment on a home feels like an uphill battle? It’s no secret that pharmacists have a lot of competing financial priorities, including high student loan debt, meaning that saving 20% for a down payment on a home may take years. We’ve been on a hunt for a solution for pharmacists that are ready to purchase a home loan with a lower down payment and are happy to have found that option with First Horizon.

First Horizon offers a professional home loan option, aka doctor or pharmacist home loan that requires a 3% down payment for a single-family home or townhome, for first-time homebuyers, has no PMI and offers a 30-year fixed rate mortgage on home loans up to $726,200. The pharmacist home loan is available in all states except Alaska and Hawaii and can be used to purchase condos as well. However, rates may be higher and a condo review has to be completed.

To check out the requirements for First Horizon’s pharmacist home loan, and to start the pre-approval process, visit yourfinancialpharmacist.com/home-loan. Again, that’s yourfinancialpharmacist.com/home-loan.

[INTERVIEW]

[0:01:58] TU: Brenna, welcome to the show.

[0:02:00] BR: Hi, thank you.

[0:02:02] TU: Well, it’s been a while since we’ve shared some PSLF stories on the podcast. In fact, over a year and a half ago on episode 248, we featured three pharmacists that collectively had more than $700,000 in student loans forgiven. We’ll link to that episode in the show notes. But all that to say, it’s been a while, and I’m certainly excited for this conversation, which came to be after YFP Planning, Financial Planner, Kim Bolton, shared the good news with our team, about your MOHELA account officially showing a $0 balance with over $550,000 that was forgiven, tax-free. And as soon as I heard that, I thought, we have to share this story with our community.

Brenna, as I mentioned to you before we hit record, there still is a lot of skepticism, a lot of questions, a lot of unknowns, surrounding public service, loan forgiveness. I think the more stories that we can share, the more information that we can get out the better. So, before we dig into your specific journey, tell us a little bit about your background, including your journey into medicine, where you went to school, and the work that you’ve been doing since?

[0:03:07] BR: Yes. So, I’m a trained infectious disease doctor. I did my undergraduate work at Tulane University. I also got a Master’s of Public Health there. Then, I worked for a couple of years in public health work research, and then I went on to medical school at Ross University. I did my residency at York Hospital in Pennsylvania, and I did my infectious disease fellowship at the University of Maryland, and I’ve been working since then.

[0:03:40] TU: A lot of years of training. Certainly, our audience can appreciate that. You know, $550,000 of debt that’s forgiven, tax-free, that’s a big number, and I think even quite shocking to our community who’s used to high debt loads, but not that high, right? Maybe $150,000, $200,000 or $250,000. But over $550,000, again, that is a large amount. I assume, and one of my questions about your brand as we get started is how did that debt load come to be as big as it was? Is that a function of medical school, as well as the master’s degree? Tell us a little bit more about the accumulation phase of that amount of debt.

[0:04:19] BR: Yes. It’s from the loans that I took out for my Master’s of Public Health as well as medical school. I was paying off the Master’s of Public Health, initially, when I left school. But then when I started in medical school, that repayment was paused. But during that time, still, the loans were collecting interest. So, it was really that accumulation over all those years of the loans plus — and I’m sure people are familiar with, they have rather high-interest rates, and I was no exception. So yes, just those high-interest rates building up over the years really impacted the amount.

[0:04:58] TU: Yes. The accumulation of interest, on a couple $100,000 or more of debt adds up pretty quickly, especially over periods of time with training involved. I think that while most people know that, we have, somewhat Brenna forgotten that, just because of the last three years, we’ve been on this freeze. So, I think for those of us that graduated, many of my loans are at a fixed 6.8% interest on the federal side, and you quickly realize, like, whoa, and you’ve got a couple $100,000 of debt. If you’re not making payments that are covering that interest, that loan balance grows pretty quickly, and all of a sudden, 200 becomes 250, becomes 300.

Now, if we’re pursuing public service loan forgiveness, and we get to the finish line of tax-free forgiveness, that’s not a bad thing. The goal is that we pay as minimum out of pocket as we can, to have as much as we possibly can, forgiven, and tax-free. But obviously, for those that go through the journey of paying those out of pocket, not through our forgiveness plan, certainly that can be a concern.

Brenna, I’m curious about your feelings surrounding the debt. No right or wrong answer. But I often talk with pharmacists. I joke it’s the student loan debt pain scale, 0 to 10. I talked with some pharmacists that may have a couple $100,000 of debt, and they describe it as a 10. The house is on fire, it’s causing anxiety, they’re frustrated, they’re worried. Even something like a PSLF strategy, they want these gone tomorrow. Even though the math shows it’s going to be favorable, it’s causing that much stress.

Other end of the spectrum, I’ll talk with pharmacists to say, I’m closer to a one or two or three. I recognize it’s a big deal, but they kind of are what they are. If it’s a longer payoff or forgiveness strategy, they may be more comfortable with that, to be able to maximize whatever they can dollars-wise. So, for you and your journey, what were your feelings surrounding the debt load, and did that change at all, as you were going through this PSLF journey?

[0:06:48] BR: It definitely changed over time. I mean, I would say it was at a tenant point. But honestly, I got to a point where, at one point, before I sorted into PSLF, I really just thought I will just have these debts forever, and it’s just going to be a part of my life and better to just accept it, and know that it’s just going to be there. So, I would say it went from a 10 to maybe more like 5 or 6, because I won’t say that I wasn’t at all concerned. But it kind of diminished. But with PSLF, I think it – well, initially, I won’t say it decreased, because I was a little skeptical about whether it was the best choice and I also, over time, I switched the companies that were handling my loans. That never proved to be a really great transition.

So, that was always stressful, because I was always worried that documentation or information would be lost, and the efforts I’d been putting in would not show up at the end, like something would go wrong. So, there were moments where stress kind of went up about all of it. But I would say overall, maybe it was only the last probably few years that I kind of – it dropped below a five for me when I started to have more confidence that things were really moving and things were really going to actually be forgiven.

[0:08:29] TU: Yes. I’m glad you brought that up with the loan servicing companies, right? That’s something we hear often, which is, those can be headaches to navigate. I mean, even right now with the new safe plan that’s coming out, people’s payments are being calculated incorrectly. For good reasons, people are freaking out, wanting to get the right information. Might have to recertify income. Should I recertify an income right now? I mean, there’s just so many nuances and wrinkles. I think as you go through some of the pain of those, and you get over those speed bumps, you tend to get a little bit more comfortable knowing how to navigate it.

But unfortunately, the difficulties with the loan servicing companies, that hasn’t gotten a whole lot better. I think people have gotten more comfortable with PSLF, because of hearing stories like yours, or we’re getting more education and information to make sure that they’re crossing the T’s and dotting the I’s correctly. But we would be lying if we said it’s going to be a clean journey for everyone, right? Just 10 years, 120 payments, you wake up, it’s tax-free. That’s the goal. But it doesn’t mean there’s not going to be some bumps along the way as well.

[0:09:34] BR: Definitely.

[0:09:35] TU: You mentioned reluctancy. I want to talk more about that. Is that something we hear a lot? I often will present on student loans, and when I show the calculations, I think, people nerd out and they get really excited about, “Oh, I can optimize this, and maybe it allows me to achieve other financial goals because I’m not having to put as much towards my student loans.” But there still is very much a sense and feeling of, what if? What if the rules change? What if this isn’t everything that I think it’s going to be? So, I want you to talk a little bit more about your reluctance, what were some of those questions, and then what ultimately changed, that allowed you to say, “Okay, yes, this is the path that I’m going to pursue.”

[0:10:17] BR: So, it should be noted that I was first presented really seriously, shortly after signing up with them with Tim, with YFP. Because this was, my loans were probably my major financial concern at the time. This was 2016, 2017, and I’d heard about the program. But I hadn’t really heard of anybody successfully navigating it, for sure. So, I think it was just not really knowing – my hesitancy was not knowing for sure, if after all of those years, things would actually be forgiven. Of course, as you mentioned, the strategy really is to lower your payments as much as possible and to get through those 10 years, meeting the requirements. But taking as little financial hit as possible.

Which the alternative to that would be, okay, let’s focus on making paying off as much as we can each month, and getting this paid down as quickly as possible. So, you’re accumulating as little interest. Those are like the two options that were presented to me. While it was clear that PSLF made the most sense, on paper, my reluctance came from not being totally sure that at the end of that 10 years, and that would be 10 years wasted in accumulating interest. All of these things, and that was really where my hesitancy came from. Again, this was a number of years ago, when there wasn’t as much evidence that the program was really going to definitively work. I even – I didn’t know if – I even had the concern of what if they just up and decide to cancel it for some reason?

So, it was really that. And you did hear horror stories of people thinking that they were doing everything right for years, and then getting nine years in, and being told, “Oh, no, you were in the wrong repayment plan”, or whatever it may be. During one of my switches from – actually, no. I was checking in with my loan servicer, and just to see is everything on track, is everything look okay. I felt pretty comfortable because you guys were helping me. So, I felt like I’s were dotted, T’s were crossed, but I was still checking in, and they actually told me, “Oh, we don’t go back and check that stuff until it’s like the last year of repayment.” And suddenly, I realized, “Oh, that’s why people get to the end, and they don’t know, because nobody’s really reaching out and communicating with them that this isn’t correct, or this should be.” So, people were getting really far along before getting any feedback that anything was not correct.

[0:13:12] TU: Yes. And when you mentioned the skepticism for good reason, that was around 2017. Is that correct?

[0:13:17] BR: Yes, 2016 or ’17, somewhat in there.

[0:13:21] TU: Yes. Which totally makes sense, right? This program was legislatively enacted in 2007,10-year timeline to forgiveness. That first group to be forgiven would have been in 2017, 2018. This is where a lot of the initial negative press came out. To be fair, the Department of Ed could have done a lot better job in terms of, communicating this and preventing some of these problems that people were identifying it to your point, at the end, when they’re getting near the finish line. Even in the six, or seven years since then, the information has gotten a lot better, the education has gotten a lot better. I think the loan servicers are more comfortable. Still not necessarily easy to always work with, more comfortable. The path, even with employers, now there’s a, through the studentaid.gov profile, you can punch in the EIN of your employer and see if there are qualifying employers. Even those questions in the past were like, “Am I 100% sure that I’m working for a qualified employer?”

For a good reason, you had skepticism, and when you’re talking about the horror stories, I’ve mentioned to you before we hit record that there was an article published by NPR. I think it was 2018, 2019 that the headline was “99% of PSLF applicants are denied.” Somewhat of a misleading story. We haven’t actually looked into the details in terms of the number of people who didn’t fully complete their application and the paperwork. But there were fair issues, and those issues being, “Oh, I didn’t realize that I had to maybe first consolidate my loan into a direct loan, to be able to then unlock a qualifying repayment plan so that then it counted as a qualifying payment.” It’s even crazy when I present on this topic, Brenna, like, I even catch myself like, well, if you do this, and then you do this, and then you do this, then it counts as a green checkmark, right? Then we’re good.

It’s kind of crazy that we have to jump through all these hoops. But that’s just the system that we’re in and the cards that we’ve been dealt. Now, thankfully, you were positively impacted by some of the changes that the Biden administration implemented where for individuals that maybe didn’t have all those T’s or I’s crossed because they didn’t necessarily know from Jump Street that they were going on a PSLF pathway, that there was a reconciliation process for those payments to count as qualifying payments, which you benefited from, is that correct?

[0:15:33] BR: Yes, because when I consolidated and got everything in order, and that was actually another thing. I didn’t realize, because you mentioned employment and the employer’s account. I really did not think that my residency training would count, and it was actually, again, Tim, who pointed out that he really thought it would. So, that was another thing that pushed me once I realized that that period of time also counted, that that shifted, I think, my willingness to go into PSLF.

But yes, I did benefit because I did have a – some of my loans were in the correct repayment plan, but I had some that were not. So, there was a gap of, I don’t know, maybe four or five years between some of the loans just because once I got those into the correct repayment plan, you know, it started from zero. So, it didn’t matter that I’ve been paying those loans for years, none of those previous payments had counted, because they weren’t in the correct repayment plan.

But luckily, with that Biden, that like one year, going back and counting, a lot of those payments that hadn’t previously counted towards the forgiveness were counted, which was great.

[0:16:48] TU: Yes. I think it was really helpful, especially for people Brenna, like you, that maybe necessarily didn’t start with a PSLF journey in mind. We are seeing more people now that they come out, they go into residency, they know, “Okay, I’m not going to defer, so I can count those as qualifying payments” and they’re thinking about PSLF as a strategy right away. But that hasn’t always been the case. Again, just based on the age of the program and the information that we have available.

One of the things that is beneficial about the strategy, as you’ve mentioned, as I’ve mentioned, is to try to pay as little out of pocket so that we can have as much forgiven tax-free. You mentioned before we hit record that you were able to have about five years, about half of the 10-year timeline of payments, actually, where you weren’t having to make payments at all. Tell us more about what was happening, where you were able to have such a large chunk of time where you didn’t have to make those payments.

[0:17:40] BR: Yes. So, everybody has been affected by the pause in payments with COVID. So, I was also affected by that. But I moved to Tanzania, actually in 2017. I was living there, full time. Because of that, it affected my taxes, and basically what it looked like, what my income looked like, and thus my repayment. So, if I remember correctly, there were a couple of years there where technically I could have been paying zero. I was still paying a small amount on my loans. But yes, I had a couple of years there, where just because of living internationally and working internationally. My income appeared low enough that – because it’s income-based, and so basically, my payment was functionally zero.

[0:18:33] TU: Yes. You had a few years of the pandemic freeze, as did other borrowers, were those counted as qualifying payments. That was one of the big questions when that freeze started, and that was good news that people that were pursuing PSLF, those counted as qualifying payments to the freeze that just ended here in September of 2023. Then, you have a couple years in Tanzania, you mentioned, perhaps this could have been zeroed out payments. You’re making small payments.

I’m glad you mentioned that because one of the most common questions that I get is should I defer my loans during residency, or in your case, residency and fellowship. While not blanket advice, generally, my answer is you don’t want to defer, and the reason you don’t want to defer is that typically because you’re earning such a low income while you’re in residency or fellowship relative to what you will earn, and how they do the calculations on these, often these will be very low, and sometimes $0 monthly payments. But as long as you’re inactive repayment, those count towards qualifying payments of the 120.

So, I still think there’s a lot of advice out there from maybe my generation of pharmacists or those even older. I graduated in 2008, where it was kind of blanket advice. Like differing residency, differing residency, and often the case may be actually not to defer, so you can get those accounts as qualifying payments.

[0:19:54] BR: Yes. It’s funny that you mentioned that, because you just triggered – that was – I think that’s actually, because I still had that had a feeling of what if something goes wrong with a PSLF. So even though I was being told those couple of years, “You don’t have to make a payment, it’s zero, it will still count.” I made the decision to make a small payment because I didn’t want anybody to be able to come back later and say, “Oh, you weren’t paying during these times.” So, I still had my own little, is this really going to work the way it’s supposed to work even at that point? But definitely, it makes sense to, if you’re going to do PSLF, to pay during residency, fellowship, those kinds of years when you’re not making very much money.

[0:20:44] TU: Yes, and one of the other, we won’t spend much time on this now. We’ll talk about it in another episode. But one of the advantages of the new save plan that was announced by the Biden administration here in the last couple of months, and certainly, it’s not the right fit for everyone. But especially those that are new graduates, new trainees in residency, there’s a provision as a part of that safe plan where as long as you’re making the minimum payment, whatever that is, based on your income, that your loan balance can’t grow, which is really nice. Because if you’re in deferment, like interest can still accumulate, you’re not making any payment technically. So, especially for those that are in one or two or more years of residency that can be, that can be really valuable.

Brenna, what did PSLF allow you to do in terms of other goals. Typically, if we’re optimizing the strategy, we’re hopefully paying less out of pocket than we normally would have with other strategies. And therefore, that gives us options to invest and save, or pursue other financial goals, where we don’t have to just solely focus on our student loans. So, for your situation, for your financial plan, what did PSLF allow you to do in terms of other goals?

[0:21:51] BR: I really, for the most part, focus a little bit more on investment retirement, and because really, I hadn’t been too focused on that until I was finishing a fellowship, going into an actual job, and I’m feeling like I had that money. So, I think that allowed me to focus a little bit. Because as I said, I sort of always thought that these loans would just be part of my life. So, it shifted my long-term thinking, and as we discussed before, having the loans forgiven didn’t really change my day to day. But even during that process, I think, instead of being so focused on I’m going to have to repay this at some point, I could really focus on that longer term, where do I want to invest my money.

I mean, yes, it did allow, because I think I would have been far more reluctant to maybe take this trip or that trip, for fear of what that meant longer term. So, it probably did allow me to feel a little more free to do those kinds of things. But for me, it was really more about the longer-term goals and being able to focus more on investments and retirement plans and those kinds of things.

[0:23:16] TU: That’s one of the things I love about this strategy is when we’re optimizing this, one of the goals we’re trying to achieve is to lower our adjusted gross income, the best that we can, which is the factor they’re using in the payment calculation to determine what your monthly payment is. One of the ways we can do that, kind of the low-hanging fruit, is making sure we’re maxing out traditional retirement accounts like a 401(k), a 403(b), and maxing out HSAs. So, there’s this beautiful double effect of not only are we then saving more through those vehicles, which are going to be able to grow and compound and time value of money, make sure we start that as early as we possibly can. But it’s also at the same time, lowering our monthly student loan payment, and that’s really cool. When we can see that working, and we all know our listeners know well, that when you’re saving even just a little bit more early in your career, and that money has a long time period to grow, that’s going to have a significant impact and effect.

Brenna, I’m curious, we have a group of graduates coming out right now that many may be listening to the show. We have three graduating classes now that haven’t had to make any payments on student loans, because of the freeze. Interest just started back up in September. Payments are resuming here next month in October. I think it’s fair to say, there’s a decent amount of anxiety. Maybe people that were making payments that didn’t have to, and now they’re having to make payments again. Or for new graduates, or just on the front end of this journey, and not really sure what is ahead, but certainly there’s some anxiety surrounding that. As you look backwards now, finish line has been crossed. You’ve had a large amount of debt forgiven, tax-free. What advice would you have, whether it’s pharmacy graduates, or medical school graduates, that are just getting started and they’re looking ahead and saying, “This feels big. This feels scary.”

[0:25:03] BR: I think I would say, definitely give PSLF some serious consideration. I won’t say it’s the right thing for everybody. Obviously, it can depend on how much debt you have, and what kind of job are you going into. How much are you going to be making? I’m in infectious diseases in medicine. That’s not a subspecialty that is known to make a lot of money compared to some others. So, for others – and I don’t know as much about pharmacists, and their training, and different specialties within that. But I would assume there’s some variation as well.

So, I think it is a very individual decision. And for me, though, as I said, having a financial planner, being able to discuss it, really just my income to debt ratio, PSLF was just very clearly the best option for me. So, I think, just really give it some serious consideration, and don’t talk yourself out of it immediately. It is working. Just my experience over many years, and with many different – having my loans switched from different companies, I can tell you, it’s been so much easier recently to be able to track things, to get information about things. It’s gotten so much easier over the years. I mean, it does work. There are more and more people with loans being forgiven. So, I hope that the concern and the fears are diminishing over time. I won’t say everybody needs to go out and do it. But I think it should be definitely a serious consideration as an option.

[0:26:52] TU: Yes. I’m glad you said that. We estimate in pharmacy, and I know it’s higher in medicine, just based on the distribution of practice, and where people are at nonprofit to for profit. But we estimate that about 25% to 30% of all pharmacy graduates are eligible or qualify for PSLF.

Now, they may not have the right debt-to-income ratio. It may not make sense. They may be unsure about how long they’re going to be in the nonprofit space, and there’s other questions. But to your point, Brenna, I think the take-home point I hear there is making sure that you’re considering it among all of the options, and running the numbers, how do we feel about it? What does this mean for other parts of the financial plan? And making sure that we feel that we’re making an informed decision, looking at all the different options that we have on the table. For some, that’s PSLF. For some, that could be a non-PSLF strategy over a long period of time, if they’re working for a for-profit. Or we have some individuals that say, “Hey, I really want to aggressively pay these off.” And they have reasons and a rationale that may make sense for them.

So, this is certainly an area where, whether we like it or not, student loan repayment is a somewhat complicated topic, and it’s something that we’ve really got to dig into and make sure that we’ve got good information as we look at and evaluate all the options that are available.

Well, Brenna, this has been awesome. I really appreciate you taking the time coming on the show to share your journey of having over $550,000 of debt that was forgiven, tax-free. As I mentioned at the beginning, we’re going to share some other resources in the show notes of where we’ve talked about public service, loan forgiveness, as well. And to the Department of Ed’s credit, as you gave them credit here, I think recently, of information getting better in the loan servicing companies. They have updated a lot of information and resources, and especially with so much changing right now, make sure to check that out at studentaid.gov.

Again, Brenna, thank you so much for taking time to come on the show.

[0:28:38] BR: Thank you.

[0:28:40] TU: Before we wrap up today’s show, I want to again, thank this week’s sponsor of Your Financial Pharmacist podcast, First Horizon. We’re glad to have found a solution for pharmacists that are unable to save 20% for a down payment on a home. A lot of pharmacists in the YFP community have taken advantage of First Horizon’s pharmacist home loan, which requires a 3% down payment for a single-family home or townhome for first-time homebuyers, and has no PMI on a 30-year fixed-rate mortgage.

To learn more about the requirements for First Horizon’s pharmacist home loan, and to get started with the pre-approval process, you can visit yourfinancialpharmacist.com/home-loan. Again, that’s yourfinancialpharmacist.com/home-loan.

[OUTRO]

[0:29:24] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and it is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archived newsletters, blog post, and podcast is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analysis expressed herein are solely those of Your Financial Pharmacist unless otherwise noted and constitute judgments as of the dates published. Such information may contain forward-looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.

Thank you again for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 304: How This Pharmacy Entrepreneur Helps Pharmacists Transition Into Their Careers in Canada

Posted on by Caitlin Boyle

Havalee Johnson, pharmacist and Founder of Immigrant PharmAssist, shares how and why she made the move from Jamaica to Canada, how her business helps immigrant pharmacists transition into their careers in Canada, and her business goals.

About Today’s Guest

Havalee is a Jamaican immigrant in Canada. She holds dual pharmacist registrations in both countries and has a combined 8 years of practice experience. Feeling the need for growth and expansion in her life and career, Havalee successfully pursued her pharmacist licensure in Canada, completely self-sponsored, and moved from Jamaica to Canada at the onset of the COVID-19 pandemic in early 2020. She seamlessly transitioned and integrated into the Alberta healthcare system where she practices as a clinical pharmacist. Havalee is people-centric and multi-passionate and loves to help, empower and inspire others. Noting the myriad of challenges encountered by pharmacists’ peers and colleagues who have been unsuccessful in their many attempts to transfer their licenses to Canada, Havalee is on a mission to support and assist as many immigrants as possible. Through her business Immigrant PharmAssist, she helps international pharmacist graduates (IPGs) successfully navigate and accelerate through the licensure process so that they can smoothly transition into their lives and careers while thriving as newcomers in Canada.

Episode Summary

Havalee Johnson is a pharmacist in Alberta, Canada, and her new company, Immigrant PharmAssist, focuses on helping fellow pharmacists transition to a pharmacy career in Canada. After explaining why she stepped into a career in pharmacy, Havalee gives details on her community pharmacy experience, why commitment is one of her most important values, and the financial strategy she implemented to make the move from Jamaica to Canada. Havalee then opens up about what she wishes to accomplish with PharmAssist, whether pharmacies in Canada and America are going through the same struggles, common misconceptions that she encounters about moving to Canada, and where her business needs to be in the next three years for her to consider it a success.

Key Points From the Episode

A warm welcome to today’s guest, pharmacist and entrepreneur, Havalee Johnson.
Havalee’s background in pharmacy, including where she trained and her first job after school.
The community pharmacy experience that made her enroll in pharmacy school.
Why the John Assaraf quote about commitment resonates with Havalee and her life’s journey.
Havalee’s reasons for immigrating to Canada.
Her financial strategy for moving to Canada, and her unique relationship with money.
The problems that she is trying to solve with her business PharmAssist.
Why Canada is an attractive destination for pharmacists to consider.
Whether pharmacies in America and Canada are experiencing the same challenges.
Common misconceptions that aspiring pharmacists have about moving to Canada.
Where Havalee wants her business to be in three years to consider it a success.
The mindset shift that has had the biggest impact on her life since moving to Canada.
What Havalee does to reenter herself when she feels overwhelmed and out of focus.

Episode Highlights

“I’m a very committed person. And it’s not just in my professional life, it’s in every area of my life. If I have an appointment with someone, I’m going to make that commitment; I will show up for the occasion. If I have to do something, I just get it done.” — Havalee Johnson [08:47]

“When other people are having challenges or they have this sort of mindset that things will not work out, it’s because their level of commitment is not in alignment with what they think they truly want.” — Havalee Johnson [09:18]

“There’s so much wealth and information tied up in knowledge. It is very indispensable.” — Havalee Johnson [18:05]

“I worked, I saved, I bought the things that I needed to buy. I didn’t focus on the things that I wanted. It’s called delayed gratification. A lot of us know about it but we don’t subscribe to it.” — Havalee Johnson [18:40]

“It is not a matter of resources, it’s a matter of being resourceful.” — Havalee Johnson [27:39]

“I’ve embraced the fact that if I want to get to where I want to go, I need to do things differently and I have to invest in me. And not just investment in terms of monetary investment, but invest in my mindset, in up-leveling my mindset.” — Havalee Johnson [34:23]

Links Mentioned in Today’s Episode

Episode Transcript

EPISODE 304

[INTRODUCTION]

[0:00:00.4] TU: Hey everybody, Tim Ulbrick here, and thank you for listening to The YFP Podcast, where each week, we strive to inspire and encourage you on your path towards achieving financial freedom.

This week, I welcome to the show, Havalee Johnson, a pharmacist-entrepreneur from Jamaica, who helps pharmacists transition into their careers and thrive as newcomers to Canada. During the show, we discuss why she decided to move away from her family and hometown in Jamaica to live and practice some 2,000 plus miles away in Canada, some of the biggest misconceptions that folks have about moving to Canada as a licensed healthcare professional and the steps that she took financially to pay off her student loan debt, her car, accumulate savings, and to ultimately fund the move and transition to Canada.

Now, before we jump into the show, I recognize that many listeners may not be aware of what the team at YFP Planning does in working one-on-one with more than 280 households in 40-plus states. YFP planning offers fee-only, high-touch financial planning that is customized for the pharmacy professional. If you’re interested in learning more about working one-on-one with a certified financial planner may help you achieve your financial goals, you can book a free discovery call at yfpplanning.com.

Whether or not YFP Planning’s financial planning services are a good fit for you, know that we appreciate your support of this podcast and our mission to help pharmacists achieve financial freedom. Okay, let’s jump into my interview with Havalee Johnson.

[INTERVIEW]

[0:01:29.4] TU: Havalee, welcome to the show.

[0:01:30.6] HJ: Hey Tim, thank you for having me.

[0:01:33.1] TU: Really excited to follow up on the conversation from a couple of weeks ago to share what you shared with me, which is a really cool career journey and I think an inspiring story for many with the work that you’re doing now with pharmacists. We’ll get to that here in a little bit.

Let’s start with your career journey. What led you into the profession of pharmacy, where did you do your pharmacy training, and what was your first job out of school?

[0:01:56.1] HJ: Oh, that’s interesting. So interestingly, my first job, I will start with that one, my first job was in a pharmacy, that I think propelled me into my career being a pharmacist because I never wanted to be a pharmacist growing up. So my back story is that I was born and raised in Jamaica.

I lived in Jamaica for pretty much my entire life until I moved to Canada at the start of 2020, and that’s where I also did my training in Jamaica, at the University of Technology. I did my undergrad studies with my bachelor of pharmacy degree. So it’s interesting that I never thought of pharmacy, it wasn’t on my radar.

But as a student in high school, we were required to do some voluntary work prior to graduating and it so happened that I volunteered at the hospital’s pharmacy. So that was my first introduction to pharmacy but I never thought anything of it then. But after I completed six form, which is the equivalent of community college. In Jamaica, you can go to six form if you’re in high school.

You do your A-level studies and then you move into university. One of my colleagues was like, “My mom was saying pharmacy is a cool profession and all this stuff.” I was like, “Pharmacy? No.” I actually wanted to become a linguist. I was the Spanish student, I was the math student, and I did a mixture of the sciences and the arts. But as I’ve told you before, Tim, when we met, that I’m very multi-passionate and a multi-potential.

So I could just basically segue from pharmacy into just about anything, which to me that right now is really exciting. I started my pharmacy career in Jamaica where I practiced for five years before moving to Canada, where I interestingly transferred my pharmacist license and I practice as a pharmacist in Canada as well.

[0:03:45.1] TU: What I like about what you just shared there, Havalee, is that pharmacy is a part of your story, it is not the only story, right? So it’s an important part of the journey, you’re obviously helping other pharmacists but you know, you mentioned you can pivot in different directions. We’ll talk about the value of diversification here in a little bit and if I heard you correctly, it was a hospital experience that led you into pharmacy school. But you would end up practicing in community for a while, is that correct?

[0:04:11.0] HJ: Yeah. So after high school, so we had financial challenges growing up and my mom was basically a single parent and my sister went to nursing school prior to me going to pharmacy school, and she was like, “I can’t afford to send you both to university at the same time. So you have to work for a year.” And I was like, “No way, I’m not working.” Because for me, school was the only thing that I knew and actually, I found my value and my education.

As I told you from my back story that I never felt worthy, and I was told growing up that I was ugly. So, I just buried myself in academics. So when my mom told me I had to work prior to going to university, I was crushed. And I thought she was actually kidding but she was serious. So she went and got me a job basically. She made recommendations because she loves to talk about her children and she found a pharmacy owner.

She was like, “My daughter, she’s very brilliant, she’s interested in starting in pharmacy.” I did not want to go to work in a pharmacy. I wanted to go to university and I did an application to the pharmacy owner. That’s an interesting part of my story, we’ll have to talk about that another time, but it was my penmanship that was the hook. Like, my penmanship is really great, if I may say so myself.

So the owner saw my penmanship and he’s like, “I need to meet this person” and so I interviewed. My personality and I fit right into the pharmacy setting. I worked there for 15 months as a pharmacy assistant. So that was my first introduction to business as well because I got to do a little bit of cashiering, I did the OTC stuff, I got to do account reconciliation, I got to do just about every little thing in the pharmacy.

So I was like a floater and I worked there, but the impression that was left upon me by the pharmacist, who was the chief pharmacist at the time, her name is Alicia. Alicia, she was very impressionable. She was very proficient. She was very professional and I like the way she dealt with the parents, and that was my inspiration for going to pharmacy school. I wanted to emulate her and I was like, “Wow, this is really nice.” I enjoyed my 15 months there and I apply for pharmacy school.

Interestingly, I applied for pharmacy school prior and they didn’t have any space and they’ve gotten a letter, an email, a letter saying that I didn’t meet the qualification requirements. I reapplied the following year and I got through but all they needed to tell me was that they didn’t have any space. They didn’t have the capacity but I applied, I reapplied because I’m not the person who gives up easily. With the same credentials, I got in and then I had a whale of a time.

I suffice to say, I mentioned earlier that we had financial challenges and then the pharmacy was how I got through university. My mentor, my support system came through the pharmacy and that was how my accommodation was paid for. That was how my books were taken care of, that was when I got my first laptop.

I was 20 years old when I got my first laptop and just looking back now, it’s amazing to see how far I’ve come since then. Yet, that’s how I got through pharmacy school and I mentioned my friend Alicia the pharmacist, every single month that she got her salary, she sent me some pocket change, every single month, and I just feel so blessed.

[0:07:32.9] TU: Let’s make sure Alicia hears this episode, we’ll have to share it with her as you give a shout-out to her. But one thing that really stood out to me when you and I talked a couple of weeks ago is, you know, I have the opportunity to talk with different pharmacists, pharmacy owners, entrepreneurs all across the country every week, which is an incredible part of the job and the work that I have and doing the podcast.

But something really stood out about our interaction. I think it was your mindset, it was your passion, your enthusiasm, your resilience, you described that a little bit, your optimism, it’s contagious. And you shared recently on LinkedIn a quote by John Assaraf. You said, “If you’re interested, you will do what’s convenient. If you’re committed, you’ll do whatever it takes.” Tell us more, why does that quote resonate with you and resonate with your own journey?

[0:08:23.3] HJ: It absolutely does. Thank you for bringing that up. I tend to forget the things that I put out there sometimes because I’m just, you know, going from what’s inside that I wanted to share. But again, I buried myself in my academics and I found that for me, things just seemed so easy. And it’s just when persons are approaching me and asking, “How did you do this, how did you accomplish this?” that I realized that I was a very committed person. And it’s not just in my professional life, it’s in every area of my life.

If I have an appointment with someone, I’m going to make that commitment, I will show up for the occasion. If I have to do something, I just get it done. So there are no entrances and even if there are obstacles along the way, it doesn’t prevent me from going ahead because I’m so committed to whatever task it is that I have in front of me, whatever commitment that I’ve made. So, when other persons are having challenges or they have this sort of mindset that things will not work out, it’s because their level of commitment is not in alignment with what they think they truly want.

So I thought that quote was fitting for the post that I did. I didn’t realize that it had gone over on to your platform as well. So thank you for the reminder, but I’m actually very committed and it makes the process much easier. It makes things — like, you don’t focus on the problems when you’re committed, you find creative solutions, and one problem has more than a thousand solutions if we were to go through and think about it logically.

[0:10:01.2] TU: Yeah, I mean, mindset really matters, right? I think that’s what you’re alluding to there and you could have two people that are facing a very similar problem but how they approach it and how they receive that challenge can be night and day. I had a chance to talk with Lauren Castle recently on the podcast, who is the founder of The Functional Medicine Pharmacist Alliance, and she talked about a book that its purpose is not a side hustle.

Meaning, what you said is, we bring our purpose and our intentionality to every single interaction, every single day. Now, easier said than done, right? And I often wonder, “Hey, what would the day look like as a parent, as a father, as a business owner, what would it look like if I did that every moment?” But such a good reminder.

Let’s talk about your transition to Canada. So you mentioned your upbringing in Jamaica. After pharmacy training, you worked a little over five years in community practice and then ultimately, you make a bold decision to move 2,000 plus miles to Canada, away from your home country, your family, your friends, your professional network. Why, what led you to that decision?

[0:11:07.0] HJ: I just don’t, it just came out of nowhere. I think Canada for me signified not security, because there’s not security anywhere, but Canada had some of the things that I desired as an adult. For example, growing up, our healthcare system is not the best. I’m not here to criticize our healthcare system but I lost my dad through him having health challenges going through dialysis, kidney failure, we couldn’t afford the dialysis.

I recognize that in order for me to serve people, I need to be healthy and I need to have that access. I’m not focusing on being ill but if things were to happen, if things were to hit the ceiling, I want to know that I have the accessibility. Also, when I completed pharmacy school, I got a statement for three million Jamaican dollars for my student loan debt.

I was like, okay, I didn’t come from the typical middle-class or upper-class family that had the financial means to send me to school. I had that. I was like, “Okay, I need, when I start my family, for my children to have access to work less education.” That was one of, again, these things were my deep why’s. Why I decided Canada.

Canada is underpopulated and they love bright young minds. I should just try for Canada and I had that thought when I went into the pharmacy. The first pharmacy I worked in after I got my license, my boss actually, they were selling the pharmacy and they were like, “Are you interested in buying?”

I’m like, “No, I’m on my way out of here.” I just told her, “I’m on my way out of here.” That was 2015. I didn’t know how, I didn’t have any connections. At that time, I had persons telling me I needed to go back to school and here I am, in three million dollars worth of student loan debt, now I’m at the phase in my life where I think I need to acquire things, which no, in retrospect, I didn’t need to acquire things. I need to acquire experiences instead.

So I had Canada in mind and I made it happen. I was committed, I did whatever it took. I had the two jobs. I was trying to be very savvy with my finances because again, we had the challenges of not having things that other children had that you probably, why you would have had but no, I’m like, it’s okay. I didn’t really need them but the mind of a child is totally different from the mind of an adult.

When you’re a child, you’re very impressionable and we have very receptive minds but as an adult, you know that you might need to be receptive as well as fertile and the things that we allow into our spaces has to be totally different from the focus we had when we were much younger.

So, I had Canada in mind and I’m like, “Okay in Jamaica, you get two months maternity leave when you start your family” and I was like, “That’s no time for you to nurture and care for an infant” and I’m like, “Okay, Canada, you could get up to a year as maternity leave” and also the scope of practice.

I was frustrated at times, so I had to do a year’s internship in the hospital after pharmacy school and I was frustrated with the way things were systemically, like the things that patient — I’m very passionate about patient care and I’m an advocate for people because I treat people the way I would want to be treated, the way I want my family members to be treated. And they have to go through too many hoops and hurdles to get even a registration number and a prescription, for example. These are things that I would have done differently but I’m not in administration.

I’m not in a certain position to implement those changes. So when I completed my internship, I said, “I cannot work with this system because it’s not in alignment with me.” And then going into community, I had so much autonomy and my boss’s wife is a pharmacist and my boss. They respected me, they allowed me to practice to my fullest scope but my scope was still very restrictive.

If the doctor wasn’t available, I couldn’t fax, I could make changes to the prescription. I love that about Canada, because the scope of practice here is that much greater. You can adopt a prescription, you can prescribe for a minor ailment, you can order labs, you can see the patient’s actual lab results, and that to me was exciting and that was one of my reasons for wanting to move to Canada as well.

[0:15:29.1] TU: And when you take a bold move like that, whether it’s moving from Jamaica to Canada, whether someone decides they’re going to start a business, which you did that as well. We’ll talk about that here in a little bit. But any bold move I think often requires one to feel like they’re in a sound financial position to make that move with confidence, and I talk about this in the show all the time.

If you’re starting a business, not that we need to have every single T crossed and I dotted with our financial plan, but we want to have some level of a foundation that we can approach that business with confidence, and not be having the stress and anxiety of personally not being where we need to be. So I ask that because, for you, you shared with me before that you paid off three million dollars in Jamaica debt from pharmacy, which was equivalent to about 30,000 in Canadian, is that correct?

[0:16:20.1] HJ: Correct.

[0:16:21.1] TU: Paid off a car, you accumulated savings, there is cost of moving, what was the strategy for you to get yourself in the financial position to be ready to make that bold move?

[0:16:33.6] HJ: Thank you for that question. I think that my relationship with money is very unique. I used to say that I don’t know how my mom makes more than a hundred cents out of a dollar because she did it, and I think I got some of that from her in terms of being very savvy about my finances. The minute I started working, I said I’m going to start saving towards this Canada journey, and that’s what I did.

I earned, I took care of my obligations. So in pharmacy school, we actually learned about the reducing balance method. I’d never done any business subjects, I never done accounting prior, I learned about the reducing balance method. I applied that to my student loan and my debt payoff but I also did it smartly. I also referenced my friend Alicia. She allowed me, whenever I needed to do any business transaction, not business but any personal related transaction if I wanted to travel to buy an airline ticket.

She was the person that got the credit card print posts from. You use, you pay on time and in full so you don’t accumulate an interest, and then I just started learning that, “Okay, if I use it directly after the due date, I get at least 51 days to make that payment.” Because the date for the statement will come and then you’ll have time to pay. So I adopted that from Alicia, that was where it started initially and then I started reading the financial section of the local newspaper.

There’s so much wealth and information tied up in knowledge. It is very indispensable and I did that, and using my credit card to pay down my student loan was a part of my strategy because I had a credit card that had cash back. So I would pay the student loan and I’d get back some of the money and I built up great credit. I honestly never checked my credit back in Jamaica, but I knew that my credit was great because I started out with a credit card of USD 100,000 in 2016 and by 2018, my credit limit increased to over a million dollars.

So I worked, I saved, I bought the things that I needed to buy, I didn’t focus on the things that I wanted. It was called delayed gratification. A lot of us know about it but we don’t subscribe to it . And just being very disciplined in my finances, paying my debts, honoring my financial obligations, doing everything that I needed to do, it allowed me to save and I also set up, I didn’t even know for sure but I invested in a life insurance investment policy.

I just heard about this in financial advisor. I called him up and met with him, he explained some stuff to me, then it was just all his. I didn’t understand what were mutual funds, I didn’t know the jargons, I didn’t know what was going on behind the scenes but I knew I needed to make plans and preparation for my future. So I invested in a policy and I started saving every single month from my salary.

I told myself, “This is my retirement plan” and over a period of time, it accumulated so much funds. I was like, “Whoa, this is amazing.” It is amazing to see the tiny steps that we take, and over time, we adapt quickly and I think that was a very big thing for me. But I think it really boils down to me being the disciplined person that I am with my finances. I have never paid any money for credit card interest while I work in Jamaica. Never.

I paid on time, in full, and over a two-year period, I got back over USD 130,000 in cash back just by using my credit card.

[0:20:19.6] TU: It makes sense when you’re paying big student loan payments, right? And the cashback of that. So I’d like what you share. I think there’s a couple of things that really stand out there, your relationship with money and really, understanding what is that, where does that come from, our upbringing typically, what are the good things that we have a positive relationship with money, what are the not so good things.

Being aware of that and then really, what I heard is a lot of discipline in setting your goals and being intentional with how you were going to achieve those goals, which obviously, allowed you to make some of the transitions and move that you did make.

I want to shift gears and talk about the work that you’re doing through PharmAssist and as you say on LinkedIn, “I help pharmacists transition into their careers and thrive as newcomers in Canada.”

So two questions for you here, what problem are you trying to solve with this business, and what benefits does living in Canada for pharmacists, that it may be an attractive option for people to consider?

[0:21:17.0] HJ: Thanks for that question, Tim. So in my business, actually I just studied shortly a backstory, PharmAssist started off as a podcast but it was a podcast to help patients, because I wanted to use my voice that I wanted –

[0:21:29.9] TU: I saw that, I found it, yes.

[0:21:32.4] HJ: You did? I wanted to utilize my voice in a way that could be meaningful and impactful. I’ve always stayed away from public speaking, anything that required me to be in the spotlight. So, I started PharmAssist but I didn’t, at the time, know how to get in front of the right audience, but it was well working in pharmacy. I’ve noticed certain trends, I saw the frustration, I heard the stories.

I’ve met several international pharmacists who were struggling and when I say struggling, in terms of transitioning into their careers in Canada. They’re already in Canada but their credentials have not been recognized. And if you have noted recently on my platform, I’ve been talking about decredentialization, having high credentials is not yet recognized. So you end up doing survivor’s jobs and so your income earning potential has been significantly diminished.

So what I aim to do is to empower especially persons who are coming into Canada to let them know, “Hey, there is a possibility for you to transition smoothly into your career.” You can take an alternative route than coming to Canada as an international student, which is I believe one of the most expensive roads to come to Canada, or even coming and not having your degrees transferred, getting, passing your board exams.

Getting your pharmacist license recognized so that you can continue in your practice to create impact but also to make an income so that you can have a higher standard of living. I successfully transferred my license and I started while I was working in Jamaica, because I was so fortunate I had the discernment to know that if I move to Canada prior to getting my license, I’m going to have to move into the fast lane, but also be doing menial jobs, low income, so I might end up burning out.

I need to be doing maybe two or three jobs just so that I can survive because when you convert the dollar, it’s totally about being a millionaire in Jamaica. I’m a ten thousand-narian in Canada. A million Jamaican dollars is 10,000 Canadian. So it doesn’t stretch very far, especially with the cost of living. I wanted to help those international students who have the misconception that they need to first move to Canada and get their credentials transferred.

But if their desires or they desire to move to Canada, there is a way for you to zone in focus on passing those exams and getting into practice because statistics show that it’s in the low 40s the amount of international students who pass the exams, the statistics are very low. I think, again, it’s because of lack of knowledge. People are not aware of the commitment that they need to make to pass the exam.

The investment that they need to make to get through the programs that they need to go through so that they can, and I believe every single pharmacist across the globe, they are capable of going into their careers in Canada successfully, it’s just that they don’t know the right strategy. They need someone to maybe hold them accountable, someone to show them what pathway they need to take, what direction they need to go. They just probably need like a human compass and I think that’s where I stepped in.

[0:24:55.8] TU: They need a guide, right? They need someone that will help them along. I’m curious, our listeners know very well that there’s many challenges right now in community retail practice in the United States in terms of burnout and expectations and staffing. There’s obviously a lot of work that’s being focused in advocacy on that.

Because of that, are you seeing interest from pharmacists in the US potentially moving to Canada as well, or are those same challenges we see in community retail practice here in the US, are those very similar in Canada?

[0:25:28.7] HJ: I have seen interest from pharmacists in the US who want to move to Canada for a myriad of reasons including — it’s like in the US, where it’s state-to-state practice, each state they have their own scope of practice or their own regulations. It’s the same thing in Canada with provinces, but a province like Alberta where I was practicing, we have a wide scope of practice.

So it may be for the scope of practice, it may be to escape the burnout. The thing about pharmacy practice in Canada as well, because immigration, and people are coming in full force. A lot of people are migrating to Canada then the workload becomes that much heavier as well. So there is burnout being experienced by pharmacists in Canada as well but it depends on the settings.

It depends on whether you’re working with a corporation or if you are working for an independent, or you could be working in just about any setting. But I don’t know if the challenges that are being faced in the United States if it’s that the same magnitude in Canada. Again, the cultures are very different, things are quite subtle here and maybe Canadians, they don’t want to seem as if they’re complaining.

But a lot of the challenges that people are experiencing in the US I can say that, from my own experiences, that some of them are similar in Canada. It’s just that people are not advocating at the level that it’s been done in the US.

[0:26:59.4] TU: Havalee, as you are talking to people that might be thinking about making the transition as a pharmacist to Canada, I suspect you hear from a lot of folks that their interested but they may have some type of misperception about what that transition may look like. Is there a common one that typically folks have that might hold them up in their journey?

[0:27:18.4] HJ: Yes, Tim. So one of the most common misconceptions that persons have in terms of transitioning into their careers in Canada, they believe that they don’t have the money to get it done. They don’t think they have the financial needs. And I am here to tell them that, like my coach said to me, it is not a matter of resources, it’s a matter of being resourceful. So a lot of these folks who, they will say, “I am going to pursue the school road, I am going to apply for school.”

And this is where the misconception comes in, because it is more expensive for you to apply as a student than it is to apply to transition into your career as a pharmacist, and even to move to Canada as a pharmacist, as a skilled educated professional. And this is not limited to pharmacy alone. I’ve had just today a connection on LinkedIn sent me a message saying, “Hey, I came to Canada as a student and it lasted for three months and then I just spent my six months and I returned home because it was so expensive.”

The connection just said, “I spent 15k.” And if you are moving to Canada as a skilled, educated professional and you are a single person, you need about 14k to show the government proof of funding, about 14k. If you come as a student for one semester for three months, that’s 15k. You will not see that money again. The money for a year of residency, you will get to keep that money.

So the misconception is, “I need to come as a student, ride along on the struggle bus, and then struggle to get my credentials transferred, and then five years later, I’m still not registered.” I’ve had a colleague in pharmacy who has been in Canada for 10 years and still unregistered. I’ve had a colleague who’s been in Canada for four years and still unregistered. Another misconception if I may is that the exams are too hard.

Because the statistics are low, it doesn’t mean that it’s not passable. You just need to have a strategy, you need to have a plan, and you need to have your commitment. You need to have these things in place and once you pursue the exam, it’s kind of like going to pharmacy school, there’s no difference. You go through the exam, you pass your exams, you can transfer your licenses. So those are two of the biggest misconceptions that I have had.

[0:29:48.8] TU: Havalee, I am curious, since you are on the front end of this business journey, which I think many people will find refreshing hearing some of the early experiences you’ve had of starting the business. I’m curious, as you think out let’s just say three years as a marker, what does success look like for you three years from now?

Personally, with the business, I mean, I’m sure there is a lot of overlap there but as you’re at the beginning of this and obviously, you’re in the day-to-day, you’re kind of in the weeds, you’re thinking about growing it. But I know when I have these conversations there’s often these feelings of, even if it’s not clear, I kind of see the vision of where things are going. What does that look like for you in three years?

[0:30:26.5] HJ: In three years from now? Wow. I see myself running a very well-organized, fully-automated, technologically included business that merges healthcare with immigration. In three years, I see myself there. I see myself onboarding more people to solve the many problems that we have, whether it’s in the health system and also to help a lot of people to change their lives. The way immigration and moving to Canada has changed my life, I want that other person to have a similar experience and especially if they have a family.

They will get that social support and also to help them to up-level in their finances. I could introduce them to Tim. I was like, “Tim is a financial pharmacist.” Yeah, so in three years from now, I can see myself positioning myself in the marketplace as the go-to person for any internationally educated pharmacist as well as persons who are interested in migrating to Canada.

[0:31:29.8] TU: I love that. Here’s the reason why I asked that question, well one, I’m curious but two, as I talk with a lot of aspiring or early pharmacy entrepreneurs, I’m often encouraging them like you’re in the weeds, you’re building it, you’re wearing every single hat of the business. That’s what you need to do when you get started but it’s so important even if you don’t know exactly where things are going to go, because none of us do.

This will evolve over time. It is so important to have even a fuzzy north star of what is this vision for a couple of reasons, one, that gives us the focus of, “Does the activities I’m working on, the products and services I’m developing, how I’m spending my time, does that line up towards that vision?” And obviously gives us clarity to the messaging that we have both for ourselves as well as externally.

Then I think it also provides a really important source of motivation, right? Because something you just shared there highlights that so well. You said, “In three years I really see running a well-oiled technologically included business with a lot of automation that is focused on the intersection of immigration and healthcare.” Now, pharmacists moving and practicing in Canada, that can be one piece of that business, right?

But the intersection of immigration and healthcare is a much bigger vision and obviously, you are taking a very important first step right now. So I love that you’ve thought about that. I think it is such a good example of what are the things that I am doing right now, the steps that I am taking, the efforts that I’m moving, the products and services I’m developing, and how does that align with where I want to see things going in three to five years, so really cool.

Thanks for sharing. I want to wrap up by asking you two questions, which I have stolen from Tim Ferriss who ask some really great questions on his podcast. That first question is, in the last let’s say couple of years since you’ve made this transition, what new belief, behavior, or habit has had the most significant impact on you personally or professionally?

[0:33:34.0] HJ: So over the last five years or let’s say ten years, let me just even say even three years, a lot has shifted for me both personally and professionally and I’ve had to embrace a new mindset, I’ve had to embrace a new philosophy and I’ve had to become a student. I have had to question my belief system and the things that I grew up knowing. I’ve had to unlearn a lot of the things, unlearn the belief that I wasn’t worthy enough, I wasn’t good enough.

That there were limited supplies of everything out there when there actually is an abundance. I’ve had to retrain my brain and I’ve gotten into personal development. But one of the things that I’ve done most is embrace the fact that if I want to get to where I want to go, I need to do things differently and I have to invest in me. And not just investment in terms of monetary investment, but invest in my mindset, in up-leveling my mindset.

So, I’ve had to surround myself with other women in business, in a community setting where there are people who are empowering you and inspiring you and not just settling for mediocre things. I’ve had to make that shift and I’m so grateful that I’ve had, again, the discernment to know that. If I see things going on a particular trajectory and they want a different outcome, then I can. I have the power within to change that direction, so yeah.

[0:35:05.5] TU: That’s a really good one. I think it’s so important that we are aware of what are those external influences or the stories that we’re telling ourselves that are leading to some of those self-limiting beliefs and behaviors that we have. Well, one of the real examples of this, you probably see this all the time is you mentioned the 40% passage rate of that examination, right?

I can almost assure you that if you talk with someone that does not know that number and you know, maybe they are confident about this transition, they’re feeling good about it, they’re confident in their abilities and all of a sudden, you throw that number on them like I am sure you can see the confidence and the demeanor change, and all of a sudden the ceiling comes down of what they think is possible.

I think it is so important that we’re constantly examining where do these beliefs come from and why do I have this ceiling in my mind? We all have them, when we think about our goals over the next year even in 2023, even if we are challenged to think big, dream big, we all have a ceiling. It is just a really interesting question of like, “Where does that come and why is that there?” Gay Hendricks talks about this in The Big Leap, which is a great book that I kind of –

[0:36:12.5] HJ: That’s the book that I just completed, just completed.

[0:36:14.5] TU: Oh cool.

[0:36:15.6] HJ: Yes, talk about that ceiling and how when we get there, we tend to self-sabotage. I love that book, I love the concepts that it brings across.

[0:36:25.7] TU: My second question for you Havalee here again, stealing this from Tim Ferriss is when you feel overwhelmed or unfocused, what do you do to refocus and get yourself back on the right path?

[0:36:36.5] HJ: So, I tell people that I have a really short attention span but that’s not true. What I’ve come to realize is that I’m not focusing on the most important things that I need to get done, so I get distracted. I get sidetracked. Whenever I feel unfocused or overwhelmed, I first have to check my environment. What is it in my environment that I need to remove? What is it that I need to, what systems do I need to put in place? What habits do I need to reinstall?

For me, I listen to Patrice Washington’s podcast, where she said, “Clutter is a physical manifestation of chaos in your mind.” I check my environment to see if everything is organized, what do I need to clear out. I also try to do some brain dump, I do write out the things that just free up my mental queue. I also do journaling and sometimes I do meditation, I don’t do it often enough. I know I need to get centered and get focused and get realigned and write out the things that are most important to me.

What is it that I need to get done right now that’s going to have the greatest impact on the big goals that I have for myself and just to add to that, it’s funny that when I was operating in my imposter syndrome, that I felt fearless because I didn’t know that I had imposter syndrome. I was just smashing through goals and moving from one goal to the other and then when people were like, “Okay, so how did you do that?”

I was like, “It’s no big deal” because I was just operating. But now that I am more centered and becoming more aware of who I am and what I bring to the table, I am smashing through my imposter syndrome and just showing up anyway and trying to de-identify. It will take some time but try to de-identify, I need to divorce imposter syndrome altogether so that I can operate in my greatness and operate in alignment.

[0:38:38.5] TU: I love that reflection and I think the comments you have about clutter are really interesting. I found that as well that sometimes it needs to be a brain dump, sometimes it needs to be a physical organization of the space so that we can focus and align and get ourselves working on the thing that’s most important.

Other times I have found that sometimes we’re not working on the most important task, because typically there’s some fear that might be underlying us wanting to lean into that. We’re working on something that’s maybe a little bit easier or not as significant or that fear doesn’t reside is kind of an escape route, that typically fear of failure, but it could also be fear of our identity or what other people think, fear of success, exactly, so.

[0:39:20.2] HJ: I have experienced that myself.

[0:39:22.6] TU: Yeah, an important question for folks to reflect on, if you find yourself often not focusing on perhaps the most significant or meaningful work that you could be doing, what’s driving that and if it’s fear, what’s behind some of that fear? So Havalee, this has been awesome as I knew it would be. Where is the best place that folks can go to learn more about you and to follow your journey?

[0:39:44.8] HJ: Oh, absolutely. So I may be found on LinkedIn, Instagram, and Facebook. I go by my actual name Havalee, surname Johnson. On Instagram, I’m @havalee_89. On Facebook, I’m Havalee Johnson and that is in fact my real name. I’ve had persons reach out to me like, “What is your real name?” I say that’s my real name.

That it’s because a lot of persons have been scammed, a lot of persons have had encounters with people who are not authentic and so they’re questioning whether or not this person is real. Like out of nowhere Havalee showed up prior to March, April of 2022, I was a ghost on LinkedIn. I would not show up, I would not write anything, I would not advocate.

If Tim had asked me to appear on his podcast, well, he wouldn’t have known me but if he just mysteriously came across me and say, “Hey, would you like to be on my show?” I’d be like, “No.” I have passed up important opportunities in the past. So I appreciate being on your platform, Tim. Thank you so much for having me and it was so great connecting with you on LinkedIn, that’s where it started.

[0:40:53.2] TU: Thank you for saying yes and I hope folks will follow your journey. I’ve enjoyed it as well. So thank you for taking time to come on the show, I appreciate it.

[0:40:58.7] HJ: Thank you for having me.

[END OF INTERVIEW]

[0:41:00.0] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and it is not intended to provide and should not be relied on for investment or any other advice. Information on the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archived newsletters, blog post, and podcast is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analyses expressed herein are solely those of Your Financial Pharmacist unless otherwise noted and constitute judgments as of the dates published. Such information may contain forward-looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.

Thank you again for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 303: How This Pharmacist Paid Off $115k in Two Years

Posted on by Caitlin Boyle

Dr. Donisha Lewis talks about her debt-free journey, why and how she got involved in real estate investing, and how she and her husband got on the same page to achieve their financial goals.

About Today’s Guest

Dr. Donisha Lewis is a clinical pharmacist at an ambulatory care facility where she collaborates with providers of the Hematology/Oncology and Internal Medicine departments to create treatment plans for patients. She attended the University of Louisiana at Monroe College of Pharmacy where she received her Doctor of Pharmacy degree in 2011. During her career as a pharmacist, she has served patients in the community, inpatient, specialty, and ambulatory care settings. She is also a real estate investor alongside her husband. She enjoys traveling, spending time with family, and volunteering.

Episode Summary

This week on the YFP Podcast, YFP Co-Founder & CEO, Tim Ulbrich, PharmD, welcomes Dr. Donisha Lewis to the show to discuss her debt-free journey. During this episode, listeners will hear the how and why of Donisha’s path toward financial freedom, how she got her start in real estate investing, and how she and her husband got on the same page to tackle $115,000 in debt in just two years. Donisha shares her pharmacy story, what drew her to the pharmacy profession, and her financial picture upon graduation from pharmacy school. With plans to tackle her $99,000 in student loan debt as soon as possible, her mindset and approach to debt payoff were critical in achieving this goal. She shares practical tips and tricks from her experience in paying off a combined $115,000 between herself and her husband, and advice for recent graduates who may not have started making payments on their loans due to the student loan pause. Making sacrifices while remaining realistic, Donisha built a budget that allowed her and her husband to combine the snowball and avalanche strategies. Using her budget, she identified wasted spending and analyzed her savings to determine the amount she was comfortable contributing to the debt payment. Tim and Donisha talk about the importance of having a shared financial vision with your partner and the benefit of having varied strengths in personal finance.

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[00:00:00] TU: Hey, everybody. Tim Ulbrich here, and thank you for listening to the YFP Podcast, where each week, we strive to inspire and encourage you on your path towards achieving financial freedom.

This week, I welcome Donisha Lewis onto the show to talk about her debt-free journey, why and how she got started in real estate investing, and how she and her husband have been able to get on the same page to achieve their financial goals. If you’re interested in learning more about working one-on-one with a certified financial planner may help you achieve your financial goals. You can book a free discovery call at yfpplanning.com. The team at yfpplanning includes five certified financial planners that are serving more than 280 households in 40-plus states. YFP Planning offers fee-only, high-touch financial planning that is customized for the pharmacy professional. Whether or YFP Planning’s financial planning services are a good fit for you, know that we appreciate your support of this podcast and our mission to help pharmacists achieve financial freedom. Okay. Let’s jump in our interview with Donisha Lewis. Donisha, welcome to the show.

[0:01:02] DL: Thank you for having me.

[0:01:04] TU: Well, I am really excited for this conversation. You and I connected via LinkedIn through a mutual colleague, Dr. Jerrica Dodd. After we connected, and I learned a little bit more about your journey as eager to share your story with our listeners. So we’re going to dig into your debt-free journey, paying off the student loans. We’ll talk about some real estate investing as well. But before we get into all of that, let’s start with your career journey. Where did you go to pharmacy school and what led you into the profession?

[0:01:34] DL: Absolutely. I completed my pharmacy degree at the University of Louisiana at Monroe, back in 2011. As a child, I wanted to be a pediatrician, actually. My mom actually put me into a program, at the time, you could kind of shadow physicians. We didn’t shadow them seeing patients, but just the day in the life when they were doing their office hours. We went up to the operating room, and I saw all the tools and I just said, “You know, I have to find something else to do, because this is pretty intimidating.” I didn’t really want to perform any surgeries. I really didn’t think that I wanted to do anything that had that much patient contact as it related to doing surgery, stitches, anything like that. That really made me reconsider being a physician. So I started researching other medical professions that weren’t as hands-on, if you will. That’s when I came across pharmacy.

I actually have an uncle who’s a pharmacist too. That led me to the profession. I was still able to interact with patients, but not necessarily be as hands-on as I would have been as a physician. That’s what led me into the space.

[0:02:44] TU: I can relate to that. I went into pharmacy right out of high school and I was interested in medical professions at large. But the whole blood thing, you know, kind of scared me away. You hear that story often with pharmacists. One of the many reasons. I’m not sure that’s a great reason not to go into other ones, but it was an important one for me at that time. Tell us more.

So you graduated 2011. Coming up on your 12 years out into the profession, what have you been working on this point since graduation? I understand you’ve had experience in community practice, ambulatory care, a little bit in management as well. Give us that career journey over the last decade or so.

[0:03:22] DL: Sure. I began my career with one of the large retail pharmacies. I stayed with them for a little while. Then, during my time with them, I was able to get a PR, inpatient clinical pharmacist position, so I was doing both. From there, I was able to transition into a specialty pharmacy role, which was within a hospital practice. I like to say it was a combination of outpatient community pharmacy, as well as some inpatient clinical pharmacy. I really enjoyed that role. Now, I’m with an academic-based practice, and I’m helping them expand pharmacy services there. I am in a clinical role there, and we are expanding our services throughout the practice. We have some collaborative practice agreements in place. I’ve also started an ambulatory care clinic with the Department of Internal Medicine, and we’re launching specialty pharmacy there as well.

[0:04:16] TU: Wow. I love it. I love it. Some of our listeners, especially those that have graduated here in the last five or so years. I graduated in 2008, so we’re pretty close in that timeframe. When you and I graduated, student loans were – they were a thing, but they weren’t as big of a thing as they are today. We see lots of graduates coming out with you know, $200,000, $250,000 of student loan debt. Average right now is about 160,000. I think sometimes, when we talk about our own journeys, 10, 12, 13 years ago, people were like, “Oh, well. That was only $100,000.” It’s like context, context of what pharmacists were making at the time, as well as – that’s still a substantial amount to pay off. I think we’ve become a little bit numb to the indebtedness and the debt loads that are out there.

Let’s talk about your student loan journey. Give us the juicy details. How much did you have upon graduation, and what was your mindset at the point of graduation about how you wanted to approach the student loan debt?

[0:05:20] DL: Sure. When I graduated, I came out with right under $100,000 in student loan debt. Like 99,000 and some change is what I owed. For me, when I came out of school, we were at the end of the shortage, approaching really a saturation of pharmacist. One thing that I wanted to do was definitely be conservative in my spending because of that, but also not being comfortable with that type of debt that really led me to make decisions. Basically, like I was still a college student, related to my finances. I’m sort of grateful for that time coming out of school. It was an interesting time, because I saw a pharmacist when I started pharmacy school being offered all these incentives, and bonuses, and that stopped.

As soon as I graduated, those bonuses, and all of those incentives, they stopped. That’s a very big difference. I heard of people getting these extremely, just extreme amounts of bonuses, cars, all these things. For all of that to stop, I really wanted to be very cautious in my decision-making financially, because I really wasn’t sure what the future of pharmacy was at the time. One of the things to do with obviously, live below my means, but also reduce this debt. That was very important to me. With that large number, though, it’s intimidating.

Like you said, nowadays, 99,000 is not that much, unfortunately, for a lot of pharmacy grads. But to me, that was a lot. That was the framework, the mindset. I really did not want to have that debt looming over me like that for an extended amount of time.

[0:07:07] TU: It’s interesting to hear you share the timeframe you were in. I graduated in 2008, which was still at the time sign-on bonuses. We’re happy. I remember I made the decision to go do residency. I was going to make a whopping $31,000 salary all the while. Cars and sign-on bonuses we’re having. I remember one specific offer that was out there. It was one of the big chains that was offering a million dollars to go work in Alaska for a three-year deal.

[0:07:31] DL: Wow.

[0:07:33] TU: I remember, I mean, times changed significantly. You saw that happen, you graduate in 2011. We’re actually swinging back into some of that right now, which is an interesting discussion for another day. But you said something that I want to dig into a little bit deeper, which is, I’m not comfortable with that amount of debt, right? Whether the number was 99, or 150, or 50, I get a sense that just overall, you wanted this debt off of your shoulders. Tell us more about that, because I will talk with some people, Donisha that will say, “Hey, I’ve got $250,000 of debt.” And you’ll see a range of emotions to that debt. The number can be the same. In one instance, the house is on fire, it’s causing anxiety, it’s causing a lot of stress, and worry.

Then the other end, it might be, “Nah, it is what it is. It will kind of take care of itself over time.” Where was your motivation, your mindset around, “I want that off my shoulders”? Tell us more about why you felt that way.

[0:08:31] DL: Sure. For me, I, as a pharmacist, we have the actions to work part-time jobs, or pick up extra shifts and all of these things. Initially, I was thinking, “Oh, I can do that when I want to do extra things.” But I realized that that wasn’t very fun working all the time, so that was extra motivation to really have that time back and not feel like I had to work so hard in so much because I had this amount of debt. I felt like I couldn’t really do much else, because I owe someone else all this money. For me, personally, that’s just my belief with that, I really wasn’t comfortable making more decisions and making big purchases, and really moving my life forward the way that I wanted to, because I owe this large amount of money. It was really uncomfortable for me, but I do know, you know, like you said, other people, they’re totally comfortable with it. They’re like, “Well, hey, I’ll pay it off eventually.” But I just wasn’t okay with that, and I initially scheduled my student loans for a 10-year pay off. But even with that, I was like, “This isn’t going to work. Let’s speed this up.” So that’s what happened.

[0:09:37] TU: Yes. I would really encourage the listeners, especially those that are listening, that our students are just getting started. When it comes to the financial plan, I think what you’re highlighting so well here is there’s the objective numbers part of it, how much debt, what’s the strategy, what’s the plan. But then there’s the emotional side of it as well, which is really important. Folks often talk about how much a personal finance is behavioral. As each year goes on, I’m believing that more, and more, and more. There’s so much to be said about acknowledging the emotional side, the behavioral side of financial planning. There is no right or wrong answer. That’s I think it’s so important to communicate that, whether you are someone that looks at debt, and you have a lot of aversion to it, and it’s causing you stress, and it’s causing anxiety, like honor that. Honor that and develop a plan around that.

For folks that feel differently, making sure you’re finding a way to mitigate the risk, but just understanding having the self-awareness of where you are, emotionally in terms of viewing different parts of the plan.

[0:10:35] DL: Absolutely.

[0:10:37] TU: Donisha, I’m curious to hear your perspective. We are now approaching three years since the beginning of the pause on any payments being due for federal student loans because of the pandemic. So March 2020 was the beginning of the passage of the CARES Act, it’s been extended several times. We’ve had a freeze on payments, a freeze on interest rates. We now are coming up on class of 2023. We’ll be the fourth graduating class, and depending on what happens here, with the Supreme Court decision, and when the when the payments begin, potentially the fourth class that has not had to make payments on their student loans. I think that is a blessing, and it also presents some challenges. I’d love your perspective as someone who has gone through this journey, what would you have to say to those that are coming out, and those that are recent graduates about, “Hey, be thinking about this when these payments begin, because they will begin at some point.”

[0:11:32] DL: Absolutely. I think if you’re in the position where you are making the money that the average pharmacist makes. I would strongly consider starting to plan now, or starting to make those payments, and loan forgiveness and all of that. Those things are still in legislation. I really don’t recommend waiting for that to happen. It may very well happen. But I feel like if you’re in the six-figure zone, I don’t think the full amount will be forgiven. Even just now, thinking about your strategy, thinking about how you want to approach it, and especially if you’re someone who’s not comfortable with it, you definitely don’t want to just ignore it. There are different strategies that you can take to make sure that you aren’t – it’s completely ignoring it, but you’re still comfortable in your lifestyle. I would really do my research there and begin to plan and have a decision to take some action on that.

[0:12:30] TU: Yes. Such a good time to game plan, right? That timeline to game plan has been extended. We were saying back in 2020, use this window, come up with the plan. I think that’s had a – it’s lost its effect right over time, because it’s been extended so many times. But I love what you’re sharing there, because if payments start back up, and you’ve got a plan, great, you hit the ground running. If payments don’t start back up, but you have a plan, and you’ve just had expenses. That’s great, too, We can allocate that to different parts of the plan. I think my fear is that, especially with rising housing costs, often we have student loan borrowers, that are also first-time homebuyers, like pharmacists making a great income. But at the end of the day, there’s only so much income to go around.

When you’re looking at $200,000 of student loan debt, rising home costs, and obviously inflation. There’s been other competing expenses, I’m sure for many people as well. You start to get pinched in all different directions, and we’ve got a reset. What is that payment going to be when we come out of the pause? Look at the options. Are we doing a 10-year standard repayment? Are we doing an income-driven repayment? Are we doing a loan-forgiveness pathway? What is that monthly amount going to be based on the strategy, and then how do we work that into the budget to make sure that we’re ready?

I do think, though, that for folks that have really optimized this time period, the we have heard of situations of pharmacists that hey, I had a big student loan payment. But because that’s been on pause, I’ve been able to pay off credit card debt or I’ve been able to build up my emergency fund, or focus on another debt that was getting paid off as well. Hopefully, there’s been a lot of wins and opportunities that have come from this

[0:14:05] DL: Yes, I hope so too.

[0:14:07] TU: Let’s talk about how you were able to accomplish this. We can debate whether or not $100,000 is a lot. I think it’s a lot.

[0:14:14] DL: I do too.

[0:14:16] TU: It wasn’t just the amount, but it was the time period and the intensity. Couple years that you paid this off. I’m curious, you know, what sacrifices did you have to make to be able to allocate as much as possible towards the student loans, and then how did you keep up that momentum and the intensity of it knowing that two years, yes, it’s a short period. But when you’re in that type of intense debt repay off, that can feel like a long time. What were the sacrifices and then how did you keep the momentum?

[0:14:47] DL: Sure. I did this with my husband. Total, it was $115,000 together, between the two of us and that did include a car loan. We just included all the debt. We didn’t have credit card debt, but we did have the student loan debt and the car loan. I will be honest, in the beginning, we really didn’t know how long it was going to take us. We just knew we wanted to get more aggressive with our payoff. We use the snowball strategy. Some people don’t know what that is. You just put all your loans in order, you start with the lowest amount, and put them down in order, and you pay the first one off, and then you just roll that payment into the next payment, and you keep going.

The first thing we did, Tim, was we just looked at our budget. If you don’t have a budget, you can create one. I would say, look at the last few months of your banking statements, credit card, all that stuff, put it together, create a budget based off that. Now, the first thing you would do is, you want to see, “Am I spending more than I’m making?” If that’s the case, then you really need to, again, create some type of strategy. That’s what we did. We looked at our budget, we looked at our spending. Even though we did live below our means, I think everybody can identify areas of waste in their budget. For us, that was food.

We would go to the store, buy groceries for the week or so, get tired, go buy food out, because we didn’t want to cook. Meanwhile, those groceries, they’re no longer, you know, you can no longer eat them. They’ve gone bad. So now, we’re throwing away food and buying more food. We really identified that, and that was a big area for us that we could cut down on. So really, looking at your budget, identifying areas of waste. That’s another thing that we did. Then, we just looked at our savings to see what we were comfortable with going at the debt.

I know a popular snowball or the author of Snowball, they recommend the $1,000 for your emergency fund. That wasn’t realistic for us. I live in DC, my husband and I are both from Louisiana. If something happened, $1,000, we couldn’t even get home. We had to make that a larger number, but whatever is comfortable for you.

We did take some of our savings, and we just did the Avalanche Method, which is where you put a large amount of money towards the debt. We use that. During that time, we had just purchased our first home, which was a fixer-upper, pre-foreclosure. In that, the next year, we got a lot of tax benefits, because we did a lot of improvements. When we received that tax return, threw it at the debt, like that’s what we did. So, sometimes things like that happen. Anytime that happens, just throw it at the debt. I recommend being realistic. When I say create your budget, identify areas of waste, going back to the food example. If you’re someone that’s eating out five or six times a week, don’t just say, “Oh, I’m going cold turkey.” It’s not realistic, and you’ll probably be miserable. That’s not the goal, because then you really, probably will quit before you get to the finish line.

What I would recommend is, being realistic with your goals. If you’re eating out five times a week, maybe cut it down to one to two times a week, and also reduce the level of the restaurant. Maybe not the most expensive place, maybe like a mid-range place. You definitely don’t want to deprive yourself. For us, we also like to travel. We decided, okay, instead of maybe taking three to four trips a year, you just do one. That’s what we decided to do, so that reduced a lot of money going out as well.

Setting up some realistic expectations once you do your budget, identifying that waste. Another thing with a budget, some people don’t realize, if you get paid bi-weekly, two times out of the year, you get a third check. For us, that was a mini bonus. What we would do was really strategize with that check. Do I want to spend a portion of that to do something that I’ve kind of cut back on to pay off the debt? To pay off the debt, do I want to put the entire mini bonus toward the debt? Really like looking at different areas that you can strategize in. Another area of waste is subscriptions to the gym, to subscription services, with television or all those things. Just looking at your finances, there may be things coming out every month, $7 here, $10 there. Those things add up.

If you’re not using those things, you can cancel those subscriptions. That’s what I advise, looking at those bank accounts. That’s what we did. Identify as much waste as possible within reason. Then any type of extra money that we received via from tax return, a bonus from your job, or just that extra third check, being strategic about that, and putting it toward the debt. By doing that, we really started to change the way we viewed money during that timeframe, and we got excited about it, and we just really wanted to keep it moving, keep rolling, put more and more money toward it.

During that time, “Tim,” life was still happening. We had unexpected things come up, where we had to pivot, we had to make adjustments. But we never touch the emergency fund, we just adjusted how much we were paying on the debt. We still did it. In two years, we were not expecting that at all. So if you really are serious about it, and you set the foundation, and really make realistic goals, I think you can be successful and also run your own race. Don’t compare too much. It took us two years, but we were only responsible for ourselves financially at the time. That was another thing we knew, “Hey, we’re only responsible for ourselves right now. Let’s take this opportunity, because we don’t know what may change in the future to get this done now.” When your own race, if it takes you longer, that’s fine as long as you’re trying and you’re taking some action on that.

[0:20:48] TU: I love that. So much to unpack there. I think the theme I heard was really a mindset around the intentionality with the financial plan, and several things that you outlined, right? Making sure that you’ve got a budget that is realistic, that one is going to be able to keep the momentum so important. I think we often try to go from 0 to 60 budget. We get frustrated. It further disenfranchises us from the process overall, and it’s something as important as track back 90 days. You said a few months of looking at expenses, before we set these goals that may or may not be realistic. Let’s look at what we have been spending. Sure, we might pivot. You gave the example of eating out. But we want to pivot in a way that, yes, it’s going to free up some cash flow that allows us to achieve the goal. Whether that’s paying down student loan debt, whether it’s paying down other debt, maybe it’s saving for a home, saving for investment property. Whatever the goal is, we got to have cash flow. But just as important, if not maybe more important is the momentum to keep going.

We don’t want a system and a process that’s going to bog us down, it’s going to leave us frustrated. I think making sure that we’re finding that balance of enjoying things along the way, but also, whatever system we’re building, we feel that it’s built in a way that we’re going to be able to sustain it.

[0:22:04] DL: Absolutely.

[0:22:05] TU: I know. I’ve fallen victim too, and I think we see this a lot with people that are getting started, is they develop a beautiful system because they’re really motivated and excited. Then two months later, we’re kind of falling back into the patterns we were, because it’s so much to manage and so much to keep up with. We have a free template for folks that want to get started with the budgeting process, you can go to yourfinancialpharmacist.com/budget. We’ll link to that in the show notes, you can download that.

Then from there, you could use Excel. If you’d like to stay in Excel, you can use a bank tool, you can use mint, you can use – [inaudible 0:22:39] lots of different budgeting tools and options that are out there. Donisha, I want to dig into the we factor more, I heard you say we multiple times throughout the journey. We as in the debt, we as in the plan that we’re developing, we as in making the decisions on what was most important and what goals we’re going to achieve. There’s a lot to get on the same page with and I don’t want to take for granted how hard it can be to have a shared vision where two people are rowing in the same direction. I often have the opportunity to talk with folks, but that may not be the case. You may have one person who’s really engaged, one person who’s not engaged, or one person that grew up in a very different money household than someone else. For different reasons, they’re grown in two different directions.

It’s so hard for them to achieve the goals without first sharing the vision of being on the same page. I sense a very united we front as you were talking. Tell us more about what that looks like, give us the sneak peek into the kitchen table. How have you been able to get on the same page and keep that momentum together?

[0:23:45] DL: Absolutely. I appreciate you for acknowledging that. One thing about us, we’re blessed to go to a church that has a budget class. We took a budget class before we even got married together. That really put us on the same footing. We had the same vision and the same goals of what we wanted to achieve, but the pathways were a little different. In taking that class, we took it together, and we’ve really kind of established that foundation. The budget to me is the first step for everything. Now, once we got married and our finances were together, we really had to look at each other’s strengths. My husband is the big-picture person, I’m the day-to-day person.

When we were doing our debt payoff, I was the one looking at the budget every day and saying, “Okay, we need to slow down in this area because we’re only two weeks into the month and we’re not going to reach our budget goal if we don’t slow down.” That was my job. That’s okay. Then, what we would do is we would have meetings together where I would discuss certain things with him. He’s looking at the bigger picture, and also projecting what’s the next stage after that. That’s kind of his role. I’m the person that goes back, kind of works on the strategy, and looks at the day-to-day and the little details that he really does not want to do at all. We really show one another grace in that and really appreciate our differences, and use those differences for the benefit of the team. That’s how we do it.

[0:25:21] TU: I love that. I think just the awareness to acknowledge the different strengths to articulate that to one another, to embrace the strengths that come with those roles naturally, and then to align those so you can move forward. I love what you’re saying about the budget. I often encourage folks, “Hey, start with the vision and the dream.” Then as you work into the budget, the budget is really the roadmap for how you’re executing your goals. It’s a direct representation of what you are saying collectively is the priority or is not the priority. I think for folks that are listening, and maybe don’t feel like you’re on the same page with a vision, I would really encourage you to start there. Because I think when two people get excited about the vision, before you maybe get bogged down in the weeds of the numbers, like if we can get on the same page about the vision, awesome.

This is what financial success looks like for us as a couple or for us as our family. All right. Now, let’s develop the budget in the system that is the roadmap to achieve those goals. We said these things are most important. Are they represented? If not, why not? What can we change? What should we do differently? I think that that really helps folks get aligned. I think we often think of budgeting as restrictive.

[0:26:35] DL: Absolutely.

[0:26:36] TU: But if we reframe as, “Hey, this is the mechanism in which we’re achieving our goals. I’ll never say it’s exciting, but I think it’s a path in that direction of – and especially if we layer automation on top of that.” Okay. We’re now identifying the goals and automating the goals that we collectively said are most important. Then watch out, right? Because if you have come together on the same page to define the vision, and you’re starting to achieve that, and you both see that happening, things start to move from that forward of what else is possible.

[0:27:08] DL: Absolutely. You hit the nail on the head, especially for us, because the next move was real estate investing for us. That was something that my husband was much more on board with than I was. I’m a pharmacist. We like things to be in a nice little package. It all has to make sense. That was risky to me. I was interested, but I just really didn’t want to dive in. But once we work together to pay that debt off, and I saw the power of the teamwork for us, I just felt like, “Hey, we can do this.” Even if things go beyond what we expected, or things change, and we have to pivot, we have already done that with the loan payoff. So it really strengthened that teamwork, and I was able to get on board with the real estate investing afterward.

[0:28:01] TU: Yes, right. We’ve accomplished this as a team. Obviously, at that point, you’re working from a position of financial strength. We’ve got no debt. We’ve got a fully-funded emergency fund. We’re able to take on a little bit of risk, such that, if things go differently than as planned, it’s not going to create additional stressors. Let’s talk about the real estate. There’s lots of different types of real estate, from passive to active. The guys on the real estate investing podcast that we launched, every Saturday, David and Nate do a great job of talking about the spectrum of real estate, featuring different pharmacists that are investing in all different types.

I think that, at least for me, when I first heard about real estate investing, and really started to dig into learning more. I had a very active image in my mind of, you know, you buy a property, you hold it for the long term, you manage it, you’re fixing things, and a lot of people do that. But there are also more passive strategies, there’s fix and flips, short-term rentals, being in the bank, there’s a lot of different ways to go at it. Knowing the variety of pathways that are out there, tell us more about the pathway that you and your husband decided to go, and how you got to the decision to go down that path.

[0:29:06] DL: The first property that we purchased, it was a pre-foreclosure. It was a situation where it was in the budget that we wanted and the location was good. But the location is really what was most important to us. That’s why I got on board with something that needed renovation, because I realized if you want something that’s turnkey in this neighborhood, it’s far past your budget. I said, “Okay. We’re going to do this, and so we did.” We renovated the home, we didn’t do any structural renovations, but we did – basically got the house. We did that, that went off really well. We stayed in the home for a little while and then we sold it. When we sold it, we sold it before the pandemic when the prices just went crazy. It was before that.

But to see the amount of appreciation in that home, a light bulb went off in my head like, “This is what they’re talking about when they say, real estate can really propel you into financial independence.” From there, the plan was to continue to buy homes, renovate, and then maybe hold them for a little while, depending on what the market was looking like, and then to sell them. That was the plan. But we ended up moving into another home that was a newer build. From there, we have the home that we’re in now, we just renovated this one. We’re kind of still working out the strategy, but the other home is – we’re using it as a long-term rental.

Ideally, we would like to be able to do a flipping business, because we like to do it. But as we’ve done more research, we realize that being able to hold on to some of these properties, and leverage the equity in them, we can propel a lot faster. Our strategy really is to buy, renovate, hold. Then, you know, use that leverage to buy again, which is called the birth strategy. That’s really what we’ve chosen to do. We are open though, toshort-termm rentals. We are exploring other markets for that as well, and really just trying to have a somewhat diversified real estate portfolio. Not to diversify, because I do feel like if you focus on one or two things, you do a lot better. But that’s really our strategy.

We’re okay with doing construction, we’re okay with doing renovation, we’ve done it, and we’re okay. At this point, we’re doing long-distance investing. That’s really our next step.

[0:31:32] TU: I love it. I think it’s a great example of you, take that initial step and kind of get over that initial fear. Then, some things goes plan, some don’t. It opens up some different doors or opportunities. I think for everyone, their journey may be different of what they’re comfortable with in terms of risk tolerance, how active they do or don’t want to be in the process as well.

For folks that are listening to this and hearing some of the strategies that you’re talking about with the birth strategy and leveraging the equity in long-term rentals versus short-term rentals. The Real Estate Podcast, they’ve covered much of that and a future pharmacist stories as well. So we’ll link to that in the show notes. I would encourage folks to check out that podcast as well. I’m curious to know, it sounds like you’re fairly active, right? When you’re talking about the flipping, the construction, is that you and your husband? Is that you managing the project? Are you passive? It sounds like you’re very active. Am I reading that right?

[0:32:23] DL: We are very active. He’s more of the project manager. I’m the money person. I actually analyze the deals, I research areas, and research deals. Then I bring them to him, and we kind of analyze those together. He is the negotiator as well. When the negotiations happen, I walk away, Tim. I’m a lot more polite when it comes to that. I just walk away and let him do his thing. That’s him. He’s definitely the project manager. Working with the contractors and all of that, and I’m more so the person managing the budget, finding the deals, and then we work together on design.

[0:33:02] TU: Okay. Just like your personal finances, it sounds like you have identified strengths, and roles, and areas of responsibility. It’s your own business, within the family unit, which is really cool. I’m curious to know, deal finding. I think that’s one of the biggest barriers for people getting started is where do I look? It feels like people that are in this are just a huge disadvantage of somebody getting started. Are you looking off-market? Are you looking on the MLS? Do you have referral sources? How are you sourcing those opportunities?

[0:33:32] DL: Right now, as you know, these interest rates are very expensive. This market is very unique. But when we started out, we did a lot of driving, just driving ourselves around, and really looking for opportunities where a home may look vacant, or a home looks like it’s not being properly taken care of. Then from there, we will try to see if it was on the MLS. In the case of our first home, it was a pre-foreclosure. It was actually on the MLS as a pre-foreclosure. Then we use a realtor to help us with that.

Now, there are so many just groups of wholesalers and all of this that are out there. If you are trying to get started, there are ways to get in contact with other folks doing that. If you feel like, “Hey, I don’t really want to invest that much money into it” and you want to kind of get that experience and exposure, you can always ask people if you can just link up with them, and ask them what you can add to their system where their pain points are. That’s a great way for you to learn and a great opportunity for you if you’re not really at the point where you really want to invest a lot of money into it.

Right now, we’re currently working with realtors, especially since we’re looking in other markets. So we are working with realtors to try to find some of those properties. We don’t focus too heavily on off-market deals at this point in time. But I do know people do that, and they do that well. There are a lot of systems out there that can help you with that as well.

[0:35:06] TU: When done well, I think real estate can really add to, you mentioned, a pathway to financial independence that could potentially create wealth, lots of reasons to accelerate the financial plan, different tax advantages, et cetera. When not done well, it can be a hindrance on the financial plan, and there is a risk side of it. There’s obviously folks that have built systems and processes that have done this well. There’s individuals that maybe haven’t done as well, or analyzing deals properly, and not looking at the full breadth of what the numbers really are.

I sense that you guys really do have a system, a process. You’re looking at growing and scaling, which tells me the numbers are working. My question is, how do you view real estate investing, impacting and accelerating your personal financial planet. Is it a long-term strategy of building wealth, it’s part of the retirement plan, it’s a tax strategy? Is it short-term that the income from real estate you’re using towards other financial goals? How do you view the intersection of real estate with your financial plan?

[0:36:09] DL: Sure. That’s a good question. We like to kind of be right in the middle with that. What I mean by the middle, is by us holding those properties. They are a part of our long-term plan. But we also like to choose properties where we will cash flow pretty well, also. That’s a good balance there, because we know there are markets where you can really cash flow. But if you go to sell the home and 10 years, it’s going to be the same price you paid for it. You don’t really have a lot of appreciation on that front. That long-term game isn’t necessarily there. We try to find a good balance, and that’s one of the reasons we’re leaning towards short-term or midterm rentals. Because right now, in this market, especially, that’s really going to give us that that cash flow, but we can also have that appreciation.

We do have a long-term rental, and thankfully, it’s in a location where we’re doing very well on both fronts. But trying to get there right now in this market can be challenging. We’re looking towards that short-term, midterm. But we really like to have a balance, because we do want to use the real estate. Right now, we’re just using the money to purchase other real estate, not for our personal use. But we do want to get to a point where, “Hey, we could if we wanted to.” It depends heavily on our real estate income, and maybe transition into a lower workload on our W-2s or something to that effect. But we are in this for the long run, so we’re not trying to accumulate all of these rentals and get rich quick. That’s not really our strategy.

[0:37:45] TU: Yes. You’re not having to replace your W-2 income. I think that’s an interesting point, because for many individuals, there’s the initial strategy of, “How do I do this well, and then how do I scale the system, so I can invest more into other properties, more opportunities?” But then, there becomes a point of the portfolio where, depending on what else is going on, your retirement plan, et cetera, you might want to draw from that asset. There’s a strategy involved in that, and the tax optimization and so forth there as well.\

As we wrap up, I’m curious to hear your perspective. You’re on the other side of paying off your student loans, you’ve been out for over 10 years, you’ve got a good base in real estate investing. For all intents and purposes, you built a really strong financial foundation that you and your husband are going to grow upon for the next several decades and beyond. For individuals that were – just for you and I were a little over a decade ago, I think there’s both excitement and feelings of maybe some level of overwhelmed. Hearing a story of, you’ve been through that, you’re beginning to build wealth, you’re investing in real estate. What advice would you have for those individuals that are on the front end of this journey may be feeling overwhelmed, frustrated, confused with where they’re at with their finances?

[0:38:58] DL: Absolutely. That’s a great question. I would say, write down what’s important to you and your why. So really, write down what’s important to me, my values, and you can even project that out over the next 10 years, what do I want my life to look like? I think if you start with that, then you work backwards, and you look at what you’re facing right now. Then, you leverage the tools and all these podcasts like this one that are out there, and all the different strategies that you can take to reach your goals. If you do have a lot of student loan debt, and that debt is going to impede you from getting to those goals, then maybe that’s where you start. If you don’t have student loan debt, or it’s not a significant amount of student loan debt, but you do know in 10 years, you do want to have the option of working a W-2.

Then you may want to start with looking at different ways that you can invest your money, so you can make it work for you and make it accumulate even faster. That’s what I would do. I would kind of project out maybe 10 years. Because let’s be honest, a lot of new pharmacists are in roles, and they’re thinking, I don’t want to do this for 10 years, and that’s fair. Trust me, we understand. If that’s where you are, then definitely, think about where do you want to be, and what your goals are, and then work backwards. Look at what’s in front of you, and decide what the, what the priority is, and then start to educate yourself on different methods and strategies that you can use and get help. Get help, there’s no problem asking questions, meeting with a financial planner that understands your goals, and is willing to work with you to achieve your goal. That’s what I would recommend to someone who’s at the front end of this journey.

[0:40:49] TU: I love that. Great words of wisdom, and I’m so grateful for you coming on the show to share your journey. Congratulations on the debt-free journey. I have a sense you’re just getting warmed up here into the future. I appreciate you sharing that with our listeners, and I look forward to following your journey as well.

[0:41:05] DL: Thank you. Thank you so much for having me. I’ve enjoyed it and we will definitely keep you posted on the journey. I appreciate you and this platform.

[0:41:12] TU: Thank you so much.

[0:41:13] DL: Thank you.

[END OF INTERVIEW]

[0:41:14] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding material should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archive, newsletters, blog post, and podcast is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analyses expressed herein are solely those of your financial pharmacist unless otherwise noted and constitute judgments as of the dates publish. Such information may contain forward-looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements.

For more information, please visit yourfinancialpharmacist.com/disclaimer. Thank you again for your support of the Your Financial Pharmacist podcast. Have a great rest of your week.

[END]

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YFP 288: An Interview with Suze Orman (YFP Classic)

Posted on by Caitlin Boyle

This week we replay a YFP Podcast Classic. Suze Orman, #1 New York Times bestselling author on personal finance with over 25 million books in circulation, joins Tim Ulbrich on today’s episode. They talk about her most recent book Women & Money: Be Strong, Be Smart, Be Secure and the advice Suze has for pharmacy professionals feeling overwhelmed with their student loan debt and managing their financial plan.

About Today’s Guest

Suze Orman has been called “a force in the world of personal finance” and a “one-woman financial advice power house” by USA today. A #1 New York Times bestselling author, magazine and online columnist, writer/producer, and one of the top motivational speakers in the world today, Orman is undeniably America’s most recognized expert on personal finance.

Orman was the contributing editor to “O” The Oprah Magazine for 16 years, the Costco Connection Magazine for over 18 years, and hosted the award winning Suze Orman Show, which aired every Saturday night on CNBC for 13 years. Over her television career Suze has accomplished that which no other television personality ever has before. Not only is she the single most successful fundraiser in the history of Public Television, but she has also garnered an unprecedented eight Gracie awards, more than anyone in the entire history of this prestigious award. The Gracies recognize the nation’s best radio, television, and cable programming for, by, and about women.

In March 2013, Forbes magazine awarded Suze a spot in the top 10 on a list of the most influential celebrities of 2013. In January 2013, The Television Academy Foundation’s Archive of American Television has honored Suze’s broadcast career accomplishments with her recent inclusion in its historic Emmy TV Legends interview collection.

In 2010, Orman was also honored with the Touchstone Award from Women in Cable Telecommunications, was named one of “The World’s 100 Most Powerful Women” by Forbes and was presented with an Honorary Doctor of Commercial Science degree from Bentley University. In that same month, Orman received the Gracie Allen Tribute Award from the American Women in Radio and Television (AWRT); the Gracie Allen Tribute Award is bestowed upon an individual who truly plays a key role in laying the foundation for future generations of women in the media.

In October 2009, Orman was the recipient of a Visionary Award from the Council for Economic Education for being a champion on economic empowerment. In July 2009, Forbes named Orman 18th on their list of The Most Influential Women In Media. In May 2009, Orman was presented with an honorary degree Doctor of Humane Letters from the University of Illinois. In May 2009 and May 2008, Time Magazine named Orman as one of the TIME 100, The World’s Most Influential People. In October 2008, Orman was the recipient of the National Equality Award from the Human Rights Campaign.

In April 2008, Orman was presented with the Amelia Earhart Award for her message of financial empowerment for women. Saturday Night Live has spoofed Suze six times during 2008-2011. In 2007, Business Week named Orman one of the top ten motivational speakers in the world-she was the ONLY woman on that list, thereby making her 2007’s top female motivational speaker in the world.

Orman who grew up on the South Side of Chicago earned a bachelor’s degree in social work at the University of Illinois and at the age of 30 was still a waitress making $400 a month.

Episode Summary

Happy Holidays! This week, we bring back a YFP Podcast classic! YFP Co-Founder & CEO, Tim Ulbrich, PharmD, is joined by the one and only, Suze Orman. Suze, #1 New York Times bestselling personal finance author with over 25 million books in circulation, talks about her book, Women & Money: Be Strong, Be Smart, Be Secure, and shares advice for pharmacy professionals feeling overwhelmed with their student loan debt and managing their financial plan.

Suze shares her journey of being a waitress until she was 30 years old and going through a loss of $50,000 from an investment through Merryl Lynch in a three month time period. This is where her passion for personal finance began. Suze landed a job at Merryl Lynch, quickly began rising in rankings and eventually started her own firm. Suze became an advocate to ensure other people’s investments make more money than she’s earning.

Suze says it’s important to have a healthy relationship with money and that there is no shame big enough to keep you from who you are meant to be. She shares that fear, shame and anger are the three internal obstacles to wealth.

In regards to student loans, particularly for those with the biggest debt loads, Suze says that first and foremost you have to understand the ramifications that unpaid student loan debt will have on your life. She suggests following the standard repayment plan to minimize the additional interest and amount added on the end of loan (if following an income driven plan), and the taxes to be paid if the loan is forgiven. After paying off your student loan debt, Suze says that you can start dreaming. If an employer offers a 401(k) or 403(b) with an employer match, Suze suggests to contribute to the retirement account only up until the amount of the match.

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[00:00:00] TU: Hey, everybody. Happy holidays. Tim Ulbrich here, and thank you for listening to the YFP Podcast, where each week we strive to inspire and encourage you on your path towards achieving financial freedom.

This week, our team at YFP is taking off an annual tradition for us, as we reflect on the year behind us, plan the year ahead, and most importantly, spend time with family and friends. Since our team is on a break this week, I’m bringing back one of our most listened to episodes of all time. That’s an episode from July 2019, where I had the pleasure of interviewing the one and only Suze Orman, a number one New York Times bestselling author on personal finance with over 25 million books in circulation.

On the show, we talked about one of her books, Women & Money: Be Strong, Be Smart, Be Secure, and the advice she has for pharmacists, as it relates to managing their finances. Now, Suze has been called a force in the world of personal finance and a one-woman financial advice powerhouse by USA Today. She’s a number one New York Times bestselling author, magazine and online columnist, writer, producer, and one of the top motivational speakers in the world. Orman was a contributing editor to the O, The Oprah Magazine, for 16 years, the Costco Connection magazine for over 18 years, and hosted the award-winning Suze Orman Show, which aired every Saturday night on CNBC for 13 years.

With that said, it’s without question and honor to welcome Suze Orman to the YPF Podcast.

[INTERVIEW]

[00:01:28] TU: Suze, before we jump in to discuss how pharmacists can be more intentional with their financial plan, I want to give a shout-out to one of our avid listeners, Amanda Copolinski, who is a super fan of yours that said, “Tim, you need to interview Suze on the podcast. Her message will resonate so well with your listeners in the financial issues that pharmacists are facing.” So while you have impacted millions of people, Amanda is one of those. Because of your work, your message will now impact thousands more in our community. So thank you so much for coming on the show.

[00:02:00] SO: You’re welcome. But, Tim, I just have to say one thing about Amanda, seriously. Amanda asked, and because she had a voice, because it is so important, particularly, that women have a voice, and they ask for what they want, and because she asked for what she wanted, even though it was for the good of all, it obviously was also good for Amanda. She got what she wanted. So if we can just learn to ask for what we want, I mean, what’s the worst thing that could happen? I say no. So then it wouldn’t have mattered if even – Do you see what I mean? So, Amanda, you go girl, you go girl, you go girl. All right, we can go now.

[00:02:41] TU: So before we jump in and talk more about your book, Women & Money: Be Strong, Be Smart, Be Secure, I’m curious and want our listeners to know as well a little bit more about your background into this world of personal finance that has led you to transform millions of people on their own financial journey. Were there a series of events or an aha moment for you that set you on this path, on this journey to teach and empower others about personal finance?

[00:03:07] SO: Yeah. It was a very simple story, actually, where I was a waitress till I was 30 years of age in Berkeley, California. Having been a waitress for seven years, making $400 a month, to make a very long story short, I had this idea that I could open up my own restaurant because I made these people a fortune with all my ideas. My parents had absolutely no money. My mother was a secretary. My father was sick most of his life, blah, blah, blah, blah. And the customers I had been waiting on lent me $50,000 to open up my own restaurant.

So I’m, again, making a long story short. They had me put that money in Merrill Lynch, which was a brokerage firm. I had a crooked broker. Within three months, all $50,000 was lost. Now, I didn’t know what to do, and I thought I know I can be a broker. They just make you broker. Because during those three months, I really loved starting to learn about a world that was so foreign to me. I didn’t even know what a money market was or Merrill Lynch was.

Anyway, I went and applied for a job at Merrill Lynch because I knew I wanted to pay these people back that lent me $50,000, and I wasn’t going to do that at $400 a month, which was my salary as a waitress. They hired me to fill their women’s quota. While I was working for them, I realized what my broker did was illegal, and I also had been told that women belonged barefoot and pregnant. They had to hire me, but they would fire me in six months. So while I was working for them, I sued them with the help of somebody who worked for Merrill Lynch who told me what had happened to me was illegal. Because I sued them, they couldn’t fire me.

During the two years until it came to court, and they then settled outside of court because I was their number six producing broker at the time, but what happened was during that time, those two years, I realized, oh, my God, how many people out there don’t have the money to lose? Like all right, I was young. I could have somehow come back. But what if it were my parents? What if it were your parents? What if it was somebody who that was every penny they had to their name?

Even though I was a financial advisor, in terms of serving people at that time, I became an advocate to make sure that every single person that invested money, that their money meant more than the money I was going to earn off of them. I put them before me. People first, then money, then things. It was those people that mattered because I was one of those people. Before you knew it, I just rose and rose in the ranks, started my own firm, and here we are today.

[00:06:20] TU: Indeed. I think that’s a good segue into talking about your million-copy,

number one New York Times bestselling book, Women & Money: Be Strong, Be Smart, Be Secure. As you may or may not already know, the profession of pharmacy is made up of a majority of women, approximately 60-40 split, two-thirds, one-third of graduates today, roughly speaking. So I think this message in your book is certainly going to resonate with our audience.

You start the book with a chapter titled Imagine What’s Possible, and there’s a passage in there that I want to briefly read that really stood out to me. You said, “Women can invest, save, and handle debt just as well and skillfully as any man. I still believe that. Why would anyone think differently? So imagine my surprise when I learned that some of the people closest to me in my life were in the dark about their own finances. Clueless or, in some cases, willfully resisting, doing what they knew needed to be done. I’m talking about smart, competent, accomplished women who present a face to the world that is pure confidence and capability.”

So why, Suze, is this topic of personal finance, even for well, smart, accomplished women, such as the pharmacists listening, and heck, regardless of gender, I would say this is true. Really smart people that often can’t effectively manage their money. What are the root causes for them?

[00:07:42] SO: Yeah. You just used the word can’t. Oh, they can. Women have more talent in their little fingers, I’m so sorry to say, more capability than most men have in both hands, really. I don’t say that as a put-down to men. It’s just that women hold up the entire sky here in the United States. They take care of their parents, their children, their spouse, their brothers, their sisters, their employees, their clients, their patients, everybody, their pets, their plants. When it’s all said and done, when they’re 50 or 60 years of age, that’s when, for the very first time, they start to think about themselves.

You have got to remember that women have the ability to give birth, in most cases. They have the ability to feed that which they have given birth to, in most cases. So a woman’s nature is to nurture, is to take care of everybody else before she takes care of herself. So it’s not that she can’t. It’s she doesn’t want to. She doesn’t want to. She wants to make sure that her kids, in particular – A woman will do anything to make sure that her children are fine. That is not true with men. That is not true with men.

I used to think that it was until 2008 came along and when people were laid off of their jobs. They lost their home. They lost their retirement. They lost everything. Women would go back to work, working three or four jobs, a waitress, a cocktail waitress, anything, just to put food on the table. A man, if they had a $200,000 job, would not go back to work if all they were offered was $60,000. They weren’t going to do it.

Again, it’s not putting men down. Please, men, don’t think that because I don’t put you down. It’s the socialization effect of the difference between a man and a woman. So a woman just will do it all, but she won’t take care of herself. She chooses not to. In any aspect, she’ll only take care of her household expenses. You know why? Because her house holds everybody that she loves. That’s the only difference. That’s the only difference, boyfriend. That’s the only difference.

[00:10:06] TU: Which is a good segue to talk about healthy relationships with money because in the book, you mention that in order to build a healthy relationship with money, there are attitudes that women need to get rid of, with the first of these being these weights or burdens that you referenced that are commonly carried around, one being the burden of shame and the second being the tendency of blame. Can you tell us more about this concept of blame?

[00:10:29] SO: Yep. You know, in the book, I talk about truthfully that there is no blame big enough or shame big enough to keep you who you are meant from being. There just isn’t. Sometimes, we’re ashamed that we don’t know about money. Sometimes, we’re ashamed that we don’t have the money that we need to be able to give our children what they want.

Now, what I just said was very heavy, believe it or not, because it’s really difficult. I mean, I just experienced it. I had my niece here. In fact, I had all my nieces here, but one in particular that has a five-year-old child who loves Pluto more than life itself. He literally thinks Pluto is alive. He said to me, “Aunt Suze, how do I get a real Pluto?” I mean, “You mean a dog?” He said, “No, really. I want this Pluto to be alive.” You could just see, you want to give this kid anything this kid wants because he’s so fabulous. Not that – All your kids are fabulous, to you, anyway.

So a mother feels, especially if she’s a single mother, that she has to make up for the loss of a father figure or another mother figure or parent figure, and she does it usually by purchasing things for her kids because when they go to school, oh, but this kid has this cute backpack, and this kid has this, and look at these watches, and look at this iPhone. So it becomes very interesting that a lot of times, you’re ashamed of what you yourself don’t have. You’re not proud that you have anything. You’re ashamed of what you don’t have, and you blame it, usually, on somebody else. Or you blame it on yourself.

It’s – Fear, shame, and anger are the three internal obstacles to wealth. They just are. I have people – I know you’re talking about the book right now, but my true love at this moment in time is the Women & Money podcast because it’s on the Women & Money podcast that you can hear. You can hear via the emails that are sent in the shame and the blame that women feel, the anger that they have at themselves for staying in a relationship that they don’t want to be in, but they don’t have the money to leave, the confusion that’s out there. A lot of these women are so powerless because they’re not powerful over their own money.

[00:13:10] TU: In the book, you go through a detailed financial empowerment plan, which I think is incredibly helpful for our listeners to hear more about since we know many pharmacists are struggling with spinning their wheels financially, graduating now with more than six figures of student loan debt, the average about $166,000, having many competing financial priorities with home buying, starting up a family, building up reserves, saving up for retirement. The list goes on and on. So the question is where does one start when they are looking at so many competing financial priorities, and it can feel so overwhelming?

[00:13:42] SO: You start by, number one, really understanding the ramifications that student loan debt that goes unpaid will have on your life forever. So your number one, bar none, is your student loan debt, and you have got to understand the difference between paying back student loan debt on the standard repayment method and the income-based repayment methods. You have to understand that in your head, if you think, “Oh, I have all this debt. I’m just going to pay back a little bit because I don’t have that much of an income, and they’re going to forgive it in 20 or 25 years. I’ll be OK,” no, you won’t.

You won’t because if under the standard repayment method, your monthly payment should be $1,500 a month, and under income-based repayment, you’re only $750 a month, that $750 difference gets added onto the back end of your loan, plus interest. When they forgive it, when a debt is forgiven, you need to pay taxes on that, as if it were ordinary income. It is possible that if you do that over 20 years, you’re going to end up owing more than you even started with that they’re going to forgive.

So you have to be realistic here. If you’re going to go in this industry, if you’re going to become a vet, if you’re going to become anything with massive student loan debt, then you have to put your priorities in place. Your first priority is your student loan. After your student loan, hopefully, on the standard repayment method, it is paid off, then start dreaming. Ten years isn’t that big of a deal. It will come, and it will go. But don’t try to do it all at once.

[00:15:45] TU: Yeah. That’s really timely. I know for many pharmacists that are listening to this, they’re looking at, as I mentioned, six figures of student loan debt, $160,000, $170,000, $200,000 of loan, unsubsidized many of those, interest rates that are at six to eight percent. So obviously, those interest rates and the growing interest and the baby interest can have an incredible negative impact on their financial plan.

That being a good segue, I think, into the conversation about loan forgiveness, which has gotten a lot of attention with the upcoming presidential elections, and we’ve had some discussion with Bernie Sanders, Elizabeth Warren, have forgiveness plans that are out there. Not even getting into specific candidates or politics or the individual policies, I think it brings up an interesting discussion around loan forgiveness and the positives and benefits of that, relative to what people learn through the process of paying off student loans.

I know, for me, individually, going through the process of paying off more than $200,000 of student loan debt, there was a lot I learned and that my wife and I learned through that lesson in terms of budgeting, working together, setting goals. But I also understand that for many, and certainly would have been the case for us as well, not having that debt would have been fantastic. So how do we reconcile forgiveness relative to being able to learn through that process?

[00:16:58] SO: First of all, let’s talk about student loan debt to begin with and the viability of it. Is everybody crazy that we should have to pay, our children should have to pay $200,000 for a college education?

[00:17:13] TU: Amen.

[00:17:14] SO: Like is that, just to begin with, the sickest thing you have ever heard in your life? So while everybody’s dealing with the debt that we have, what we also should be dealing with is why are we paying that kind of money? Listen, if that’s what these financial institutions need to keep the buildings and the teachers and everything going, maybe we need to go to online universities that are fully credited that everything is done online because the burden that these kids are leaving school with is so heavy. It is the number one question that I am asked. What is so sad, it is the number one question that I do not really have an answer for because they will not let you discharge it in bankruptcy. They do not –

I mean, it is crazy that you pay the same amount of money to get a master’s in social work as you do an MBA. Really? So tuitions, number one, should be based on the area that you are specializing in. Hey, if you’re going to graduate and you’re going to make $200,000, $400,000, $500,000 a year, fine. Then you start spending money that then subsidizes those that are going to make $30,000 a year because they want to be a teacher. Or whatever it may be. But I do think what’s going to start to happen is that people are going to have to start going to community colleges for the first two years or so, and then probably switch over. But then, you have to be crazy if you go to a school that’s $50,000 a year.

Now, with that said, I get when you want to be a vet, when you want to be a pharmacist, when you want to be a doctor. That’s what they charge. So if you know, if you know beforehand that that’s what it’s going to cost you, and you have an unsubsidized loan, which means that it is growing while you are in school, can you at least pay the interest on that loan while you’re in school?

I know everybody’s going to say, “But, Suze, I’m working full-time at school. I can’t.” Oh, yes, you can. I had to put myself through school. I worked until 2:00 AM every morning. I started at 7:00. I worked seven days a week for four years straight. Don’t you dare tell Suze Orman you can’t do it. You most certainly can. You just don’t want to. When you have debt that you can’t pay back, this is not a choice if you can or you can’t, if you want to or you don’t want to. You have to, and it’s – I don’t mean to sound harsh to you, but you’ll thank me years from now that at least you haven’t accumulated an interest rate on top of everything else.

[00:20:02] TU: Suze, one of the most common questions that I get and I’m sure you get all the time as well is how do I balance paying off my student loan debt relative to investing and saving for the future? As we think about pharmacy professionals specifically, many of them have gone through lots of education to get where they are. They may have four years of undergrad. They have four years – Likely, some people more in terms of getting their doctorate degree. They may go on and do residency training.

So here they are, and they look at the clock and say, “Yes, I’m young. But I also know I need to aggressively save, and I keep hearing the message of I need to be putting away money for the future. But I’ve got $160,000, $180,000, $200,000 of student loan debt, unsubsidized loans, six to eight percent. So how do I balance the two of these?” What advice do you give people to help them think through that?

[00:20:48] SO: I would not not pay a student loan under the standard repayment method in order to then save in a retirement account. Obviously, if you work for a corporation that gives you a 401(k) or a 403(b) or whatever it may be, and it matches your contribution, then you have absolutely no choice whatsoever but to absolutely at least invest up to the point of the match. After that, your very first bill that has to be paid before you can decide anything is your student loan repayment.

After you know what it’s going to cost you to pay on your student loan, then you have to make a decision. Oh, do I have to move in with six or seven kids and all live together in order just to do whatever? What do I have to do after that payment? Is there any money left over? If there is, what will it allow me to do? It may only allow you, I know you’re going to really think I’ve lost it, to move back in with your parents for a number of years.

[00:21:53] TU: You’ve got to do what you’ve got to do.

[00:21:54] SO: You’ve got to do what you’ve got to do. For all of us to make it in today’s society, we have to either really enhance the nuclear unit and nuclear family, and really help each other. Or if we can’t do what we’re born into, then create our own nuclear family, whereas five or six of you get together and you go, “Okay, we have this problem.” It’s not like communal living, but it’s how do we solve this problem? So rather than you each have your own individual apartment, you each have your own car, you each have all of this stuff, what can you do as a group of people? Uber and Lyft and Zipcars, all of that came, especially Zipcars, about people who couldn’t afford to have their own car.

Again, I don’t mean to be Suze Smackdown here. But I do want you just to be realistic about your life and the independence dream, living on your own, having all of these things. Nothing will give you more pleasure than having money versus things.

[00:23:08] TU: Yeah. My wife and I talk often, as we think about our own financial situations, that we felt some of that pressure in our mid-20s of wanting to live up to the lifestyle that our parents have gotten to after 30 or 40 years. So I think really reshifting expectations and thinking about specifically today’s pharmacy graduates just really has to be intentional with their financial plan and change some of those expectations to set them up to be successful in the long run.

Shifting gears a little bit, I want to talk about planning for the future, and we recently had on the show Cameron Huddleston, author of the book, Mom and Dad: How to Have Essential Conversations with Your Parents About Their Finances, an excellent book that has me thinking more and more about the significance and importance of healthy and open financial conversations with family about money and ensuring that the estate planning process is well thought out and is in place.

I noticed that you offer a protection portfolio that is meant to help people take the worry out of protecting themselves, their assets, and their family. So tell us a little bit more about why this process of having a protection portfolio in place is so important and what information is compiled in a portfolio like this.

[00:24:19] SO: What’s really important is for everybody to understand that we have no control over the things that happen to us. Are we going to be in an accident? I mean, really, just the other day, Tim, you know I live on a private island, and I’m driving down this road. I mean, there are no cars on this private island. There are only golf carts. There were only like – There’s 80 homes. There’s nobody here most of the time. I’m driving back to my house, and I come up on a golf cart that overturned on these four 20-year-olds, and they were seriously hurt, all right? I mean, five minutes before then, they were on this private island, having a fabulous time. Now, I’m like, “Oh, my God.”

So anything can happen at any time, and every one of you needs to be protected against the what ifs of life. May you always hope for the best, but may you plan for the worst, whether it’s an accident, an illness, an early death, whatever it may be. The number of emails I get from 40-year-old women, 50-year-old women, 30-year-old women saying, “Suze, my spouse died. I have three kids. I never expected to be in this situation.” They go on and on and on about it.

This is also, what I’m about to tell you, very important if you have parents. Because if you have parents, the question becomes like – My mom lived till she was 97. If something happens to your parents, they lose their mind, so to speak, they have dementia, they have Alzheimer’s, and they can’t write their checks anymore or pay their bills, who’s going to take care of them? You can’t do anything for them, unless you have what I call the must-have documents. Not only a will, a living revocable trust, an advanced directive, and a durable power of attorney for healthcare. You must have those.

But most of the time, lawyers tell you, “All you need is a will.” Oh, give me a break. The less money you have, the more you need a living revocable trust because wills make it so that in most cases, if you own a piece of real estate or whatever it may be, your estate has to go through probate. Guess who gets the probate fees? The lawyer that told you all you need is a will. So a living revocable trust not only passes your assets from one person to another within a two-week period of time, no fees, nothing. But in case of an incapacity, it will say you can sign for so-and-so. So-and-so can sign for you. It sets up your estate every way you want it, and it also helps you because minors cannot inherit money.

So if you have young children, and both you and your spouse are killed in a car crash, something happens, the money can’t go to your minors. If you left your money to them via your will, good luck. It’s going to end up in a blocked account until they’re 18. So with that said, most trusts, if you go to see a trust lawyer, first of all, you have to know there are good trust lawyers. Most of them are not, are at least $2,500. Every time you make a change, $500, $1,000, you’re just sitting here talking to me about you don’t have even have enough money to pay your student loan debt. Where are you going to get $2,500 to do a will, a trust, an advanced directive, a durable power of attorney for healthcare? Every time you need to make a change, where are you going to get the money to do that?

So years ago, with my own trust lawyer, I created what’s called the must-have documents. These documents are my documents. If you were to look at my trust, my will, everything, you would see these. But I wanted to do it at a price that every single person could afford. So we created over $2,500 worth of state-of-the-art documents for approximately $69. What’s great about these documents, not only are they fabulous. Every time the law changes, they automatically get updated, but you can change it as many times as you want.

So if you go from one kid to two kids, you go back to your computer, you change them. So you never have to pay for it again. If you’re interested, really, in that offer, you can just go to suzeorman.com/offer. Through there, it’s $69. Otherwise, you’ll see it sold for $100, $90. They’re sold for all over the place. But these documents have changed the lives of millions and millions and millions of people over the years.

[00:29:28] TU: Yeah. I think it’s also important for our listeners just to consider the peace of mind of having all of this together. When you think about all of the things that are found in estate planning documents, and my wife and I went through this process we’ve talked about on the podcast before, where you put together insurance policy information and where your accounts are at and birth certificates and all of the papers that would need to be readily accessible, in addition to all of your estate planning documents. To get there and the conversations you have and the peace of mind it provides is incredible. Again, suzeorman.com/offer will get you there.

Suze, I want to wrap up our time together by talking about legacy, and I’m fascinated with learning more about what drives very successful, highly influential individuals such as yourself to take on the life’s mission and work that they do. So for you, as you look back on a career that is undeniably wildly successful and that has positively transformed the lives of millions of people, what is the legacy that you’re leaving?

[00:30:31] SO: I hope the legacy that I leave is that women in particular, but men as well, but women in particular really know that they are more capable than they have any idea, that they will never be powerful in life until they’re powerful over their own money, how they think about it, how they feel about it, and how they invest it, and that every one of them, one of them, has what it takes to be more and to have more. They just have to want to.

I don’t really know. I don’t know how to answer that because I never think about what I’m going to leave. I only really think about what I’m doing. I can tell you right now, like one of my friends said to me, “You just can’t help yourself, can you, Suze Orman?” So with the Women & Money podcast, people write in their emails. I keep saying, “I’m not going to answer them. I can’t answer all these emails.” Now, I’ve answered almost every one, except four. I’ve got four left, and then they’ll mount up again, and blah, blah, blah, blah.

But I have such a desire for every single woman and the men smart enough to listen, but really for every single woman to get the right advice, the best advice, to start to educate them so that they become smart enough, strong enough, secure enough. So they can start educating their daughters and their sisters and their aunts and their moms and their grandmas and everybody. So that we start really teaching one another because I’m just so afraid of where this world – Truthfully, the hatred in this world that we are experiencing right now, I am very afraid of where it’s going to take us next year. So I hope I leave a legacy of love and power. That’s what I really hope I leave.

[00:32:45] TU: Yeah. What really stands out to me, Suze, the work that you’re doing, and you alluded to this, is the generational impact that it’s having, and that will forever go on. I mean, that’s an amazing thing, when you think about transforming somebody’s personal financial life. Let’s say they’re a mother, and they pass it on to their kids and their friends and their cousins and their network, and that gets passed on to another generation. That is incredible transformational work that will forever have impact. So I thank you for that work, and I know it’s had an impact here on me in even having the opportunity to talk with you today.

To our listeners, as Suze mentioned, she responds to her requests as it relates to the podcast that she has each and every week, the Suze Orman’s Women & Money podcast. So if you have a question for Suze that we did not touch on during today’s show, make sure to reach out at [email protected].

Again, as a reminder, make sure to head on over to suzeorman.com, S-U-Z-E-O-R-M-A-N.com, where you can learn more about Suze, including her blog, the podcast, comprehensive resources, live events that she hosts, and books and products that are designed to help empower you in your own financial plan.

Suze, again, thank you so much for coming on the show, and I’m grateful for what you were able to share and the impact that it will have on our community. Thank you very much.

[00:34:04] SO: Anytime, boyfriend. Anytime.

[END OF INTERVIEW]

[00:34:07] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Thank you, again, for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 248: How 3 Pharmacists Had $700,000 of Student Loans Forgiven

Posted on by yfpadmin

How 3 Pharmacists Had $700,000 of Student Loans Forgiven

Robert Lopez, CFP® and YFP Planning Lead Planner, discusses the current state of the PSLF program, plus three pharmacists share their PSLF success stories.

About Today’s Guest

Robert Lopez, CFP®, is a Lead Planner at YFP Planning. Along with his team members, Kimberly Bolton, CFP®, and Savannah Nichols, he helps YFP Planning clients on their financial journey to live their best lives. To go along with his CFP® designation, Robert has a B.S. in Finance and an M.S. in Family Financial Planning. Prior to his career in financial planning, Robert worked as an Explosive Ordnance Disposal Technician in the United States Air Force. Although no longer on active duty, he still participates as a member of the Air Force Reserves. When not working, Robert enjoys being outdoors, playing co-ed volleyball and kickball, catching a game of ultimate frisbee, or hiking with his wife Shirley, young son Spencer, and their dogs, Meeko and Willow.

Today’s episode also features PSLF stories from three pharmacists, Kimberly Gale, Ashley Hicks, and Kyle Sobecki.

Episode Summary

YFP Co-Founder & CEO, Tim Ulbrich, PharmD, talks with Robert Lopez, CFP® and YFP Planning Lead Planner about the current state of the PSLF program and why the Biden Administration’s PSLF waiver is resulting in a lot of forgiveness earlier than expected. Robert kicks off the conversation with some advice relating to PSLF, who qualifies, what changes have occurred recently, and what it means for you. With over $700,000 forgiven tax-free combined, Kimberly Gale, Ashley Hicks, and Kyle Sobecki share their PSLF journeys and ultimately how they attained PSLF. Each pharmacist shares how they came to decide on PSLF, what challenges they faced along the way, and how pursuing PSLF helped accelerate the process of pursuing other goals. Kimberly Gale shares the story of how she first became aware that PSLF was an option, communication challenges she faced early on, and how forgiveness has enabled her to attain the lifestyle she wanted for her family. Ashley Hicks tells us about roughly $200,000 in forgiveness and the challenges that uncertainty and anxiety posed for her in the process, plus her optimization strategy surrounding the PSLF process. Lastly, Kyle Sobecki shares the details of how PSLF pertains to pharmacists in the non-profit space and tells his story of having over $189,000 in student loans forgiven.

Key Points From This Episode

Introducing today’s topic: the PSLF success stories of three pharmacists.
A reminder of who Robert Lopez is and his role at Your Financial Pharmacist.
An overview of the first and second half of the show and what we will cover.
The basics of PSLF, Public Service Loan Forgiveness, and who qualifies.
Which changes were made to the rules of PSLF.
What the big news comes down to: you don’t have to rule out forgiveness.
What the limited waiver meant for those in the military.
Optimization strategy with PSLF and how Robert recommends you reallocate your finances.
The benefit of switching to a lower payment plan while achieving a long-term forgiveness plan.
An introduction to Kimberly Gale’s journey into the world of pharmacy.
The amount of debt she graduated with and how much was ultimately forgiven.
How she discovered PSLF through a friend’s recommendation.
Challenges she faced along the way, including communication at the beginning.
How PSLF helped her to afford the lifestyle she wanted for her family.
Ashley Hicks’ story of gravitating towards pharmacy because of her love for people.
How much Ashley ultimately had forgiven through PSLF.
The challenge that uncertainty and anxiety posed within her PSLF process.
How optimization and strategy can help navigate late discovery loans.
The opportunities that PSLF opened up for her and her husband to focus on other goals.
Meet Kyle Sobecki and learn about his work as a pharmacist in a nonprofit hospital.
Kyle’s story of having had exactly $189,038.72 forgiven.
Homework he has done along the way leading up to choosing PSLF.
How PSLF works when you work for a non-profit.
Uncertainties and challenges he had along the way.
His advice with regards to filing your paperwork on time each year.
Goals the PSLF plan freed Kyle up to pursue including paying off personal debt.

Highlights

“That really is the big news here. Many folks that may have ruled out forgiveness before or thought that forgiveness was still a few years in the future. We’re actually seeing some of those dates come to fruition.” — Tim Ulbrich, PharmD [0:07:00]

“There’s an old adage that says: money is power. I don’t believe that’s true. I think options are power and money gives you options.” — Robert Lopez, CFP® [0:13:33]

“The intent of the program was true. That’s really what they did, is make sure that, if you work for a non-profit for 10 years, you are eligible for forgiveness. They wipe away some of the intricacies that maybe held some people back in the past.” — Kyle Sobecki, PharmD [0:38:43]

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[0:00:00.4] TU: Hey everybody, Tim Ulbrich here, and thank you for listening to The YFP Podcast where, each week, we strive to inspire and encourage you on your path towards achieving financial freedom.

This week, we have a special episode for you, highlighted by three pharmacists sharing their PSLF success stories, in total, more than 700,000 forgiven tax-free. Some of the highlights from today’s show include talking with YFP planning, lead certified financial planner Robert Lopez, about the PSLF program and why the Biden administration’s PSLF waver is resulting in a lot of forgiveness earlier than expected.

We hear from those successful with PSLF about how they determined that PSLF was the best option for them, what bumps along the road they experienced, and how pursuing PSLF helped them accelerate achieving other financial goals.

Before we hear from today’s sponsor and then jump into the show, I recognize that many listeners may not be aware of what the team at YFP planning does in working one-on-one with more than 240 household in 40 plus states. YFP planning offers free only, high-touch financial planning that is customized for the pharmacy professional.

If you’re interested in learning more about working one-on-one with a certified financial planner may help you achieve your financial goals, you can book a free discovery call at yfpplanning.com. Whether or not YFP Planning’s financial planning services are a good fit for you, know that we appreciate your support of this podcast and our mission to help pharmacists achieve financial freedom.

Okay, let’s hear from YFP Planning lead certified financial planner, Robert Lopez followed by three pharmacist PSLF success stories.

[INTERVIEW]

[0:01:41.9] TU: Robert, glad to have you back on the podcast.

[0:01:43.7] RL: Happy to be here.

[0:01:45.8] TU: For those that haven’t heard you before on the show, I know it’s been a while, tell us a little bit about yourself and the role that you have with YFP Planning?

[0:01:52.2] RL: Yeah, Robert Lopez, certified financial planner, lead planner with Your Financial Pharmacist, been on the team for a little over two years now. I work with clients, mostly pharmacists, we help them figure out how to adult financially, how to pay back student loans, how to be most efficient use of their assets and their income to make sure that they’re living their best life.

[0:02:13.7] TU: I wanted to bring you back on as one of our student loan experts, obviously, you do much more than student loans but have worked with many clients through the public service loan forgiveness, we’ve seen some wins recently and the way we’re going to do this show is we’re going to breakdown some of the nuts and bones of PSLF briefly. We’ve covered that on the show many times before, we’ll talk about some of the updates with the PSLF waiver.

Some of what you’re seeing and working with clients at YFP planning and then the second half of the show, we’re going to feature some YFP PSLF success stories. Robert, before we get into the waiver and make making sure folks are aware of the opportunity out there as a result of that waiver, just quick high level, nuts and bolts of PSLF, who qualifies, who doesn’t, number of payments, how the taxes work.

I know we’ve covered this before, we’ll link in the show notes episode 214, we talked about this as well as episode 90 of ask a YFP CFP but just give us the basics of PSLF.

[0:03:09.0] RL: Yeah, PSLF, Public Service Loan Forgiveness, it’s a program created back in 2008 to offer loan forgiveness opportunities for people who are working in the public sector, right? If you work for a government organization, a not for profit, any organization listed as a 501(c)(3), that just means not for profit, it’s a way for them to get their loans completely forgiven, it’s tax-free forgiveness.

There are some qualifications, the original PSLF qualifications, which you had to have direct federal loans, which are a type of loans that were created 2010. Anybody who started school after that is probably what they have. It also works for direct consolidated loans, they had to be entered on to an income-driven repayment plan which would have been pay as you earn, which is payee, revised pay as you earn, which is rep payee or income-based repayment, which is IBR.

They had to make 120 on-time payments and that is cumulative, not consecutive, so roughly 10 years but if you took a break you continued counting right back where you left off and that forgiveness just gets wiped away like it was never there. One day it’s on your books and one day it’s not.

[0:04:16.1] TU: We’re going to hear some, I think we need to talk about this, Robert. Three, four years ago, especially when there’s a lot of negative press around PSLF, it was kind of that feeling of, “Is this for real?” We’ve got success stories to share and as you mentioned, especially with the tax-free forgiveness, one day it’s there and the next day it’s not.

You mentioned the original rules of PSLF and you just outlined those. Suggesting that things have changed. Give us a summary of the Department of Education PSLF waivers, some of the updates that came in fall of 2021 and why that’s such big news for folks out there that may qualify.

[0:04:50.2] RL: Yeah, big change came October 6th, that’s 2021, the Biden administration passed a limited waiver. Limited, meaning, you have one year, you have until October 31st of this year, 2022 to apply for this different waiver. The way it changes, is it changes the types of loans that can be forgiven, it changes the types of repayment plans that can be forgiven, then kind of just how those accounts work.

The new rules are any previous federal loans, that includes direct, that includes FFEL loans and that include Perkins loans, those are all eligible for forgiveness under PSLF now, assuming you go through the consolidation process. For some people out there who are aware of the consolidation process, it’s where just all your loans gets smashed together and you get a weighted average interest rates, it’s no change, it’s no benefit mathematically.

What it did do is it took loans that didn’t qualify and it made them qualify because it turned it into a direct loan, so you still have to do that but it used to restart your 120 clock when you did that because it’s a new loan and now it does not, so you actually get the oldest loan count on there. Anybody with old loans, it’s a great way to do about it.

They’ll go back in time and they’ll recalculate all those payments and if you made payments not on an income-driven plan, if you were on, say, the standard 10 year or the extended or the graduated payment plan, those previously did not count as 120 but now they do, those are the biggest change now. All that’s required is you work for a public organization, government or 501(c)(3) not for profit and you have 120 payments.

[0:06:20.0] TU: That was why Robert, as we talk about this and my goal and part of this episode is to continue to shout from the mountaintops so folks are aware and assuming that October 31, 2022 deadline stays for the temporary waiver, obviously, we’ll keep an eye on that but we don’t want folks to miss this window of time, right?

Because one of the things we’ve heard over and over again is, “Hey, I’m four, five, six years in the payments but didn’t consolidate” right? I had FFEL loans, Perkin loans or you know what? I was an extended graduated plan but I wasn’t in an income-driven repayment plan. As you mentioned, once that consolidation piece happens, still an important part of what needs to happen but those payments are then going to count.

That really is the big news here of many folks that may have ruled out forgiveness before or thought that forgiveness was still a few years in the future, we’re actually seeing some of those dates come to fruition. As we’re going to hear with a couple of stories here in a little bit, that’s something, Robert, I know you and the planning team have been seeing as folks that maybe thought forgiveness was still another two, three, four years away but they’re starting to see that happen now, right?

[0:07:22.3] RL: Yeah, the big thing that everyone needs to be aware of is if they’ve already consolidated their loans and they currently work for a not for profit or government organization, all they have to do is submit the employment certification form and they’ve actually simplified that process even farther. If you just Google PSLF help, it will take you to the government’s PSLF help tool at studentaid.gov.

You fill that out, it’ll create the document for you for you to give to your employer, once that form is submitted, they will automatically go back and recalculate all your payments. Automatically with the government could mean three or four months but it is a process that you no longer have to do anymore work.

If you’ve already submitted an employment certification form in the past, they’re already going to update you. Some of our clients have had those letters come out the mail that says, “Hey, congratulations, we recalculated 60 extra payments for you” and their numbers just jump from say, 65 to 125 and congratulations for this forgiveness but that’s all that’s really necessary.

Anybody that has those FFEL loans currently, you can go and get a consolidation as well again, studentaid.gov. Come to YFP, we’ll help you through the process as well.

[0:08:25.0] TU: One of the other benefits, Robert, I’ve heard from several folks is, because of the administrative forbearance, not only are some folks finding that this is happening sooner than they thought it would but also, they haven’t had to make payments for now, going on a couple of years and those have been counting as well, correct?

[0:08:40.6] RL: Yeah, ever since the administrative forbearance for COVID started in March of 2020, no one has been required to make payments and the interest rates have been set at zero. No one’s accruing interest in this time period as well. If you chose to make payments throughout the time, that’s great. You’re just paying off a crude interest, if you had any or paying down principle, you will continue to make payments.

If not, that’s going to continue until May 1st as of today. It’s always subject to change as we’ve seen with the government but as of right now, those loan payments will turn back on in May 1st and the interest rates will turn back on as well. Yeah, this has been – it’s going to be 27 free payments I believe and then all have counted towards PSLF as long as you qualify for PSLF.

[0:09:23.8] TU: One other thing briefly Robert, I want to touch on that you mentioned before the show that we have not talked about in much detail but for those in the YFP community listening that are in the military pharmacist position, there’s also an important part that they need to be considering here as well. Tell us more about that?

[0:09:37.6] RL: Yeah, as a part of the limited waiver that came out last October, they basically said, if you were in the military and you made payments, those all count on PSLF now as a part of that waiver. Any active-duty military members, any full-time military members, just complete that employment certification form, submit it to your superior officers and you’ll get all your payments to count.

We actually have a client that that’s going to happen for, they’ve been in the military 10 years, they have the wrong loan type, they’re on the wrong repayment plan, none of their stuff counted and now, all the payments are going to count and they’re going to get forgiveness this year.

[0:10:09.4] TU: Awesome example. One of the challenges you mentioned was you know, timeline when we think forgiveness and say, hey, one day you had your loans, the next, you didn’t, we might think of that as an overnight thing, that might be months, right? By the time papers get processed as we talking about PSLF, that could be a challenge or an uncertainty.

Anything else you’re seeing out there? I know there’s been a lot of concern with loan servicing companies that are going to be changing, there’s certainly a fair amount of horror stories with PSLF that are still out there from before the waiver. Other challenges that you’re experiencing, Robert, as you’re working with clients that are pursuing PSLF?

[0:10:43.7] RL: Yeah, the uncertainty is the big one, we know that some loan servicers have ended their contracts with the US government. FedLoans in particular is ending their contract and FedLoans is important because they actually manage all the people who are in the PSLF program.

FedLoans contract is going to expire at the end of this year, they got extended so then we have until the end of 2022 and that’s going to switch over to MOHELA. Anybody that is actually making that move and they apply for the employment certification form to get their loans counted, their loans are going to transfer to FedLoans and then transfer again later this year to MOHELA, it’s unfortunate but it’s just the way of the world at this point.

That’s kind of the biggest thing that we’re seeing is just, who do I make payments to, how does this work? If I make overpayments, will they get repaid to me? Which historically has been yes, but we haven’t seen since the admin forbearance if it’s going to be the same.

[0:11:32.8] TU: Last thing I want to pick your brain on is, I think we’ve done a decent job talking about the benefits of tax-free forgiveness, obviously less money that’s paid out of your pocket, somebody else playing the bill, that’s a good thing.

I don’t know if we’ve done as much on the optimization strategy and the optimization side of this as folks are considering this strategy among others. As we look at someone who maybe making that decision of PSLF yay or nay, I think there’s the tax-free forgiveness but there’s also the question of, what else could I be doing with dollars to move forward my financial plan if I’m not having to put as much towards those loans because they’re going to be forgiven?

I know this is an area that you and the planning team do a lot of work with our clients on. Talk to us more about the optimization strategy here with PSLF.

[0:12:19.6] RL: They, the opportunity cost is that big decision point thereof, “How can I better utilize these dollars?” Sometimes it’s easy to fall into the PSLF route, right? I had a PGY1, PGY2, I was making not a lot of money, I don’t want to make extra payments, I’m going to go income-driven in the meantime and then when I get out of my residency, I’ve got 24 months of payments but I only owe $100,000 in student loans.

I could probably pay this back if I’m going to keep working but if you don’t, we have clients paying $3,000 a month to be aggressive towards your student loans and if that’s your prerogative, awesome but if you were to switch to staying income-driven, maybe your payment drops to $500 a month and now you can better utilize that $2,500 difference there.

Maybe that’s paying down other debts. Some parent plus loans that your parents took out and helped you with to get through school, maybe it’s paying down some credit card debt that you used to travel for residencies, maybe it’s to pay down auto loans, maybe it’s to save for that home that you’ve been – that delayed gratification you’ve had for the last 10 years probably.

Maybe that’s something you want to go towards or maybe it’s starting a family. We see a lot of spouses that decide to go part-time because we have lower student loan payments. There’s a lot of flexibility that that money gives you. There’s an old adage that says, money is power, I don’t believe that’s true. I think options are power and money gives you options, right?

If you have the ability to switch to a lower monthly payment while still achieving this long-term forgiveness plan, it’s saving dollars in the long run but also giving you the option in a short-term to best utilize those dollars for your personal financial life, I think that that’s really powerful.

[0:13:54.5] TU: Great stuff, Robert. I really appreciate you sharing your expertise and experience you’ve had in working with clients at YFP Planning. Now, we’re going to transition here in PSLF success stories.

[INTERVIEW]

[0:14:05.7] TU: Kimberly, thanks for coming on the show.

[0:14:07.3] KG: Thanks for having me.

[0:14:08.8] TU: Before we talk through your PSLF journey, tell us a little bit about yourself including your journey into the profession of pharmacy, where you went to school and the work that you’re doing now?

[0:14:18.5] KG: Sure. I actually came to pharmacy a little bit later in life than most people. I went through my undergrad program like many, I think do, just kind of floundering around, trying to figure out what was a good fit, so undergrad took a little longer than usual. During one of those kind of times in my life where I just wasn’t sure of my direction, my mom suggested, “Hey, why don’t you maybe take a little time off school but maybe go work in a pharmacy?” we’re always interested in that aspect, she was a surgical nurse so I grew up around medicine.

I was like, “Okay, sure” so I went and applied as a clerk typist for a long-term care pharmacy in my town but ended up never taking the time off school, so I was doing full-time work and full-time school. I decided to get a business degree and just be done with it and then, I just never left the pharmacy, I worked as a clerk typist and then became med tech and I spent about eight years there and then I finally was like, “Well, I’m at the top of my game with what I can do here and I want more.”

So I decided to go to pharmacy school. I went, I started at Touro University of California in 2007 when I was 30 years old and graduated from there and am now after a stint in some in-patient pharmacy work, I am now anticoagulation pharmacist.

[0:15:44.5] TU: Very cool, thanks for sharing the journey. Tell us more about the amount of debt that you graduated with when you came out of Touro and how much was ultimately forgiven through PSLF?

[0:15:56.2] KG: I think, ballpark at graduation was right around, I don’t know, like 280, 290,000 when I entered repayment and then what ultimately was forgiven was about the $352,000.

[0:16:12.4] TU: Okay, obviously some interest that would have naturally accrued on that amount and then more was forgiven than the original balance and amount you had upon graduation.

[0:16:22.2] KG: Yes.

[0:16:22.8] TU: Okay, so our listeners know, we’ve talked a lot about PSLF in the show, they know that PSLF is one of many options when it comes to paying off student loans. My question here for you is, for folks that are – especially on that front end of making the decision about, is it PSLF, is it refinancing, is it something else.

That decision, although it’s very significant numerically can be paralyzing at times and so, tell us more about how you came to the decision to pursue PSLF, especially at a time, I would argue that there wasn’t as much information, tools and resources out there to support those that were on the PSLF journey?

[0:16:59.1] KG: Yeah, I was introduced to the PSLF program while I was still in school. There was an upper classman year ahead of me, had learned about it and was sharing the information about it and then I said, “That sounds like what I’m going to need to do” just because knowing how much I was going to graduate with what a standard repayment plan would look like. I didn’t know a whole lot about refinancing outside of the Department of Education kind of loan programs.

My loans had a variety of interest rates, anywhere from three to almost 8% just across the board and just looking at what extended repayment plan would be, was basically a mortgage payment in it of itself. I was like, “I’m not going to be able to do anything else with my life while I’m under this student loans” you know? The thought of, especially in the Bay Area of being able afford a house, have a child because childcare was going to be $1,500 a month. I was just like.

I’m already older than most of my classmates and this is just going to be part of my life but if there’s a chance that I can get it forgiven in 10 years and be done with it then that was what I was going to pursue, I really didn’t consider anything else.

[0:18:23.3] TU: That makes sense Kimberly, when I think of 280 to 290, especially at a higher cost of living area, out in California, other expenses, you mentioned childcare and so forth, you know 280 to 290, that’s a big monthly payment. You mentioned a mortgage payment that would be a really big mortgage here in Ohio but in California no.

[0:18:41.2] KG: Right, not so much.

[0:18:42.0] TU: Yeah, I certainly see why that directed you down the PSLF path. Fair or not, there still a lot of skepticism and uncertainty about PSLF and one thing I mentioned to you before we hit record is that, I think there’s some lingering’s of horror stories of early situations and missteps that folks took and that’s still having an impact on perspective PSLF individuals today that are considering that as an option.

My question here is, were there any uncertainties that you had, any challenges that you faced along the way? That is just a long process, it’s a lot of time and I think often, folks are like, “What if it doesn’t go right?” What if something happens along the away? You got to the finish line but any uncertainties or challenges along the way?

[0:19:26.6] KG: Oh yeah. There was a lot of just they were not really forthcoming early on. The servicer wasn’t ensuring that you were in the right type of loans, there’s yeah. I, for the first maybe year I was in, a couple of my loans weren’t in the appropriate format. I finally got the right information, consolidated all my loans but that restarted the 120-payment clock.

I was already a year later than into the program and so I was like, “Okay, well that’s fine, it’s just I’ll be maybe done in another year” but there was a lot of trepidation because nobody had reached that 10-year mark for a long time so we didn’t know how hard it was going to be, how many we’re going to be rejected. It was just blind faith, all we could do was make sure we were making payments on time in the right type of loan that we were certifying our employment.

I made sure that I was annually and any time I changed job, I changed job one time that I got my employment hours certified and submitted every year and made sure that everything was in line and cross my fingers. One thing that I didn’t realize, what was considered part-time, if one employer considers 32 hours a week full-time, that’s great but if your next employer doesn’t consider 32 hours full-time, then that doesn’t certify.

That is something you have to take into account when you’re thinking about changing jobs as well is that you know, does this job meet the requirement and/or is there going to be some payments that are going to be qualified, that just extends the timeframe.

There was a lot of learning on the go that had to happen and just kind of staying on top of everything and making sure that the documents are all in line was basically all I had to do and then once – 2017, I think was when the first people reached their 10 year mark and started doing their applications and oh my goodness, so many of them weren’t getting approved and for one reason or another, all the things that you started to hear and the reports and you guys were reporting on it, it was just like, “When my time comes up, what’s going to happen?”

Yeah and I think in the back of my mind, I was always a little worried about some administration’s going to come in and they’re just going to gut this thing and before I even get to that point, it’s not even going be in existence anymore. I had that anxiety as well.

[0:22:15.0] TU: Yeah, one of the things I shared with folks, Kimberly, when we were talking on this topic is that I think there’s been more angst previously about administrative changes that might come into program. I think that’s been eased more recently just because the tone has been a lot friendlier towards PSLF and backed up with some actions here in the last couple of years.

I’ve often said, I’m not sure that’s the biggest risk, I think the risk folks need to be thinking about is, what if for some reason I can’t find myself working for qualifying employer, you know? I think, what mobility or flexibility do I have if I need to pivot or move employers, I think that’s often something that folks need to be thinking about.

[0:22:53.9] KG: Right.

[0:22:55.2] TU: Kimberly, my last question for you is, one of the things I often encourage folks to be thinking about is, if you’re going to go into PSLF, go all in. The goal is to maximize forgiveness and minimize what comes out of your pocket. We certainly don’t want to be in the middle, right? Where we’re paying more than we have to and ultimately, those dollars could be forgiven and those dollars could be used elsewhere in the financial plan.

I think PSLF affords folks an opportunity if it’s a good fit for them to be able to pursue and prioritize other financial goals beyond student loan repayment. How did PSLF for you, help you be able to pursue other goals and was that a reality for your situation?

[0:23:33.3] KG: For sure. PSLF and being an income-based repayment, so a lower repayment than standard, did definitely free up some money just on the month-to-month basis and being able to have that meant that I could maybe move to a slightly lower cost of living area but still remain in California and purchase my first home with my husband and we had a child and we could afford to do all of that and then now without any, you know, having the forgiveness taken care of, now I can shore up the other parts of the financial picture.

You know, making sure that we’re set for retirement, making sure that the kids provided for, for his education and feel a lot more safe and financially sound, so it’s been a blessing.

[0:24:28.3] TU: That’s awesome. I was really excited when I heard the news of the $350,000 plus that was forgiven, so really excited for you for what lies ahead for the financial plan and thanks for taking time to come on the show and share your story. I really appreciate it.

[0:24:41.5] KG: Thanks for having me.

[INTERVIEW]

[0:24:45.0] TU: Ashley, thanks for coming on the show.

[0:24:46.3] AH: Thanks for having me.

[0:24:47.5] TU: Before we talk through your PSLF journey, tell us a little bit about yourself including your journey into pharmacy, where you went to school and the work that you are doing now?

[0:24:55.6] AH: Sure, so I came to pharmacy to pursue my love of working with people, my passion for healthcare, and really just my desire to give back and so that helper mentality really brought me to my career path of pharmacy and in terms of what that path looked like, I did all of my schooling at the University of Wisconsin Madison. I am a local, so that’s pertinent to know that I paid in-state tuition the entire time I was doing my seven total years of pharmacy course work there in Madison.

After graduation, I did do two years of residency in Minnesota to specialize in oncology pharmacy and so I graduated in 2011, so after my two years of residency, I took my first job in Chicago at Northwestern specializing in hematology, oncology as well as bone marrow transplant pharmacy and so I was an in-patient pharmacist there for about five or six years before I took another detour and discovered Informatics and so I am currently back in Wisconsin working for UW Heath and I am working in Informatics now, so it’s been a fun journey and I guess now I am somehow about 11 years out of pharmacy school.

[0:26:20.4] TU: I can relate to that as well. I mean, cool story of chemo training. Obviously you spent time specializing, transition to Informatics not one you commonly hear, so really cool, glad to hear you found that path that you enjoy. Tell us a little bit more about the amount of debt that you graduated with. You mentioned 2011, two years of residency. How much did you graduate and how much was ultimately forgiven through PSLF?

[0:26:41.4] AH: Sure, yes, so throughout – I mentioned I was in school for seven years in state but it was a pretty direct path and I worked my way through school as well and in spite of that, I had about $200,000 that I took out total in loans throughout that seven years, so that’s the grand total. Actually, I don’t even know if I looked at that number very closely until the last few years when things are really – when I was working with YFP and really starting to get serious about some things.

[0:27:15.1] TU: Our listeners know if they’ve been listening to the show for any time, we’ve talked a lot about student loans. I mean, they know that there is many options when it comes to paying them all. PSLF is certainly one of those options, so I am curious Ashley, how did you come to the decision to pursue PSLF especially I think at a point in time, 2011 when you graduated where the information tools, resources to support those that were on the PSLF journey just weren’t as good as there today, to be frank?

[0:27:40.4] AH: Yeah, I would completely agree with that. You know, I think that I sort of by luck even came across the fact that the program was available and new to me, so I truthfully don’t know that I knew a lot about my other options but I did know though was that as a part of PSLF that I had a chance of having my loans forgiven after 10 years and that my payments would remain income-based and so having done two years of residency, it made sense to me that those two years, when my payments were next to nothing would count towards those 10 years.

Then given the leg in recalculating payments, I kind of determined that almost half of my ten years, my payments would be extremely low and that actually ended up being true. I didn’t really hit what I would consider to be really high payments until the last three years of my PSLF, which luckily for me, two of those, almost two of those ended up being during the pandemic and so it was a lot of faith and believing that the program would work for me and knowing for me that I didn’t want to deviate from kind of the academic setting.

I think that was another consideration is I knew that I would be tied to a qualifying not for profit organization and for me that didn’t feel like a restriction based on what my projected career path looked like and so you know, given the amount of debt that I had, I kind of took a leap of faith and went for it. I will say I did encounter another professional who was able to tell me that I was doing all the right things to be in the PSLF program about four years in.

However, I did find that I had about $35,000 worth of loans four years in that weren’t in the program and so for me, that was a point where I was like, “Gosh, do I just pay it all off or do I continue in the program?” and what I ended up doing, my husband and I saved up $35,000 over the next couple of years and earmarked it for that portion of loan that wouldn’t be forgiven in my initial 10-year mark and so that was kind of my backup plan so that I could hopefully be done with all of my loans at 10 years regardless of what was all part of PSLF at that point.

[0:30:14.0] TU: That’s a common thing Ashley that we hear, where folks realize you know, several years in. I am hopeful as time goes on that that’s going to happen less and less. You know, I think that there’s more and more information out there but especially for folks that were early on in the PSLF, we have to remember 2008, you know, this was enacted legislatively 2007. 2008 was the first group that was really the beginning of the 10 years and so you weren’t too far off from the beginning of it.

So again, not as great of information that was available. Besides the 35,000 of loans that were not eligible and obviously was a wrinkle in the journey that you and your husband had to kind of work through, were there any other uncertainties or challenges that you faced along the way in the PSLF journey?

[0:30:54.0] AH: You know, I think that that was the main one. I was very – you know, I’m a pharmacist, we’re all type-A so I was very diligent about completing the paperwork. I was also very skeptical when the program did hit 10 years based on the very low number of people who are seeing forgiveness being successful but other than the late discovery of loans that weren’t consolidated, I think that that was the main hiccup.

You know, other than that, it’s just that anxiety and that uncertainty about not knowing if you are actually doing everything correctly and when you call the loan servicer, you get a different answer sometimes depending on who you talk to and that’s not a very good feeling and so that’s why I was very excited when I came across the YFP Podcast and I was able to start working with you.

I actually got a lot of reassurance that made me feel like I was doing all the right things, that I was doing everything in my power to ensure that I was keeping myself eligible and in a position to be forgiven when that day came around.

[0:32:01.3] TU: Yeah, maybe easy right now that we look back 10 years, you know? It may feel like, “Oh it wasn’t that bad but in the midst of it, you know, especially if there is five plus years ahead of some of that uncertainty, having that reassurance can be really valuable. Optimization of PSLF is something that we’re trying to talk more and more about. Yes, it is nice to have debt that can be forgiven and forgiven tax free, that’s great.

But there is also this whole other strategy of because you are not making as big of student loan payments, it allows other dollars to be put to work at other parts of the financial plan and you already mentioned earlier Ashley that because of two years of residency and because of the delayed timing of how that income-based repayment amount has increased. You made a comment about five years out of ten, we’re really at a pretty low loan payment amount, certainly much lower than what it would have been like the standard ten year.

[0:32:52.5] AH: Right.

[0:32:53.1] TU: Then you also had to adopt at that two years of pandemic and so you saw some great opportunity throughout that ten years because of the residency, because of the pandemic. My question here is, because you weren’t having to make massive student loan payments throughout that entire journey because ultimately it was going to be forgiven, did that allow you to optimize other parts of the financial plan that perhaps you might be playing catch up on now?

[0:33:14.9] AH: Yeah. I mean, I think it had a number of benefits allowing my husband, myself, and our family to do some things that we may not have otherwise been able to do and so in terms of just the payment strategy, I think it allowed my husband, for example, to work in a startup industry where maybe he wasn’t making his salary that he would have been if he had been working in a more corporate environment.

You know, I think the payment strategy allowed us to purchase our first condo in Chicago, which ended up being really great investment than when we sold it. It allowed us to purchase the home that we live in now and it also allowed us to kind of put ourselves in a financial position where my husband was able to purchase a gym that we now own and that he runs, I should say we own and that he runs.

I think the overall strategy has allowed us those opportunities really to kind of see some of our dreams come to fruition and now that we have this money that we’ve put aside in the event that the $35,000 worth of loans get forgiven, we have a big chunk that we can put to finish our basement, which is something that we didn’t really think was going to happen so soon and so yeah, I think overall the strategy and committing and staying in the program has had a number of benefits for our financial goals.

[0:34:40.2] TU: That’s excellent. I really appreciate you taking time to share your journey. Congratulations on getting to the finish line and wishing you and your family the best going forward, so thank you so much Ashley.

[0:34:50.0] AH: Thank you.

[INTERVIEW]

[0:34:52.8] TU: Kyle, before we talk through your PSLF journey, tell us a little bit about yourself including your journey into pharmacy, where you went to school and the work that you are doing now.

[0:35:00.8] KS: Sure, yeah. Thanks Tim, I am really happy to be on the show today and just give a little story about myself. So I am Kyle, I work in a hospital, a non-profit hospital system. I have been in that position for a little over 10 years. I graduated in 2011 from NEOMED and then I did my residency a year after that, so I’ve been kind of in the non-profit world for the last 10 plus years.

[0:35:22.7] TU: First graduating class of NEOMED, so exciting. That’s where our paths crossed back in the day when I started on faculty there. You guys had a great class and we had the opportunity to work together for a period of time there as well, so excited to get an update on what you’re doing as well as your success here with PSLF. Tell us more about the numbers, amount of debt that you graduated with Kyle and how much was ultimately forgiven through PSLF.

[0:35:44.1] KS: Sure. Yeah, I’ll kind of run through my numbers here. My total debt loan was $186,301.07. Just a little bit of breakdown on that, about 18,000 of that was from undergrad that I kind of rolled into the loan after I graduated. About a 168 or so, 160, 170 was from just pharmacy school going through that for four years because we were in a two plus four program and then after the $186,000 or so that was the principle, I also had accrued a little bit of interest. That number was $2,737 of interest, so if you look at the total, the principle plus interest that was recently forgiven was $189,038.72.

[0:36:28.4] TU: Awesome, love the specificity too, so tells a bit you are doing your homework along the way, which is obviously important when it comes to loans in general but specifically with public service loan forgiveness, making sure that we’re crossing T’s, dotting I’s. Now Kyle, our listeners know that there are many options when it comes to paying off student loans. I often tell folks when I am teaching this topic, you know, whether we like it or not, the system around student loans and the complexities, it is what it is.

It’s the hand that we’ve been dealt and so we’ve got to do our work to understand it and PSLF is just one of the many options that were out there. I am curious to know, how did you come to the decision to pursue PSLF where that was what you had thought was the best strategy for you individually especially at a point in time. You mentioned graduating in 2011 where the information tools and resources to support those on the PSLF journey just weren’t as readily available or good as they are right now.

[0:37:21.5] KS: Yeah, that is a great topic and one that almost every pharmacy student that’s graduating should have some serious discussions about is the repayment plan but for me, we started pharmacy school in the fall of 2007 and if you remember the program for PSLF was started in October 2007, so we were just hearing about this program and certainly nobody had been in the program 10 years to have anything forgiven, so we didn’t know much about it.

By the time I graduated in 2011, we were hearing more about the program and its availability and I always knew that I wanted to do residency, which in the hospital is most likely going to be a non-profit hospital depending on if you do one year or two year, you are probably going to have two years of non-profit work and I also knew I wanted to work in a hospital, so at the end when I graduated in residency and moved into a position, a clinical position and a shared position at NEOMED it was something that kind of fit the PSLF mold.

Where I would be working for a non-profit and as long as I work ten years and made my on time payments, everything should be forgiven. The option for me was I always kind of have it on the back burner that this might be a perfect repayment plan for me because I had already planned to go the non-profit route and work at a hospital and then it kind of just all fell into place with this and then certainly as everyone is aware, the Biden administrations, their work on expediting the PSLF program and making sure those –

You know, the intent of the program was true and I think that’s really what they did is make sure that if you work for a non-profit for 10 years that you are eligible for forgiveness, and they kind of wipe away some of the intricacies that maybe held some people back in the past.

[0:38:58.4] TU: That exactly is Kyle why we are seeing so many folks now come forward with, “Hey, we’ve been forgiven. We’ve been forgiven” it felt like it was at snail’s pace for so long and part of it has just been time. You mentioned the timeline of when this was an active legislatively, so we are seeing more pharmacist that are coming forward but also because of some of that work that the admiration has done to help expedite the process and remove some of the nuances that are there as well.

With that being said Kyle, there still is a lot of skepticism that I hear, a lot of uncertainty about PSLF and I think some of that comes from, you know, maybe some horror stories that have gotten over-glorified, some things that haven’t been updated in a period of time. Tell us about for you, any uncertainties you had along the way or challenges that you faced in the pursuit of PSLF?

[0:39:42.3] KS: Yeah, that is a big one for me, so my story, I mentioned kind of having a little bit of some undergrad debt when I started in residency, I made sure to file the paperwork right away and get into the program just in case the program was done away with that way. They usually grandfather people in that were in there but one thing that I didn’t realize is I had FFEL loans while I was in the program for about a year and then I had called them.

They basically said, “Well, you have to consolidate your loans into direct loans” and then at that point, it was probably 2012 when I did that and I consolidated them all together but in doing so, they also told me that’s going to push back my repayment date. Before the Biden administration updated their standards and how things will be forgiven, my repayment date or my payoff date was going to be May of 2023.

I still technically had 15 months from now to go but because they moved everything up and actually some of those payments the first year didn’t count then and they had to restart their clocks so to speak, so that’s one thing that I don’t think was the intent of the original program was to make it so difficult with the type of loan you had to be eligible for the program. I think that is one kudos to the Biden administration for trying to solidify that plan.

That hey, it really doesn’t matter what type of loan you have if you are working in non-profit for 10 years, you really should be a part of the program and I think they’ve done a really good job of that, so that was probably the biggest challenge, in the beginning, was that I lost some payment time. The other challenge I would say for anybody who is in the program is just make sure you’re – one thing I did was I filed my paperwork on the dot every year.

When I hit my anniversary at work, which for me was August 1st, every August 1st, I would file a new sheet with PSLF and send it to FedLoan to update my payment account and that way, any kind of mailings that they sent me, any kind of confirmations, I would have a file that I was tracking it along with them. I was religious to that, I did it every year to make sure how many payment accounts I had left and then I would know when my repayment date would be.

That was another challenge I think that as long as you’re on top of it, once a year is probably enough to do that but you don’t want to delay that because your payment accounts won’t be updated until you send in your sheet.

[0:41:55.8] TU: Great insights Kyle and one of the things that we like to talk about in the show is, when it comes to PSLF, often the strategy side of PSLF might get overlooked, and what I mean by that is that you know, typically the goal of PSLF is usually to maximize forgiveness and minimize what comes out of pocket and one of the advantages, therefore, can be allowing someone to pursue and prioritize other financial goals beyond student loan repayment if they have that mindset of what can I be doing to maximize forgiveness, minimize what is coming out of pocket.

For you Kyle, how did the PSLF strategy help you be able to pursue other financial goals for you and your family?

[0:42:32.7] KS: Yeah, another great thing that I think this program allows you to do to coincide with paying off the debt or being in the program is to prioritize other things that you want to do. In my case, just taking a step back for a minute is if you notice the numbers that I stated earlier, I didn’t pay a dime of principle through the entire ten years. My 186,000 and some change, that was the number that I graduated with and it didn’t come down one penny.

When you talk about maximizing public service loan forgiveness, you know, that’s ideally what you want to do. You want to have the most available to forgive at the end of the 10 years. One thing that my wife and I did is we ended up filing our taxes separately. We were in the old IBR plan, which I am not sure you’re allowed to get in anymore. I think they have updated and there is a new IBR plan.

That plan if you file separately, it will only look at my income as oppose to our total income, so we would file our taxes separately. Typically, that’s not advice that you would see for most tax professionals. For most people in the United States except in the scenario where you have student loans and you are in a program like PSLF and then you know, it is just allowed us to maximize some other things we did along the way knowing that hey, we’re making our payments, the payments count and now we can invest in other things like our IRAs.

My wife and I both have IRAs, we have 529 accounts for both of our kids that were started when they were born, and then we actually had somebody left over, so we started a taxable account so we kind of maximized retirement and then we were able to save for some other things, you know, just house renovations and things that probably wouldn’t be able to be done had we’ve been paying, understand the repayment plan, which would have ended up costing us about 800 or 900 dollars more per month.

[0:44:12.4] TU: 800 to 900 more per month, right? I think that’s where the numbers and the PSLF math can become so favorable. You highlighted so well Kyle, you know, how can you use that additional margin to expedite prioritize other goals, right? You talk about the tax strategy, super important, you know, college accounts, IRAs, 401(k)s, brokerage accounts and again, not to say having to wait until those student loans were gone to be able to pursue those goals, which we know is so important because of compound interest and time value of money.

Kyle, I really appreciate you taking time. Congratulations, excited for you and the family to get through this important milestone and really appreciate you taking time to come on the show.

[0:44:51.2] KS: I’m glad to come on and just wanted to at least give some evidence that the PSLF program can work for everybody and those are in it to stick with it and make sure you’re trying to maximize the amount forgiven at the end.

[0:45:03.2] TU: Thanks Kyle, I appreciate it.

[0:45:05.0] KS: Thank you.

[END OF INTERVIEW]

[0:45:05.6] TU: Well, as we wrap up today’s episode hearing about some PSLF updates with lead planner, Robert Lopez, from the YFP Planning team as well as three PSLF success stories, now is the perfect time as we await the end of the administrative forbearance to make sure that you’ve got your student loan repayment plan knocked down.

You’ve heard firsthand through these stories about why identifying the best repayment plan, whether it be PSLF, refinancing or another repayment option is so important to make sure that you’re optimizing your student loan situation and considering it as a bigger part of your financial plan.

That is why we’re excited to have a one-on-one student loan analysis service that is offered by the team at YFP Planning that is specifically focused on having you identify the best repayment plan for your personal situation.

For this service, you’ll work directly with one of YFP Planning certified financial planners to inventory your loans both federal and private, evaluate eligible repayment options including student loan forgiveness, income-driven repayment, private refinancing and ultimately determine that best repayment strategy for your personal situation.

You can get started by visiting yourfinancialpharmacist.com/sla. Again, that’s yourfinancialpharmacist.com/sla and you can use the coupon code, “YFP” for 10% off.

[DISCLAIMER]

[0:46:25.4] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and it is not intended to provide and should not be relied on for investment or any other advice. Information of the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archived newsletters, blog posts, and podcasts is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analysis expressed herein are solely those of your financial pharmacist unless otherwise noted and constitute judgments as of the dates published. Such information may contain forward looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.

Thank you again for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 247: 10 Common Financial Mistakes Pharmacists Make

Posted on by yfpadmin

10 Common Financial Mistakes Pharmacists Make

On this episode, sponsored by APhA, YFP Co-Founder & CEO, Tim Ulbrich, PharmD, talks about ten common financial mistakes pharmacists make.

Episode Summary

In this episode, Your Financial Pharmacist Co-Founder & CEO, Tim Ulbrich, PharmD, flies solo to dive into ten common financial mistakes that pharmacists make. Tim talks through the math behind the age-old retirement advice that we have all heard, “save early and save often.” He discusses some common mis-prioritization of investments that leave tax savings on the table, like prioritizing non-tax favored investment accounts. Tim further discusses two common student loan mistakes that can cost folks tens of thousands of dollars and in some cases, much more than that; paying too much interest and not maximizing PSLF. Tim shares about the importance of having an emergency fund, protecting your income, and saving for your kid’s college in the correct order. He details common financial missteps such as accepting that income is fixed (because it will change) and failing to or delaying retirement savings, plus some long-term impacts of each. Tim then wraps up with another look at tax planning and how proper tax planning each year (not just tax filing) can affect the financial plan. Lastly, Tim explains how having a financial planner that does not have your best interest in mind can be one of the biggest mistakes that you don’t have to make.

Key Points From This Episode

The number one mistake on our list: paying too much interest on your student loan debt.
Tim shares the way to shift your mindset away from the ‘monopoly money’ feeling.
Diving into student loan strategy and the different buckets to consider.
Talking about service loan forgiveness and PSLF strategy, and how to maximize these.
Why emergency funds take a back seat and how to avoid delaying getting one.
Some tips on starting your emergency fund.
Mistake number four: protecting your income.
Accepting your income is fixed, and factoring in inflation and debt loads.
Putting numbers to the retirement savings saying of ‘save early, save often.’
Investing in a way that maximizes your tax savings!
A reminder of why it’s crucial to create a tax strategy and do your tax planning.
Talking about saving out of order for kid’s college.
How to get a certified financial planner who has your best interests at heart.

Highlights

“We tend to underestimate how much interest we’re going to pay over the life of a loan and therefore, we tend to underestimate how much we’re going to actually pay out of pocket.” — Tim Ulbrich, PharmD [0:08:37]

“When it comes to insurance, the balance point here is we want to not be underinsured, we want to make sure we can protect the time but we also don’t want to be over-insured.” — Tim Ulbrich, PharmD [0:19:23]

“You can borrow for your kid’s college, but you can’t borrow for your retirement.” — Tim Ulbrich, PharmD [0:30:48]

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[0:00:00.4] TU: Hey everybody, Tim Ulbrich here and thank you for listening to The YFP Podcast, where each week, we strive to inspire and encourage you on your path towards achieving financial freedom.

This week, I fly solo to talk about 10 common financial mistakes that pharmacists make, no judgment as I’ve made many of these mistakes myself. Some of the highlights from today’s show includes talking through two common student loan mistakes that can cost folks tens of thousands of dollars and in some cases, much more than that, the math behind the age-old advice that we’ve all heard, save early and save often, as well as talking through some common mis-prioritization of investment that leaves tax savings on the table

Now, before we hear from today’s sponsor and then jump into the show, I recognize that many listeners may not be aware of what the team at YFP planning does in working one-on-one with more than 240 households in 40 plus states. YFP planning offers free only, high-touch financial planning that is customized for the pharmacy professional. If you’re interested in learning more about working one-on-one with a certified financial planner may help you achieve your financial goals, you can book a free discovery call at yfpplanning.com.

[SPONSOR MESSAGE]

Today’s episode of Your Financial Pharmacist Podcast is brought to you by the American Pharmacist Association. APhA is partnered with Your Financial Pharmacist to deliver personalized financial education benefits for APhA members. Throughout the year, APhA will be hosting a number of exclusive webinars covering topics like student loan debt payoff strategies, home buying, investing, insurance needs, and much more.

Join APhA now to gain premier access to these educational resources and to receive discounts on YFP products and services. You can join APhA at a 25% discount by visiting pharmacist.com/join and using the coupon code, YFP. Again, that’s pharmacist.com/join and using the coupon code YFP.

[INTERVIEW]

[0:02:08.5] TU: Hey everybody, Tim Ulbrich here, welcome to this week’s episode of the Your Financial Pharmacist Podcast. I’m flying solo this week and we’re going to talk through 10 common financial mistakes that I see pharmacists often making, that we see pharmacists in the YFP community often making. As I mentioned in the introduction, there is no judgment here in these mistakes.

I’ve made many of these mistakes myself. My hope with this episode, through sharing some of those experiences and other common mistakes that we see folks making, is to hopefully prevent those, right? For others that are perhaps on this journey towards achieving financial freedom.

Before we jump into the 10 common mistakes that we’re going to talk about in today’s episode, I am not going to be covering a few things that are worth noting because I’m going to assume that you’ve got these bases already covered, right? Those would be things like having a budget and being intentional with your spending, so important, right?

We’ve ultimately got a certain amount of income to work with each month, we’ve got a lot of things that are competing for our attention financially, various goals, various expenses and so that budget is going to allow us to be intentional with our spending. I’m going to assume that that is already in place.

I’m also going to assume that we’ve either eliminated any high-interest rate, credit card debt that is revolving each month in a current interest or we’re going to avoid that if we possibly can, right? Very important is, we look at how the impact of that interest can really hurt us as we look at trying to achieve other goals.

Finally, of course, we need to minimize our lifestyle creep, right? For many pharmacists, we know that we see, certainly, a great income overall but that income often can be relatively flat throughout one’s career. Expenses tend to creep up on us over time, perhaps families grow, home expenses, other types of things throughout one’s career and so, we got to do our best to keep those expenses at bay and so that we can focus those limited dollars that we have on other goals each and every month.

Again, things I’m not going to cover, having that budget, being intentional, spending, avoiding, eliminating credit card debt, minimizing lifestyle creep. Now, what we are going to talk about are some common student loan mistakes, we’re going to get really tactical with some numbers that highlight why these mistakes can really have a significant negative impact and really ultimately leave a lot on the table that could be put elsewhere in the plan.

We’ll talk a little bit of our emergency funds and protecting the income. We’ll talk about a couple of things in the long-term savings, retirement side, in terms of prioritization and delaying of savings. Then I’ll wrap up by talking about tax planning as well as looking for a planner that has your best interest in mind.

All right, I hope you’re ready, I’m going to go quick, we’re going to hit a lot of information and we’re going to reference several resources throughout the show and we’ll of course, link to those who you could deep it to those deeper after the recording.

[0:04:49.0] Number one mistake on our list is paying too much interest when it comes to paying off our student loans. Now, you’ve heard me say a hundred times on this show, that pharmacists are facing significant student loan debt. The cost of 2021 to be exact, median debt load, have $170,000 as reported by the American Association Colleges of Pharmacy Graduating Student Survey.

Now, the good news is for the first time in over a decade, we’ve seen that number come down was $175,000 for the class of 2020. Bad news is, that’s still $170,000 and when we look at how interest accrues on a $170,000, those start to be really big numbers. One of the things I often say is that for me in my journey of paying off debt, when I was in school and even early on in the repayment journey, to be frank, it felt a little bit like monopoly money, right?

Once we get into active repayment, once we see the impact of that interest accruing, it starts to become really real, really quick. One of the ways I like to shift that mindset away from that feeling of monopoly money is to calculate the daily interest that is accruing on our loans. The way you do that is take your loan balance that currently remains, you multiply it by your interest rate and you divide it by 365 days.

If you were to have $170,000, let’s just say the Median debt load, $170,000 if we multiply that by 6% and assume that’s an average interest rate across our federal loans, and we divide them by 365, we’re looking at about $28 per day of interest that is accruing. $28 per day. Now, of course, as that $170,000 gets paid down to 160, 150, 140, et cetera or, and/or, we’re able to reduce that interest rate either through our process of refinancing or perhaps some forgiveness opportunity.

Then of course we’re going to see that impact of interest go down but that really is the opportunity cost that we need to be thinking about. $28 per day, if we look at the median debt load of a pharmacy graduate that is going towards interest alone as they begin that repayment period.

[0:06:47.8] One of the feelings I had early on in my repayment journey is I felt like I was spinning my wheels in terms of making substantial monthly payments but not feeling like I was really making a whole lot of progress and momentum towards getting that debt load paid off.

The reason that was and the reason that is for many of you that might be listening to this show, is because the amount of that payment that goes toward interest, right? When we look at big debt loads like 170, 180, $200,000 or perhaps even more at interest rates, six, seven percent, maybe higher on some private loans, what we see is pretty big monthly payments but we also see a lot of that that is going directly towards the interest.

Let me give you an example. If somebody has $170,000, again, let’s just use a 6% average interest rate, if we assume they’re going to pay that off over a 10 year period, that would be the standard repayment option, 120 fixed monthly payments, what we see is a monthly payment of about $1,900 per month for 120 payments or 10 years. $1,900, fixed payment for 10 years.

Now, of that $1,900 that first payment, about $1,000, 45% or so is going to go towards principal and about $850 is going to go towards interest. Right out of the gates, we see that in a standard 10-year repayment about half is going to put a dent in the actual principle and about half is going to go towards interest. And of course, with each monthly payment that we make, we’re going to see a little bit more going toward principle and a little bit less going towards interest.

[0:08:19.2] This is why folks often feel like, “Hey Tim, I’m making big monthly payments but I don’t feel like I’m progressing as quickly as I would like to in terms of getting this paid off” and that’s because of the interest that is accruing on those payments.

One of the common mistakes here that we’re talking about in terms of paying too much interest is we tend to underestimate how much interest we’re going to pay over the life of a loan and therefore, we tend to underestimate how much we’re going to actually pay out of pocket.

I see this all the time and talk with the pharmacy students, they may say, “Hey, I’m borrowing $20,000 a semester” let’s say for tuition cost, the living expenses, they multiply it by eight semesters and they think, “Hey, that’s roughly my student loan debt number.”

Now, what they’re forgetting is of course the interest that’s accruing while they’re in school, outside of administrative forbearance period, such that we’re in right now, and they’re also not including the interest that’s going to accrue while they’re in active repayment, right?

If we’re looking at a 10 year, perhaps for some it’s even a little bit longer repayment journey, then we’re going to see a significant amount of interest that’s also accruing throughout the life of a loan.

That’s why often, folks look up and say, “Wow, that’s a lot more that’s getting paid back than I really had anticipated was going to initially be the case.” What we want to be thinking about here as we talk about this first common mistake, paying too much interest is, what can we be doing to minimize the interest that we’re paying?

[0:09:38.9] That’s where we really get into student loan repayment strategy, right? A topic we have covered, lots of different ways on this show and there’s several different buckets that we need to consider.

That could be tuition reimbursement programs, forgiveness programs, either public service or nonpublic service loan forgiveness programs or we’re going to pay them off but we have an option perhaps to move our loans into the private sector through a refinance that’s going to help us reduce that interest.

The first couple of areas that come to mind if I’m thinking about, “Hey, how can I avoid paying too much interest?” is number one, could I have somebody else pay the bill, right? That could either be through a tuition reimbursement program or through forgiveness, whether that’s PSLF offer or non-PSLF, if that’s not viable or of interest, then perhaps, might I be able to reduce my interest rate through a process of refinancing.

One of the things that we want to avoid is staying in a status quo position in terms of staying in the federal system, paying a high-interest rate, or paying a high private rate, if there’s a better option out there, whether that be forgiveness or whether that be considering a refinance.

A couple of things to think about as we talk about that first mistake of paying too much interest and I’m going to reference a resource here where you can dig more into student loan repayment strategies to evaluate that further.

[0:10:50.9] Number two mistake on our list of 10 is not maximizing public service loan forgiveness. Now, we have talked about this on the show extensively but I feel the need to continue to shout from the mountain top about this topic because there’s a lot of folks that maybe have the option or pursue public service loan forgiveness and for whatever reason aren’t making that choice or folks that are kind of half in and they’re half out, right?

We’re leaving something on the table. When it comes to public service loan forgiveness, assuming that’s the right play for you and your personal financial situation, if we go that pathway, the goal is optimize and maximize forgiveness and minimize what’s out of pocket, right?

When I say, the common mistake here is not maximizing PSLF, what I’m referring to is that we’re leaving something on the table, either we’re paying more interest that we could have forgiven, or/and potentially, we’re not optimizing certain situations that would allow us to be able to also save through our forgiveness period.

One of the things we need to do here is actually break down the numbers of what this means for your personal situation. Now, I’m not going to go through the rules of PSLF, again, we’ve talked about that extensively on the show before, highlights here, we have to work for the right type of employer so 501(c)(3), not for profit or federal government agency or organization.

You have to be in the right kind of loan, so a direct loan, we’ve had some provisions with the Biden administration that have allowed some forgiveness and latitude on that, we’re going to talk about that more in an upcoming show. You have to be in the right repayment plan, which is an income-driven repayment plan.

[0:12:22.8] You have to make 120 payments and be consecutive but 120 qualifying payments before you’re ultimately applying for and receive tax-free forgiveness. Now, one of the things folks often omit, when they’re thinking about optimizing PSLF is really trying to figure out what can I be doing to pay less towards my student loans so that more is forgiven and that really gets to how the monthly payment is calculated towards your student loans when you’re in PSLF through an income-driven repayment plan.

The formula that is used is they take an amount that’s called your discretionary income and that is included of your adjusted gross income, so your taxable income reported on your tax returns, so your AGI, minus 150% of the property level, that is your discretionary income and then that gets multiplied by a certain percentage.

Just by definition of that calculation, there’s some things that we can do if we look at that discretionary income. That AGI minus that 150% poverty level, hopefully, you’re asking yourself, “What could I be doing to lower my AGI?” right? We don’t want to make less money but, “What I could be doing in terms of optimizing strategies to lower my AGI so that I can pay less towards my student loans, increase the amount that’s forgiven, and perhaps also, move forward other financial goals at the same time?”

What we know, what you know from listening to the show is there are strategies that we could do to lower our AGI, right? We think about accounts like 401(k) contributions, 403(b) contributions, HSA contributions. This is where we get to the strategy and the numbers start to become pretty wild in terms of not only optimizing what is forgiven tax-free but also, what could we be putting towards investments that over this repayment period of 10 years with PSLF, we also take advantage of compound interest and compound growth over that period of time.

[0:14:16.0] You know, it doesn’t take a whole lot of whole numbers in terms of putting money away at three, five, seven percent of compounded growth each year. Again, it’s not just the tax-free forgiveness that of course is a huge benefit but also, what can we be doing to moving forward in accelerating our investment plan. That’s the second mistake, not optimizing our PSLF strategy.

Now, a couple of resources I want to point you to here. Student loan repayment, you’ve heard me say it many times, one of the most important decisions pharmacists are going to make early in their career, one that we don’t want to walk into blindly, one that we don’t want to replicate what somebody else is doing that may not be a good fit for our situation.

This decision can be the difference, easily of tens of thousands of dollars, if not more, based on the option you choose and so, I really want you to invest the time and the energy to understanding this loan repayment options, as nuanced as they are. We’ve got a great comprehensive resource, The Ultimate Guide to Pay Back Pharmacy School Loans. It’s a free blog, comprehensive, almost like an ebook, to be honest, you can download that, read that blog at yourfinancialpharmacist.com/ultimate and we’ll link to that in the show notes.

Now, for those of you that are saying, “Hey, the information is great but I want one-on-one help with an expert that knows this in and out.” We do have a one-on-one student loan analysis survey that pairs you up with a YFP Planning certified financial planner and the goal of that is to analyze all of your options and ultimately decide on the best repayment plan for your situation.

You can learn more about that service at yourfinancialpharmacist.com/sla. Again, yourfinancialpharmacist.com/sla. All right, that’s number two, not maximizing PSLF.

[0:15:57.3] Number three is delaying the emergency fund. Now, we just came off of talking about student loan repayment, right? That’s a gorilla that is often in the room. Many folks are also trying to think about saving and investing for the future, perhaps there’s a home purchase, kids that might be involved, kid’s college, the expenses, and the list of expenses goes on and on.

Sometimes, the emergency fund can take a back seat for a couple of reasons. Number one, it’s not very exciting, when you think about making progress on our debt, to become ultimately debt-free whether that’s by paying them off or forgiveness or saving for investing for the future.

Those are typically a little bit more exciting goals to be thinking about. Putting money away in a savings account that’s going to earn minimal but not too exciting amount of interest and it’s there if we need it but hopefully, you don’t, not super exciting, right?

This often may fall by the wayside but the purpose and the goal of that emergency fund is to protect the financial plan when, not if, but when an emergency happens, and work from a position of financial strength with the rest of the plan, right?

[0:16:57.2] This could be a short-term job loss, gap of employment, this could be a health emergency, an emergency with the home, the list of things that could be involved here obviously go on and speaking from personal situations, something will come up at some point, probably not too distant in the futures that is going to require you to tap into this emergency fund.

Generally speaking, our target here is three to six months’ worth of essential expenses. Not to say three to six months’ worth of income but three to six months’ worth of our essential expense because there can be a place where we have too much in this emergency fund. Obviously, we want to be comfortable with that amount but too much means opportunity cost of dollars that could be used elsewhere in the plan.

Now, in terms of where to put it, generally speaking, we’re going to be looking at a long-term savings account, a money market account, somewhere that we can get to the money, it’s a liquid, it’s accessible, it’s running a little bit of interest more than you’re going to see in a checking account, typically which is closer to zero.

Maybe you’re going to getting 0.4, 0.5, 0.6 right now, not too exciting, we’re getting a little bit of interest but it’s a liquid, it’s accessible, this is not the place we’re trying to take a risk with our financial plan, right? We’re going to do that in the savings and investing for the future.

[0:18:05.9] Now, one of the tips that I could share with folks is I think it’s incredibly helpful to get these dollars out of your checking account, right? This really gets to the intentionality of the financial planning.

If we have a bunch of money lumped into our checking account that is for our month-to-month expenses and then we say, “Yeah, I’ve got some of that, that’s earmarked also for an emergency fund,” get it out of the checking account, put it in a separate savings account. Number one, out of sight, out of mind.

Number two, we’re really going to call that account an emergency fund and that’s going to show us our intentionality towards building that and protecting it and getting that out of our month-to-month checking account where we’re either doing our expenses or that we have tied to a credit card where those expenses are charged, so that’s number three.

[0:18:44.0]: Number four is not protecting your income and this obviously gets to a whole laundry list of types of insurance we need to be thinking about including health, home, auto, renters, and so forth, professional liability.

The two that I just wanted to touch on briefly here are term life and long-term disability, and one of the things I often share with pharmacists is “Hey if you are going to do the hard work to really figure out how we’re going to manage just a $170,000 student loan debt if you are going to do the hard work to build a nest egg and a retirement portfolio, we’ve also got to invest some time to make sure we’re playing defense so we are preventing the catastrophic from disrupting that progress in our financial plan. “

When it comes to insurance, the balance point here is we want to not be underinsured, right? We want to make sure we can protect the time but we also don’t want to be over-insured, which is something we often see folks might be in a position of a policy that has been sold to them that is not necessarily coverage that they need or that is in their best interest.

When we are talking about term life insurance what we are talking about here is insurance that would be able to replace your income and what that income provides in the event that you were unexpectedly passed away, right? We’re big advocates of term life insurance. Other types of life insurance out there are whole life, permanent, value types of policies not to say that those don’t have a place anywhere but for the vast majority of folks that we talk with, a coverage with a term life insurance policy might be a 20 or 30-year term.

A million, two million dollars, it really depends on your personal situation but that is going to allow for an affordable monthly payment that is a fixed monthly payment that is going to then allow us to free up dollars to be able to put towards other parts of the financial plan.

[0:20:24.9] In terms of a term life insurance by definition, let’s say somebody buys a 30-year term policy for a million dollars and they’re 30 years old, they are going to pay a monthly or annual premium, depending on how the policy is set that is a fixed monthly payment over that policy length, so it will be a 30-year policy in this case. From 30 to 60 years old in that situation, they would pay a monthly or annual premium.

Now, if they were to die unexpectedly at some point, so let’s say at the age of 50 that person passes away, well at that point their beneficiary would receive the money that’s known as the death benefit and that would be a tax-free policy that would be paid out to the beneficiary. Now, if they don’t die in that 30 year period, which is a good thing that’s the goal, a term life insurance policy, you’re paying those premiums on but you are not going to get those dollars back, right?

If we get to 60, we’ve made it, we are still alive at that point, the policy ends and we are not going to recoup any of those dollars. We are really preventing things on the catastrophic side. We are not looking at this as an investment vehicle. Now, on the disability side, what we are talking about here is really trying to address a scenario where what if you are unable to work as a pharmacist because of a disability?

Car accident, chronic illness, whatever it may be, and obviously at that point, you are disabled and so you are unable to work, in that case, your expenses still live on but your income now here is in jeopardy. A long-term disability policy is the one that we’re often referring to here, again, monthly or annual premium, typically a percentage of your salary that you are going to purchase a policy for.

It could be a five-year, 10-year, 20-year policy up to the age of 65 so it depends on the type of policy, lots of nuances here to think about and then if you were to become disabled, there is going to be known what’s an elimination period, which is the time period between when the disability happens and when your policy kicks in and you have to self-fund that period. It might be 30 to 180 days depending on the policy and then after that point, your monthly policy kicks in to help replace your income.

[0:22:16.8] This is one of the areas we see pharmacists often overlooking and both with term and long-term disability, you may have some base coverage that is provided by your employer. It works a little bit different on the tax side of things of how that benefit is taxed or not taxed depending on where the policy lies and how the premiums are paid and really the question here is, what additional coverage might we need beyond what we have offered through our employer?

If you go to yourfinancialpharmacist.com/insurance, we’ve got two additional resources pages on term life and long-term disability where you can learn more about those and see where that fits in with your financial plan. So that is number four, not protecting your income.

[0:22:57.1] Number five is accepting that your income is fixed. Now, many pharmacists graduated in 2008. If you look at the average of pharmacists in 2008 versus what it is here in 2022, if you factor in inflation, not a whole lot has changed, right? Pharmacists tend to make a great income coming out of the gates but depending on the area of practice that they are in, that income may be relatively flat throughout their career.

All the while our expenses are going up and we also see debt loads continue to creep up through that time period. One of the things we want to be thinking about here is how can we potentially maximize our income, right? This would be a benefit to both diversify your income, so I talk with many pharmacists that might let’s say, full-time at a community pharmacy pick up some PRN hours at a hospital pharmacy so they have their foot in the door at a couple of locations.

Again, additional income but also to diversify, pharmacists that are working on side hustles and doing some medical writing or other businesses to generate additional revenue, also areas of interest. And so this could help us diversify but also can help us accelerate our financial goals, so lots to think about here and this really is very much an individualized decision and we’ve got a great resource available, 14 Extra Ways That Pharmacists Can Consider Making Additional Income. That is a blog that we have in the YFP blog, we’ll link to that in the show notes with this episode.

[0:24:19.5] Number six is delaying retirement savings. Now, many of us have been told by parents, grandparents, perhaps multiple people that you need to be saving as early and often as you can, right? Time value of money, compound interest, as Albert Einstein said, it is the eighth wonder of the world and so what we’ve been told, what we’ve been taught is the longer we delay our savings, the harder it is going to be to catch up.

I want to put some numbers to this because I think sometimes we hear that, were like, “Yeah, yeah, easier said than done. You don’t have $170,000 in student loan debt, you aren’t trying to purchase a home and doing all of these other financial goals at the same time” but the math here is really compelling.

If we look at a pharmacist who is making about the average salary of a pharmacist that’s out there if we assume they are putting away about 15% of their income and they are getting an average annual rate of return on their portfolio around 6%. So if you look at the historical rate of return of the stock market around 10% net of inflation closer to 7% and so if they are putting away 15% of their income and they have a desired retirement age of 60, what we see is by putting away about 15% of their income each and every year, if they start at the age of 25, when they get to the age of 60, they’re going to have about 2.6 million dollars saved.

Now, if they wait to the age of 30, that 2.6 turns into about 1.8. If they wait to the age of 35, that 2.6 that could have been if we started at 25 turns into 1.2 and if we wait to the age of 40, that 2.6 turns into $800,000. So that value, that advice is real, right? The earlier we invest and save, obviously we are going to have more time for that money to grow and to do its thing in terms of compound interest throughout many, many years.

Again, we’re just talking about one factor here in a vacuum as we talk about delaying retirement savings. We of course have to zoom out and consider this with other financial goals that we’re working on but ultimately, as we are able to do. We want to be focusing on starting as early as we possibly can.

[0:26:17.9] Number seven here is prioritizing non-tax favored investment accounts. Now, we talked in episodes 72 through 75, we did a series on kind of an investing 101 series meant to be a crash course for those that are wanting to learn more about investing in terminology, some of the biases associated with investing, some of the information on fees, types of accounts, 401(k)s, IRAs, et cetera and so that is a great primer if you want to go back and listen to episode 72 through 75.

What I am referring to here is investing potentially out of order. Now, this is certainly not investment advice, right? We don’t know anything about your personal situation but there is some low-hanging fruit from a tax advantage investing standpoint, right? When you think about 401(k), 403(b), employer-sponsored retirement accounts especially when we think about employer match, free money, right? We have all been told that before.

If we keep working down there, we think about things like health savings accounts, triple tax benefits. We have talked about that on the show before, Roth IRA accounts. Again, another account where we might be putting dollars in that have already been taxed but they’re going to grow tax-free, we pull them out without a future tax burden, so if we are contributing to let’s say a brokerage account, whether it is through a tool like Robin Hood or Acorns or Betterment or whatever be the app or tool. But we are not yet taking advantage of some of those other things, the question we want to ask ourselves is, are we investing in a way that’s going to allow us to maximize our tax savings, right?

Are we investing in appropriate priority? There certainly is I think a place and a role for a brokerage or taxable account but let’s be thinking about the order in which we are doing that relative to employer retirement accounts, IRAs, HSAs, and so forth.

[0:28:02.1] Number eight here is tax filing without tax planning and strategy. Now, we’ve been hitting on this in the show in the last three to six months, shout out to the team at YFP Taxes doing a great job servicing the clients of YFP planning as well as some new clients here in 2022 and what I am referring to here is someone who is doing tax preparation but is not thinking more strategically on the tax planning side.

So, if we look at a pharmacist on average, if they are making an average income working 40 years or so, and if we adjust up that salary for inflation of pharmacists throughout their career as going to earn about $9 million in their career. But only about six million of that depending on their tax situation is going to hit their bank account, so that delta of $3 million is what we want to be thinking about to pay our fair share, right? But we want to optimize how we can be able to use dollars elsewhere if we can allocate those towards a financial plan.

Tax preparation, that’s what we are all doing, we’re required to do it, right? If we don’t file our taxes by April 15, the IRS is going to be coming knocking on our door unless we file for an extension. Tax preparation is historical. It is looking backward, so it limits the impact that we can truly have on our tax liability because things have been done at that point in time, so it is mechanical, we have to file, it’s looking back.

Where tax planning is more of the forward-focus strategic part of integrating the tax plan with the financial plan. Here is where we can avoid common issues in advance, right? We can look at how we can adjust withholdings, do some projections, how can we optimize our savings accounts, how might we look at our savings and philanthropic contributions to be able to optimize those as well.

Lots of things to consider, there’s optimization strategies around long term savings accounts HSAs, 529s, we know there is tax saving strategies with PSLF, lots of child-related optimization strategies, child care credits, dependent care FSAs, maximizing charitable contributions, you know really the list goes on, right? If we are able to do more of that planning and strategy work and look ahead, then we’re obviously able to take advantage of those, so that when we do the filing, we know we have optimized the situation throughout the year.

I would reference folks to episode 233, where our director of tax, Paul Eikenberg and I talked about some tax moves to consider from an optimization standpoint and we’ll link to that in the show notes.

[0:30:27.2] Number nine here is saving for kids college out of order. Guilty as charged, right? I found myself in this trap and as I reflect on that, I think about, “Well, why was that the case?” right? I knew about tax advantage, retirement vehicles, I knew that I have been given the advice over and over again that you can borrow for college, you can borrow for your kid’s college, but you can’t borrow for your retirement, so why was I not focused on the correct order of that?

The more I thought about that, was that it was my reaction to my own journey of not wanting to see my kids incur a couple hundred thousand dollars of student loan debt, right? I think for many pharmacists, that may be the same thing where they are going through their own journey, they are living through that, obviously, the pain of it may be right in front of them right now. And therefore, they might be looking at saving in a 529 account with good intentions, but are we doing that in the right order, right?

This is a great example of where we don’t want to look at one part of the financial plan and the silo because if we just answer the question, saving for kid’s college in a 529, is that a good financial move? Sure, there is tax benefits in doing that especially if we look at the potential growth over 10, 15, or 20 years. If we zoom out and look at what else we’re doing to financial plan that may or may not be the move to make at that time.

We talked on episode 211, the ins and outs of the 529 college savings plans and we’ll link to that in the show notes for more information.

[0:31:51.5] Finally number 10, hiring a planner that does not have your best interest in mind. Now full disclaimer of the bias of the planning services that are offered by YFP Planning, we wholeheartedly believe in fee-only financial planning and we’ll talk about that here in the moment. Obviously, I have a bias towards the services that the team at YFP planning offers, so we need to keep that in mind as we talk about this tenth point.

Now, we talked on episodes 15, 16, and 17 way back when we did a three-part series on working with a planner, what to look for, questions to ask and we also talked about why fee-only financial planning matters. When you think about working with a financial planner here, is the term financial planner or adviser in it itself does not necessarily mean something that we can hang our hat on, right?

We, in the pharmacy world, we’re used to the PharmD board certifications and residencies. We know exactly what those credentials mean and there is a relative amount of consistency in those credentials, so that when someone says, “I completed a PGY-1 residency.” We know what that means.

When it comes to financial planning, financial advisors, wealth managers, wealth advisers, there are a wide variety in terms of education, training, and experience. And what those services look like that will inform and help inform whether or not those may be a good fit for you. So we need to be looking at, what is the educational background of these individuals, what is the credential, how are these individuals regulated?

We firmly believe in the certified financial planner credential, we’ve got five CFPs on the YFP planning team. The CFP is certainly not a credential that is required to do financial planning but very robust in terms of the requirements of the educational portion of the CFP or rigorous examination to pass as well as an experiential component that we would think of as like appys in terms of pharmacy education.

[0:33:42.7] Other things to consider here, I have mentioned the term fee-only, so fee-only by definition is that you are paying the planner and the planning team for the advice that they are giving, so they are not getting paid by recommending products such as insurance or investments where they’d be on a commission, and obviously a potential bias on that recommendation. And then we also really encourage folks to look at whether we are or are not the solution that is the best fit, someone who really offers comprehensive financial planning.

The reason that’s important is that historically, the industry has focused a lot on investments and insurance, you know, think of folks that might be a little bit further along in their career, they have a substantial amount of assets to manage. And so, often there may be a minimum of assets to work with a firm, but when it comes to other things that might be of significance like student loan debt, like some of the early insurance discussions.

Like, “Hey, I am thinking about starting a business or a side hustle” or “I’m looking at purchasing a home or investing in real estate” or “What about the estate plan?” or “What about the tax part of the financial plan?” Making sure the adviser regardless of the stage that you are in of your career, making sure the adviser and the advising team has the expertise and the experience to be able to serve you and the needs that you have for your financial plan.

When it comes to working with YFP Planning, we’re really proud of the work that the planning team does. I mentioned five CFPs, shoutout to our lead planners, Robert Lopez and Kelly Reddy-Heffner who lead those two teams, working with Robert is Kim CFP and Savannah, working with Kelly is Christina, CFP, and Sarah. And then we also have a tax team that supports the financial planning.

We are currently working with about 250 households and over 40 states all across the country, very robust in terms of the comprehensive nature of the plan. For folks that are interested in learning more about that service and what it would look like in terms of working one-on-one with a YFP certified financial planner, you can visit, yfpplanning.com, and you can book a free discovery call with Justin Woods, also a pharmacist who is our director of business development.

[0:35:40.8] Well, that’s 10 common financial mistakes that we see pharmacists making. I really appreciate you joining me on this week’s episode and we’ll see you here again next week.

[END OF DISCUSSION]

[0:35:48.4] TU: Before we wrap up today’s episode of Your Financial Pharmacist Podcast, I want to again thank our sponsor, The American Pharmacist Association. APHA is every pharmacist’s ally advocating on your behalf for better working conditions, fair PBM practices and more opportunities for pharmacists to provide care.

Make sure to join a bolder APHA to gain premier access to financial educational resources and to receive discounts on YFP products and services. You can join APHA at a 25% discount by visiting pharmacist.com/join and using the coupon code, “YFP”. Again, that’s pharmacist.com/join and using the coupon code “YFP”.

[DISCLAIMER]

[0:36:28.5] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and it is not intended to provide and should not be relied on for investment or any other advice. Information of the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archived newsletters, blog post and podcast is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analysis expressed herein are solely those of your financial pharmacist unless otherwise noted and constitute judgments as of the dates published. Such information may contain forward looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.

Thank you again for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 234: Your Student Loan Refinancing Questions Answered

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Your Student Loan Refinancing Questions Answered

YFP Planning Lead Planner, Kelly Reddy-Heffner, discusses commonly asked questions regarding refinancing student loans.

Episode Summary

We last had our guest on the show almost two years ago to dig into the most recent administrative forbearance extension for those with student loans, where we helped you calculate your next moves before the end of that extension in January 2022. With that date right around the corner, it’s time to remove the snooze button and get prepared for those student loan repayments to start up again! Refinancing is one of many options available, and with that in mind, we sit down with our very own Kelly Reddy-Heffner, to cover commonly asked questions about refinancing student loans. Hear how the end of the administrative forbearance period impacts one’s decision to refinance, what to look for when considering various refinancing options, and some hugely important points on consolidation. We also dive into what you may be giving up and gaining when moving your loans from the federal to the private systems through a refinance and who should and should not consider refinancing their loans. Kelly also shares some valuable insight on rates in the current climate, partial refi’s, income-based repayment options, and some crucial questions to ask your servicer. This episode has all the answers you need; tune in now to get empowered on your refinancing journey!

Key Points From This Episode

An introduction to Kelly Reddy-Heffner, and recapping her previous YFP episode.
How it’s a complicated decision to choose the right repayment plan for you.
The two distinct categories of who refinancing is not a good fit for.
A reminder that refinancing is a one-way street from federal to private.
Do checking rates impact my credit score? Be aware of the language used!
Unpacking the option of refinancing more than once.
Reading the fine print on what happens to the loan in the event of death or disability.
Picking a time horizon and monthly payment amount that’s doable.
Fixed-rate or variable? Kelly recommends what to do in the current climate.
We break down the difference between consolidation and refinancing.
Pursuing income-based repayment options, and some challenges with private loans.
Hear about a partial refi of a federal loan.
We reflect on some of the past rates etched in Tim’s mind from his repayment journey.
Thoughts on the upcoming end of administrative forbearance and unlikely extensions.
Kelly shares some parting advice for December that we all need to hear!

Highlights

“It is time to really be prepared and to expect those loan payments to start up again.” — Kelly Reddy-Heffner [0:03:14]

“That interest rate that you’re offered is based on your creditworthiness. Unlike in the federal system where it’s a set rate for the year and it’s predetermined in the private market, it is based on your overall capacity to take on that debt and to pay it off successfully.” — Kelly Reddy-Heffner [0:08:19]

“We recommend picking a time horizon and a monthly payment amount that is doable. We love to see people push a little bit to be able to accelerate that repayment and get it done as quickly as possible, but it doesn’t make a ton of sense to walk into a loan that just isn’t doable.” — Kelly Reddy-Heffner [0:11:35]

“Be knowledgeable. It is time to look at everything with a clear open mind and use the information that we have available at present to make a good decision about if this is a good move for you and the student loans.” — Kelly Reddy-Heffner [0:24:09]

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[0:00:00.4] TU: Hey everybody, Tim Ulbrich here and thank you for listening to the YFP Podcast, where each week, we strive to inspire and encourage you on your path towards achieving financial freedom.

This week, we got a chance to sit down with YFP Planning lead planner, Kelly Reddy-Heffner to talk about commonly asked questions with refinancing student loans. During the show, Kelly and I talked about how the end of administrative forbearance period impacts one’s decision to refinance, what to look for when considering various refinancing options, what you may be giving up and gaining when moving your loans from the federal to the private systems through a refinance, and who should and should not consider refinancing their loans.

Those that are itching to learn more about refinancing student loans, you can head on over to yourfinancialpharmacist.com/refinance, where you can look at current offers, calculate projected savings and download a copy of our free refinancing worksheet to compare multiple offers.

As we wrap up another year of this show and are knee deep into the planning for 2022, I want to say thank you to the YFP community for entrusting us with your time by listening to this podcast. We don’t take for granted your support and encouragement of the work that we are doing at YFP to help pharmacist on their path towards achieving financial freedom.

Also, a big shout out to the YFP team members, Katelyn Boyle and Rose Mercado who are the engine behind making the YFP Podcast a reality each week. Katelyn and Rose, your contributions to the team and the YFP community are truly appreciated.

[INTERVIEW]

[0:01:35.1] TU: Kelly, welcome back to the show.

[0:01:36.5] KRH: Thank you for having me Tim.

[0:01:38.3] TU: Before I put you on the hot seat and rapid fire some common refinance questions for you to answer, give us a brief introduction of yourself and your role at YFP Planning, for those that may not have heard you on a previous episode of the podcast.

[0:01:51.3] KRH: I am one of the lead planners here at YFP and have the privilege of working with clients to do comprehensive financial planning. I’ve been with the firm over a year now, I just celebrated my one-year anniversary, which was great. And I certainly am very passionate about these student loan topics today, talking about refinancing as a potential option fits right in with that conversation.

[0:02:19.9] TU: I suspect we have some team Kelly clients that might be listening saying, “Hey, that’s my planner” so shout out to team Kelly that’s listening. We’re certainly super grateful to have you as a part of the team. So we had you last on the show on episode 220 when we talked about the most recent administrative forbearance extension. And on that show, we talk through how those with student loans should be calculating their next moves prior to the end of that extension, which we now know is at the end of January 2022.

Here we are, about a month away and we’ve had the snooze button on student loan payments for almost two years. Kelly, is this really happening, are we going to be back in action here?

[0:03:01.7] KRH: I sadly think it is and isn’t it funny? I was thinking, when did we first start talking about this but right, it seemed like it was so far in the distance. But I do believe we are here. It is time to really be prepared and to expect those loan payments to start up again.

[0:03:22.4] TU: We have discussed many times, emphasis on many, student loan repayments on the show and we’ve talked about how it really is a complicated decision. There’s lots of options, right? We’ve got all the options in the federal system including the standard tenure repayment, extended fixed graduate host to the income driven repayment plans.

Furthermore, we have forgiveness options, both public service, non-public service loan forgiveness and as we’ll discuss today, the various options you have outside in the private sector through a refinance. All that to say, the decision can be complicated in terms of student loan repayment plan that’s best for your personal situation. I really do believe it’s worth the time and the effort to make sure that you’re evaluating all of your options.

With that in mind, remembering that refinancing is just one of the options, let’s dig into some common refinance questions. Kelly, are you ready?

[0:04:12.6] KRH: I am ready.

[0:04:13.1] TU: All right, here we go, number one, who should not refinance their student loans or who should consider at least that this may not be the best move for them?

[0:04:21.5] KRH: I would say, there are two distinct categories of who this is not a good fit for at present. Of course, if you’re working for a nonprofit or a qualifying employer to receive public student loan forgiveness, then this is not a good option. That usually is a competitive strategy when we match that up against all other options, so that at least needs to be strongly looked at as an option if you work for a qualifying employer. As a subset of that, I think if you run the numbers and non-PSLF forgiveness is compelling, then I think that that would be a reason not to refinance as well.

I will say, the other area which is kind of a little bit of an interesting nuance in our current workplace environment is, if you are thinking about leaving your job or changing your job to the point where you might have lower income or are unsure about the consistency of your income. Then I would not rush into a refinance either, and we’re seeing a little bit of transition happening right now I think.

[0:05:34.4] TU: Good points and I think all of that is a good reminder that refinancing is a one-way street from federal to private, right? We ain’t coming around the corner, back into the federal option ones, we go down that pathway, we’re there. Some of the doors that you were kind of alluding to that we might want to keep open for certain folks, we need to be evaluating that before we pull the trigger on refinancing.

Kelly, number two is, will checking rates impact my credit score? I get this question a lot because one exit we recommend for folks that have determined this is a potential path forward is to do the work to go out, shop around, compare rates. And I think that naturally raises the question as, what impact is that going to have on my credit score?

[0:06:11.5] KRH: Yeah, again, we want to make sure people’s credit scores are healthy because it impacts other things. Getting a requote in general should be a soft inquiry, so those soft inquiries aren’t specifically related to an application for credit, so those are recorded differently on your credit score. They’re noted but they should not have an impact on the overall number.

Now, actually, applying, getting approved – and sometimes the language is a little bit interesting. I looked up one of the loan servicers recently and it does give a disclaimer that by checking this box, you’re kind of giving the green light to have some type of credit checked.

I think when we see that type of language, you should assume that there could be a little bit of an impact, it should be minor, that hard inquiry for a period of time. But that’s why we say the kind of group, the shopping together too is supposed to work where if you do a number of inquiries and close proximity to each other that is going to count as one. Similar to shopping for a mortgage rate as well.

[0:07:21.3] TU: If folks go to our refinance page, yourfinancialpharmacist.com/refinance, we have a spreadsheet that you can download that will help you as you’re shopping and comparing some of those rates especially if you decide to bunch those together as Kelly just mentioned.

Kelly, another common question is, can I refinance more than once? What about the opportunity to re-refinance, perhaps because rates have changed or there might be some bonus offers out there or combination of things, what are the opportunities here to look at refinancing more than one time?

[0:07:49.8] KRH: Sure, yeah. It is an option to refinance more than once, like you are not locked into that rate for an indeterminate amount of time. You should be shopping around when you know that rates are lower, the refinance again is based on wanting to get a lower interest rate. If you’re still in the four and 5% range, current rates are lower than that.

Now, I will say, that interest rate that you’re offered is based on your credit worthiness. Unlike in the federal system where it’s a set rate for the year and it’s predetermined in the private market, it is based on your overall capacity to take on that debt and to pay it off successfully.

It is a little less work than a mortgage as well to refinance a mortgage. I do encourage people to look for those lower rates and to make a change. Even a couple of points can make a big difference in overall what you pay over time.

[0:08:56.4] TU: Yeah, we’ve got a calculator as well and this is you know, great place that folks are shopping around to think about too, “What’s the repayment timeline and the impact of the rate?” Shorter timeline to payoff, obviously, the difference of savings versus a longer time to payoff might be greater, depending on the rates. So, considering that as you’re shopping around rates.

Kelly, one of the common concerns I hear is, “Hey, when am I going to be giving up, when am I going to be losing by leaving the federal system, especially if this is a one way street?” And we often talk about that when it comes to the federal loans, if someone were to unexpectedly pass away or become permanently disabled, there’s some protections there, but what about in the private system? Will loans be discharged if one passes away or becomes disabled?

[0:09:39.9] KRH: I’m heading into typical financial planner territory and giving the Tim Baker answer of, it depends. I think this was a mail bag question about maternity benefits and cause payments a little while back. So similar to that answer, in case anyone recalls that, it really does depend on the loan servicer, but we are seeing a lot more private lenders give those provisions a discharge at death or disability.

So that is something that I would say is appropriate to be asking the lender and reading the fine print, and making sure that you do select a loan that not only is a competitive interest rate wise but also has some of those other features that help you feel more comfortable about making the change. And they do exist out there but not with every lender.

[0:10:35.0] TU: Absolutely and you’ll see that, we have some of that listed on the refinance page but to your point, it really does depend on the lender. And for folks that find themselves, maybe they refinanced, historically, they’re listening to this and are coming to realization, “Hey, I didn’t know that I’m currently working with a company where I don’t have those protections.” A great example of where student loans can intersect with other parts of the financial plan. So, thinking about life, disability insurance policies if that’s the case in your situation, “Can I pay extra towards my loan? If I want to be able to pay these off quicker, can I pay off more each month and is there going to be a penalty incurred if I do that?”

[0:11:10.4] KRH: Yeah, it’s very unlikely to see a loan in the current market space where there would be a penalty for prepayment or accelerated repayment. But again, all in the fine print, all in the details, perfect question to ask as you are considering a refinance. But in general, the answer is yes, you can pay extra. We do encourage when we’re talking to clients about refinancing, we recommend picking a time horizon and a monthly payment amount that is doable.

We love to see people push a little bit to be able to accelerate that repayment and get it done as quickly as possible, but it doesn’t make a ton of sense to walk into a loan that just isn’t doable. It’s really important to make sure that you pick a monthly payment, a term that makes sense and then right, if you have some extra that you can put towards that, yes, whether hopefully or a lump sum at the end of the year, anything will help reduce the overall amount of interest that you pay on the life of the loan.

[0:12:20.8] TU: You can always make extra payments, right? You can’t not make the minimum payment. So, good insights there, I think. Fixed or variable? This is an important question because of how these refinance options are presented, where folks might be looking at, “Is it fixed, is it variable, how do I make that decision?” And then even just thinking about the nature of the variable rate and some of the uncertainty that may come from there.

Knowing this is – and it depends, I’m certain, on one’s personal situation. What are some of the things that you’re thinking through, or asking some questions of a client that might be planning, when making this decision around fixed or variable?

[0:12:54.4] KRH: Well, in definitely, the current interest rates are a big component on decisions so we’re at h historically low rates right now. I would lean towards – and again, it does depend on the individual circumstances, but lean towards a fixed rate because the likelihood of a rate being lower in the future is probably not really likely in our current environment.

If you are going to consider a variable rate, again, the attention to detail is extremely important because you need to know the fine print. How frequently will the rate change or could change by how much, and is there a cap on how high the rate can go? So usually, variable rates are when rates are higher and we’re hopeful that they’ll go down in the future. So we kind of lock in something lower and keep looking for a lower rate. But right now, with fixed, they’re pretty low.

Depending on the circumstance, I would lead towards getting that lowest rate locked in for the duration of the loan.

[0:14:04.0] TU: Kelly, refinancing versus consolidation. I often will get questions from folks when we present on student loans and they may be using the terms consolidation but might mean refinancing. Just break this apart for a moment of what the difference is between refinancing and consolidation?

[0:14:20.8] KRH: Sure, so when you have federal loans, often we’re taking loans out, different semesters. When you graduate, you have potentially ten separate loans going on, maybe even more than that. Consolidation is, you’re taking those federal loans and you are consolidating them into one or two loans. Usually, it’s broken down into subsidized, unsubsidized, for convenience. It doesn’t impact the interest rate of anything. It’s kind of the average of the interest rates and it’s rounded up a little bit, so it’s not improving the interest rate on the consolidation side.

A refinance is you’re either taking those federal loans and you are refinancing them into the private market, so you are moving them from federal to private, or you have existing private loans and you’re refinancing them into other private loans.

Again, as you said already Tim, which cannot be emphasized enough, going from federal to private is a one way transaction. There is no turning back and again, consolidation is a little bit of a one way transaction as well. You can’t un-bundle the loans then. Consolidation can be helpful if you’re staying in the federal system to qualify for loan forgiveness programs or certain income driven repayment plans. We often consolidate to open up federal options. We often refinance to get better interest rate.

[0:15:53.8] TU: Just a really good reminder Kelly, I have talked to a few folks in the last few weeks that, where I could tell they were ready to pull the trigger on either a refinance or consolidation but they weren’t yet fully aware of the implications of what that decision was going to mean, and what that ultimately may lead to in terms of other repayment options and pathways not being open to them anymore.

Just a good opportunity to take a step back, make sure we’re looking at all the options around the table and then of course, refinancing and consolidation may or may not be a part of that path forward. Are income-based repayment options available? Obviously, we know that many pharmacists, especially those that are perhaps making that transition from student or resident to a new practitioner, income-based repayment options allowing for that payment as they ease into that bigger income and bigger payments. Are those something that they can pursue also on the private side?

[0:16:46.0] KRH: Unfortunate that is not a feature of private loans and that is why when I said the categories of people that should not jump into refinancing, this is exactly that reference. Just the option to have income-driven repayment gives that flexibility if there is a period of time where you’re not working or income has decreased. You can re-certify your income within those income-driven repayment plans using a statement, and have that payment re-evaluated and probably lowered based on that new income amount.

That’s the challenge with the refinance is, there could be some provisions for unemployment but there is not a system for, “I’m working less” or “I am working different hours.” And we’re seeing a lot of flexibility, we have – many of our pharmacist clients have seen an increase in those per diem hours, different overtime. You know, if that is fluctuating quite a bit and changing, make sure, if you’re going to refinance, you do pick that right term that fits what you know your income is going to be. Because those private plans don’t have that flexibility.

[0:18:04.7] TU: That’s a great point Kelly. I was talking to a pharmacist earlier this week that is working part-time with variable night shifts, day shifts and that’s income is fluctuating, so really important consideration. The other thing I think you might have been eluding to is, we’re seeing a lot of pharmacists that are out there picking up extra shifts with COVID vaccines and other things, so if that were to change and hours were to come back down, that could have some implications as well.

A good reminder of the value of those income-driven options inside of the federal system. What about a partial refi of a federal loan? Maybe not all of them for whatever reason but can I do a partial refinance of my federal loans?

[0:18:41.4] KRH: This probably would not have been a common question prior to the conversation starting about a potential loan forgiveness, like in bulk amount. Once that became a new story, I think there’s been a fair amount of conversation like “I want to leave a little bit on the federal system to just in case, you know, $10,000, $25,000.” We have not heard a lot more conversation about that towards the end of the year.

[0:19:14.6] TU: Yeah, it’s been quiet.

[0:19:15.9] KRH: Yeah, it has been very quiet so I don’t know if that would really happen. And there probably will be some criteria in place, potentially, for who would qualify for that. But, in general, if you’ve already consolidated your loans, then no. You’ve bundled them, you really can’t separate them out. If they are still individual, then you have the potential to explore if you want to maybe refinance the highest rate one, or a combination to see what really would work out the best.

We do see some of those loans, depending on the year they were taken out, on the federal side, could be in the 3%, 4% range. Again, if you’re shopping for a refinance rate and the rate is in the threes, you know then maybe you’re taking a 6.8% federal loan and into the private side, but if you have like a 3% or 3.5% loan on the federal side, then maybe you’re sticking on the federal side for some of those loans.

We don’t like to overcomplicate strategies, try to keep things simple, straightforward, so just keeping that in mind as a component though. You want to make sure everything is easy to make the payment on time, where does the payment need to go. But yes, we do get asked that. I do think it’s a question that has come up because of the current environment, with the possibility of that bulk forgiveness but I cannot say that that is going to happen at this point either.

[0:20:49.5] TU: Yeah, it has been quiet. And, interesting, Kelly when you said 6.8% as an example, it still makes me squirm in my seat. That was many of my federal loans in my debt repayment journey where it’s 6.8% so thank you for bringing up those negative memories. But good example of what that may be.

[0:21:05.5] KRH: Tim, I forgot. I know, well, I think it is – everyone’s like that 6.8%, it’s so high. It competes with a credit card rate. Yes, I apologize though. I don’t want to send you back to a dark space.

[0:21:21.3] TU: No, it’s just interesting, like I can see it on the screen, you know? It’s just amazing how those get etched in your memories. But the story at the end was good, so that’s all positive. The last question I have for you, perhaps the one that many folks are thinking, and knowing it certainly depends on one’s personal situation, but we’re coming up at the end of the administrative forbearance coming around the corner, and so this question of timing.

When should I consider refinancing with the upcoming end? I think there’s been some rumblings all along for good reasons about, will there be an extension coming? And that happened and then it happened again, and it looks like as you mentioned earlier, here we are at the end. So this timing of refinancing is, I suspect, one that we’re going to see a lot of folks asking here in the next month.

[0:22:03.8] KRH: Yeah, how amazing that when we started talking about it again, it seemed like so far in the distance. I don’t see any indications of payments not restarting. In fact, I would recommend that people follow up with their loan servicer and inquire, like we know the forbearance is ending in January. We’ve definitely seen people’s payments starting anywhere from February through July depending on how they had made their last couple of payments or if they made any payments during the COVID forbearance.

Check in with your loan servicer, reconfirm when that payment is going to start. I think it probably is time for the New Year to shop the rates. Right now, I kind of double check to see what they look like for maybe six months ago, and I’d say there’s still competitive and still similar. Those shorter term rates, like five and seven years, look like a little bit lower than even six months ago. But longer term like 10, 20 year looks slightly higher, but again, still well within the two and half to 3.4%.

Again, it does depend on your credit, what rate you get but I think it’s at least time to start asking the question and maybe work through the numbers. Evaluate how likely you are to qualify for a non-PSLF or PSLF forgiveness program. And it is always about that mindset too. I think we’ve spent a lot of – I hope we’ve spent a lot of the last, is it 18 months now? I feel like I’m still saying a year and a half but I think we’re creeping towards two years.

[0:23:48.3] TU: Almost two years, yeah.

[0:23:49.7] KRH: Somewhere in that timeframe, wherever you’re at emotionally with this, you know we’ve been in a little bit of a hiatus. Hopefully, people have been saving, paying down any other debt that they had or making great other choices along the way. Maybe they were able to do a home purchase, do some other things. So now, get the information. Be knowledgeable. It is time to look at everything with a clear open mind and use the information that we have available at present to make a good decision about if this is a good move for you and the student loans.

[0:24:25.9] TU: Great stuff Kelly. I really appreciate your insights here on this episode and previous episodes, and the work that you do with many of our clients at YFP Planning. Not just on student loans, but obviously this being one part of the financial planning, and an important for many folks and how it fits in with other pieces of the puzzle.

If folks are looking to take action on what they have heard today and specifically for those that are looking to make a move on refinancing or inquire more information, you can head on over to yourfinancialpharmacist.com/refinance. There you can look at current offers, start to get some quotes, run some calculations on potential savings, and as I mentioned previously, download the spreadsheet that we have that we can use to compare multiple offers.

For those, secondly, that are looking for more information about which option to pursue, again refinance being just one of the many options to pursue, we have a student loan analysis service that is intended to do exactly that and that more information is at yourfinancialpharmacist.com/sla. And really the purpose of this is that you would work one-on-one with one of our certified financial planners, so that you could look at all of your options and confidently choose a plan that will save you the most money and align with your financial goals.

Again, yourfinancialpharmacist.com/sla. You can learn more information there and if you use the coupon code “yfp” that is good for 10% off. Kelly, thank you so much. I really appreciate you coming on the show.

[0:25:45.1] KRH: Thank you Tim. And I know it is hard in December, but start putting the money aside if you haven’t started doing that. The runway is starting to close in, so go ahead. December is a nice extra little bit of a challenge to top that student loan payment aside into a savings account, but getting back into the habit is important so it’s definitely time to do that.

[0:26:12.2] TU: Absolutely. You say that so gently but it’s so important. Yes, we need to be getting back into the rhythm, the habits and get ready for what we’ve got. A little bit of time to get ready but it’s going to be here before we know it. So, Kelly, thanks again. And to the community, we really appreciate you joining and we hope you have a great rest of your day.

[0:26:25.7] KRH: Thanks Tim.

[END OF INTERVIEW]

[0:26:27.3] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and it is not intended to provide and should not be relied on for investment or any other advice. Information of the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archived newsletters, blog post and podcast is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analysis expressed herein are solely those of Your Financial Pharmacist unless otherwise noted and constitute judgments as of the dates published. Such information may contain forward-looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.

Thank you again for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 224: How & Why One Canadian Pharmacist Paid Off $100K of Debt

Posted on by yfpadmin

How & Why One Canadian Pharmacist Paid Off $100K of Debt

On this episode, sponsored by Thoughtful Wills, Sachin Duggal discusses his career journey, how and why he aggressively paid off $100k in debt, and trends in pharmacy education and practice in Canada.

About Today’s Guest

Sachin Duggal is a clinical pharmacist and consultant practicing within the Toronto, Ontario area in Canada. Sachin’s current areas of practice are community-based with a focus in complex geriatric care, diabetes education, and hypertension management where he works with family physicians to optimize treatment plans. He also works as an Academic Detailer, engaging with physicians on the latest evidence in different disease states.

Sachin obtained his Doctor of Pharmacy and Honours Bachelor of Science degrees from the University of Waterloo and has gone on to work in a variety of practice settings including hospital, community, and family health teams across the province of Ontario in Canada.

As a recent graduate, Sachin has taken a keen interest in personal finance, building wealth, and optimizing student loan repayment using various financial incentives and products within Canada.

Summary

This week, Tim Ulbrich welcomes Sachin Duggal, a pharmacist from Canada who works as an Academic Detailer, to the show. Sachin discusses his career journey, how and why he aggressively paid off $100k in debt, and what trends in pharmacy education and practice in Canada are similar and different to those in the United States.

Financial freedom was a driving force in Sachin’s debt-free journey. He felt the pressure of student debt and didn’t like the feeling of debt looming over him. By contributing up to 70% of his income to education loan repayment, Sachin is now debt-free with maxed-out retirement investments. Now he is looking forward to his future, investing in real estate, and enjoying the feeling of making his money work for him.

Sachin shares his observations on the differences in the education system and trends in the current state of pharmacy in Canada compared to the United States. While many Canadian pharmacists take on a slightly lower student debt, there are additional educational benefits. Professional students may be eligible for a line of credit, as in Sachin’s case, which can be used to drive down student debt with some intentional financial moves. Sachin’s observations on trends include a downward trajectory on pharmacist salaries in urban areas, similar to that of the United States, based on the supply and demand of pharmacists. He shares that in more rural areas, the salaries may be more competitive. He notes, pharmacists in the United States may be less willing to work multiple part-time positions versus a single full-time opportunity due to the necessity of medical benefits. Universal health care in Canada permits relatively low-risk opportunities to piece together part-time jobs when full-time positions aren’t available.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Sachin, welcome to the show.

Sachin Duggal: Thanks for having me, Tim.

Tim Ulbrich: Well I really appreciate you reaching out to me via LinkedIn several months ago to provide some of the viewpoint of a pharmacist that’s working in Canada, a topic we haven’t talked about on the show, which is exciting. And during a follow-up call that you and I had, I really enjoyed learning more about some of the similarities and differences of the profession that we both love in pharmacy and some of those differences in Canada versus here in the States. And I’m grateful for the opportunity to share that information with the YFP community alongside your journey to becoming a debt-free new practitioner. So Sachin, let’s start with your background and work in pharmacy. What drew you to the profession? Where did you go to school? And what type of work are you doing now?

Sachin Duggal: Sure. So you know, initially what drew me to the profession was I was in high school, didn’t really — I knew I wanted to do a career kind of in healthcare — didn’t know exactly which avenue I wanted to go down. And being a relatively healthy kid, I kind of had a little bit of a health scare kind of in my senior year of high school. I had appendicitis, had kind of the first time I was exposed to the medical system to kind of that degree. And then you know, I was thinking in my head, ‘I’m missing all this school, I’ve got to apply to college’ — in Canada, it’s universities, but I guess the U.S. equivalent would be colleges. I’m like, ‘I’ve got to apply to all these universities, I’m missing all this school, I’ve got to kind of recover.’ And being able to interact with different healthcare professionals in that environment, for whatever reason, the pharmacist was kind of the one that I was most drawn to. And I think part of it was just that empathetic listening, just taking the time to kind of understand my concerns, kind of where I was. And then I dug a little bit deeper after I got home into the pharmacy as a profession and how much schooling it would require. And it just seemed like the fit that would work best for me.

Tim Ulbrich: And so that led you to the University of Waterloo. So tell us about when you graduated, when you got licensed, some of the early work that you did in long-term care and then the work that you’re doing now as an academic detailer.

Sachin Duggal: Sure. Sure. So yep, so it led me to the University of Waterloo. In Canada, there’s about 10 pharmacy schools. The University of Waterloo is one of two in the province I’m in, so Ontario is the province. It’s kind of the first co-op pharmacy school in Canada. So what that means is they have designated placements or placements to apply to within kind of the program in between kind of periods of studying. At the pharmacy school I went to, it’s a four-year program. It initially starts as kind of 12 months of pure school, so you don’t really get summers in those four years. It’s 12 months of school and then it’s basically four-month increments of school and then a placement or a job placement. What’s really cool is that job placements are — all the potential jobs are on a portal and they’re in completely different environments.

Tim Ulbrich: That’s cool.

Sachin Duggal: Hospital jobs, government jobs, you’ve got community jobs, outpatient jobs, right? And you apply to them and you interview for them. So it is a little bit competitive with your classmates or cohort, but really great experience and there’s always more jobs than I guess students, so you’re definitely going to be able to find something or find a role that hopefully is right for you. Kind of fast forwarding a little bit, you know, finished school, there’s a little bit of — the way we get licensed in Canada, we do the PBC, so it’s a little bit different than the U.S. But there is a bit of a lag time between when we graduate versus when they offer that exam. It’s about — you have like a four-month lull there. You graduate in August, you don’t write the exams until November. And in this four months, you have the opportunity to travel, work, take a break, whatever you’d like to do. For me, knowing that I was kind of looking all this debt, I was like, hey, I really want to kind of get a head start on this a little bit, so I ended up starting right away and just working, working in the pharmacy, getting that exposure, and it also provides you a little bit of practice for those boards, getting exposed to different medications, counseling, all that kind of stuff.

Tim Ulbrich: Yeah.

Sachin Duggal: You know, fast forward, get licensed — you don’t find out you get licensed until around Christmastime, so it’s kind of like the worst Christmas of your life or it could be a great Christmas present. So for me, it ended up working out great. It ended up being a great Christmas present and then in January, I ended up taking a job in long-term care. It was about an hour and a half from where I live. I live in a suburb outside of Toronto with about a million people. It’s interesting, so one of the biggest challenges at least I’ve found in kind of the Canadian marketplace is especially for new grads is it’s almost like getting your first job again when you’re 16 in the sense of everybody wants experience, but how do I get experience, like pharmacist experience, if no one’s going to give me a job? Right? So one of the compromises I made was hey, look, time is kind of the essence in the sense of paying off this debt, and I really want to kind of move on it. And one of those sacrifices I made was location. So I was willing to sacrifice location if the right opportunity kind of arose and I didn’t have to necessarily stay at home and stay within kind of the environment I’m comfortable in. So I moved about an hour and a half outside of kind of where I lived, a city of about 300,000 people, working that long-term care environment. I was kind of in charge of about 14 different nursing homes. I was working in clinical operations, which means I was kind of on the bench or kind of in the pharmacy. It was a closed-door pharmacy, so patients can’t walk in and out. We really just focused on servicing these kind of retirement homes and nursing homes. And I was kind of the pointman or kind of in charge of all the new clinical orders that would come through on a daily basis, probably had anywhere from 200-250 new clinical orders. And the way long-term care is set up is really interesting because you don’t learn a lot about it in school is the pharmacists there completely focus on clinical verifications. And what that means is you look at lab values, you look at the drugs being prescribed, and you look at what patients are on, their histories, and is this medication appropriate or not? And if it’s not, you kind of go through the process of getting things changed or making recommendations that may be a little bit more appropriate. You have a large team. So I had a team of about four licensed technicians that would do a lot of the refill requests and the repeat prescriptions and then a whole kind of army of assistants doing all of the order entering, so I didn’t have to handle the start-to-finish that you may typically see in kind of a retail environment. You know, I did that for about a year and we were getting close to kind of paying off all that kind of student debt and some of the things that I employed while I was kind of out in this community was, I mean, one of the big things was it’s a kind of a student city, so there was a big university there, I guess the U.S. equivalent would be like a college, out there. And I lived in student housing, paying about $500 a month to kind of live there really cheap. And then I also cooked large — basically I didn’t eat out very often at all. So I cooked a lot of meals myself, almost like I’m back in school even though I’m not, right? So I was living that kind of student life of just trying to save every dollar and trying to put as much of that paycheck towards the debt. And I threw about — on a biweekly basis — about 65-70% of that check towards that debt repayment.

Tim Ulbrich: Wow.

Sachin Duggal: So huge — basically, my car was fully paid off, didn’t have any debt from that perspective. I had basically apart from student loans, really didn’t have any other kind of debts to worry about. And I saved about 10%, you know, used about 65-70% on that debt repayment, about 20% was on living expenses like food, gas, rent. And then I took a little bit of a risk in not building that emergency fund necessarily right away, but I did try to pocket away about 5% every check or so towards that emergency fund. And you know, I really didn’t have, like I said, very many kind of expenses.

Tim Ulbrich: Right.

Sachin Duggal: No mortgage, right? No car payment. So my expenses were really low from that perspective anyways. That was kind of my time. I was there for about a year in that environment and then I was getting really close to paying off this debt and I was thinking, what are kind of the next steps and where do I kind of want to go from here, right? So I ended up taking a pharmacy manager position kind of closer to home, about 10 minutes away from where I was originally from.

Tim Ulbrich: Nice.

Sachin Duggal: Was able to negotiate a really great salary there as well. And then it was a Monday-Friday kind of 9-5 opportunity in a specialty clinic. And then everything was looking great, we had the balls kind of all kind of rolling, and then COVID hit, which kind of stalled that whole operation as a new pharmacy and a new pharmacy practice. When COVID kind of hit and everything just kind of locked down and shut down and you know, a lot of the physicians were working from home and had cross appointments in hospitals and everything was kind of sporadic. We lost a lot of that patient flow within the clinic, and it made it really challenging to keep kind of the pharmacy practice financially viable at the time. So in that instance, myself and kind of the team — it just kind of made sense to just kind of leave that opportunity on the back burner and it may be something we’ll revisit in the future. So now I was kind of stuck in a little bit of a limbo. And you know, I had opportunities. The fortunate thing about going to the university that I went to is those co-op experiences and being able to build that network and having kind of a couple of mentors and a couple of people that can really help guide me in the profession, especially — I’d only been about a year and a half out, right? So I had an opportunity from that point to really take a step back, take a little bit of a break, especially with COVID and seeing how impactful or how dangerous the virus was, right? At that time, we didn’t know a lot. This would have been about April 2020. Took some time and before I kind of jumped into my kind of next role — and that next role was taking a manager position in Toronto at a — basically, it was a pretty underserved community in kind of the northern end of Toronto. Again, another opportunity to be really resourceful and help these patients get access to care and to medications that may be challenging for them to get access to just with kind of some of the experienced I had and just knowing how the healthcare system works within the province. At that time, I saw an opportunity — this was where kind of the academic detailing piece comes in. I saw an opportunity that was posted in one of our — it’s like a Facebook group for our school and for any kind of job opportunities that have come up. And I had a previous preceptor that had done this role. So I reached out to them just to ask them about the role and I was like, this is really cool. I mean, I can’t believe you can kind of make a living basically looking at literature, looking at evidence, providing some of those resources to busy clinicians, so I can kind of explain what an academic detailer is briefly. But basically what we do is it’s a knowledge translation service, typically. So what we’ll do is we’ll pick a disease state. Maybe it’s a disease state that there’s been a lot of kind of evolution or changes, right? So for instance, diabetes.

Tim Ulbrich: Yep.

Sachin Duggal: In the last 5-10 years, there’s been a lot of changes in diabetes and medications that are used to treat the condition. So it’s an opportunity for us to look at the evidence or look at the literature, see which medication if there’s new ones, see where they fit within the whole kind of treatment algorithms, right, from a cost-benefit perspective as well as from a harms and benefits perspective. And then once we kind of as a team with myself and a team of five other pharmacists that kind of come together as well as some other people on the team that kind of gather some of the literature and some of these studies. And we sit there and we sift through the literature and we kind of think about some key points or key highlights physicians will care about, right? Say they’re strapped for time and they really want to know, OK, I’ve got five minutes, tell me what I need to know about this change. We distill those down from mountains and mountains of literature and then we have an opportunity to kind of go out in the field and talk to physicians. And the beauty about it is our academic detailing program is not industry-funded, so there’s no industry bias. It’s funded by the government, so the Ministry of Health. Our healthcare system is a public healthcare system for the most part. The government kind of funds this program knowing that there’s a lot of literature that states from when medications or algorithms change, for them to actually be able to maintain the practice can take anywhere from 10-20 years.

Tim Ulbrich: Yep.

Sachin Duggal: So there’s a big lag between fundamental changes or new breakthrough literature and actually seeing them implemented in practice for patients. That’s kind of the gap we try to fill. And the specific work we do is with family physicians, and we try to tailor every conversation to that specific practice, to their specific patient population, and work with them to see what we can do to help lubricate some of that transition and see what we can do to help them basically practice kind of the best available evidence we have in some of these different disease states.

Tim Ulbrich: Yeah, what a great use of, you know, a pharmacist skill set, expertise, and education. And I think the role that folks in the U.S. here will connect that to — also very different because you mentioned a publicly-funded healthcare system — would be an MSL position that is industry-funded. I do know a couple of pharmacists that work for the Veterans Affairs, VA, here in the U.S. that do something very similar. One of the things I love about your role, which is similar to what I’ve seen in the VA as well is a component of both practice and academic detailing. So you’re keeping your hand in practice while also providing the expertise in terms of evidence-based cost-effective prescribing. Sachin, at the risk of overgeneralizing an entire country of pharmacists, I suspect our audience is curious, as I was, to hear about some of the similarities and differences with pharmacy education and pharmacy practice in Canada compared to the U.S. And so let’s just start with debt loads. You know, a typical debt load here in the United States for a pharmacy graduate after 6-8+ of education, about $170,000 for the Class of 2021. So generally speaking, what were you seeing among your peers and graduates today when it comes to debt load?

Sachin Duggal: So from a debt load perspective, I believe in Canada, it is a little bit less than the U.S. or could be quite substantially less, depending on the school you go to. So typically on average, you’re probably graduating with anywhere in the ballpark of $100,000-140,000 of debt. Now, it just depends on the city you live in and the school you go to.

Tim Ulbrich: OK.

Sachin Duggal: So for instance, you live in Toronto and you’re going to pharmacy school in Toronto, cost of living is typically higher there versus where I went to in Waterloo or in the Waterloo and Kitchener kind of area, which is about an hour outside of Toronto. So it kind of depends on the school you go to, but I would say that would be kind of the range as far as the debt load you’re graduating with. Now, there are some opportunities in trying to help manage some of that debt load and there’s resources available to professional students within Canada. So one of them is the provincial loans. So in Ontario, there’s something called OSAP, which is a provincial loan kind of service. It’s also a federal loan service. So they kind of just mash it all together. A portion of it’s federal, portion of it’s provincial.

Tim Ulbrich: That’s interesting. Yeah.

Sachin Duggal: Yeah, so they don’t have separate applications for a federal one and a provincial one. They kind of just lump it all together. Now, that service is great and basically, you know, it’s an application process through the program you’re in, the school you’re in. Based on the program and the school, you go get basically that — and of course your own financial situation with your family and the money you make — they’ll basically spit out a number and be like, every term — a term here is about four months — so every four months, this is the money we’re going to spit out at you or we’ll give you. It could be like $5,000. It could be like $8,000. It could be more. It just depends on your situation. It is a loan, though. So it is money you have to pay back eventually. The beauty of applying to OSAP is even if you don’t need it out here, I would encourage you to apply as kind of being a student just because I think even if you don’t need money, there’s opportunities that open up where you’re able to get grants from the government as well for continuing your postsecondary education. Again, some of these grants, they range in value. It could be $500, it could be $1,000, could be more. It also opens up the opportunity at your own university to apply to bursaries. So bursaries are opportunities to just get, again, free money from your university to help pay for your education. But one of the qualifications typically to apply for those are you’re in need of some sort of financial assistance or you have some sort of OSAP application in progress or in student loans, basically.

Tim Ulbrich: And then in terms of repayment, you know, here — you and I talked a little bit about this — we unfortunately have a very complicated, overly nuanced federal loan repayment system, which includes about nine federal repayment options, we’ve got forgiveness, we have non-forgiveness, there’s of course private options, there’s income-driven repayment plans, there’s fixed plans. So you know, I think while that provides borrowers with a lot of options, as we’ve talked about many times on this show, sometimes that complexity prevents folks from really analyzing those options and determining which of those paths may be best for their personal situation. So when it comes to repayment of those loans, you mentioned both the more federal type and the provincial type, what does that look like? Is it a simplified repayment option in Canada? Or what does that repayment path look like?

Sachin Duggal: From my understanding, it’s a pretty simplified process. So if you’re going down the kind of, the student loan perspective, OK, so you graduate. Let’s just say you have $100,000 of debt. Now a portion of the debt is going to be a — and you can see it all broken down in your, like on the OSAP website in your portal. But you’ll see like, let’s just say $35,000 is federal and the other $65,000 is coming from a provincial student loan. Their interest rates are different. So I would just say the interest rate is anywhere from 5-7%, depending on if it’s a federal portion or the provincial portion. So when it comes to interest, when you’re looking at kind of the student loan that you’ve taken out, once you graduate, the school kind of notifies the student loan office that, hey, they graduated, you can kind of start that kind of clock. And basically, interest starts accruing from the moment that you graduate. However, you don’t need to make any payments on your loan, your student loan, for six months. It’s called like a six-month grace period. It gives you some time to get your kind of feet under you, find a job, figure out your situation and how you’re going to begin to I guess start repaying these student loans.

Tim Ulbrich: And when it comes to the profession, the market, you know, as it stands in Canada, you know, it’s well known here in the U.S. that again, generalizing for the sake of the conversation, but there’s some downward pressure on pharmacists’ salaries. We have supply of pharmacists and new graduates that’s been going up, so that has led to — again, very much depends on the field — but it’s led to an overall flattening, in some cases a reduction and pressure down, on salaries. And so we’ve got this debt load going up, and we’ve got this salary component that’s flat and in some cases decreasing, which obviously presents a financial challenge. So when it comes to the practice of pharmacy in Canada, what types of trends are you seeing that do or don’t align with what we’re seeing here in the U.S.?

Sachin Duggal: Yeah, so a couple trends that I’m seeing, but I think the U.S. and Canada are very similar situations when it comes to kind of pharmacy and the profession currently. One of the main things is currently, in some of the more urban areas, you know, salaries have been driven down pretty substantially from where they were kind of in the mid-2000s. Part of that is just, again, like you mentioned, that supply-demand piece. There’s just a lot of pharmacists out in urban areas, and the demand — the demand is there, but it’s just not quite where you’d want it to be in order to get those salaries a little bit higher. When you venture a little bit outside of kind of some of those urban areas and go to some of the smaller cities and even towns, I mean, the salaries are still very competitive and even in some cases, depending on just where — how far out you’re willing to go — you can really get, you can really have some good leverage in negotiating a good salary. Other trends I’ve kind of seen or something else I’ve kind of noticed — and part of that kind of lends to pharmacists who are willing to be a little bit more flexible and see if they think this lifestyle is right for them is there’s a lot of part-time opportunities. And there’s a lot of opportunities to blend multiple part-time opportunities to get that full-time equivalent. And I think that avenue, although it may not necessarily come with benefits and some of the other things that you may want from a stable kind of career, if salary is kind of a main kind of point for you and you’re like, hey, I’m relatively young, healthy, we have a public healthcare system, if I get sick, I’m taken care of, right, I don’t really need — you know, maybe I go to the dentist a couple times a year just for a cleaning, like everything’s pretty good, right, like I don’t need some of these other benefits, then maybe pursuing an opportunity or multiple part-time opportunities to get that full-time equivalent may lend well to negotiating a good kind of compensation package.

Tim Ulbrich: I think that’s a really interesting thought. And I will say, we do see I think some graduates that are taking that approach, partly out of need — maybe there’s not an offer for full-time — partly out interest, you know, two different opportunities that they want to explore past a little bit further. The challenge we have here, of course, is that healthcare benefit, right, and other benefits. So unfortunately, healthcare and purchasing that independent of an employer is definitely a pressure point. But I think we do see new graduates that are taking that approach, and certainly that can be viable. Sachin, when it comes to your own debt-free journey and some of the work that you’re doing now to really accelerate your financial plan, you mentioned that a typical graduate in Canada might have somewhere between $100,000-140,000. You know, you mentioned earlier that you went down this path of very aggressive debt repayment, you know, upwards of 65-70% of your salary that you’re putting toward your student loans, decreasing your expenses. So what was your debt position, No. 1? And No. 2 is what was really behind that goal of aggressive debt repayment? You know, why did you really want to press that forward, perhaps at the expense of other goals that you had in mind financially?

Sachin Duggal: For me, I think the No. 1 motivator was you’re in school — so I was in I guess from the start of university into graduation from pharmacy school, about a six-year process for me. And you know, the whole time, you’re just getting more and more in debt, right, trying to just live within your means comfortably and know that you kind of have some of that I guess that loan money in case you need it for emergencies and of course paying for your tuition and everything like that. But part of the journey for me was I didn’t like that feeling. I just didn’t like the feeling of being in mountains and mountains of debt that can’t be leveraged, right? Like student debt is not really, you know, it’s not a mortgage on a house, right? It’s not an asset, right? So it’s just kind of this debt that kind of just looms over you, kind of just sitting in the background like, ‘Hey, don’t forget about me. You’ve got to pay me back one day.’ And I just really didn’t like that feeling. And the idea — once I graduated, I went from making very little money in some of those co-op positions to now being able to make a pharmacist’s salary and kind of seeing those paychecks flow in, it really got me thinking, OK, this is a lot more money than I’ve kind of ever seen in my life up to this point. Like I need to make sure I set myself up so that I don’t ever have to feel like I’m in a position where I need this paycheck or anything like that. So that idea of freedom and working towards that was the kind Goal No. 1 for me in my life, right? So I looked at that debt and I went, OK, this is not serving me in any way, right? How can I aggressively pay this off? And one of the big strategies I used once I kind of fundamentally made that decision and one thing I recommend to some of my friends when they’re at a fork in the road, right, and they’re kind of like — for me, it was do I pay this debt off very aggressively or do I pay it off a comfortably kind of over x amount of years and save up for other things? And for me, I just kind of sat in a coffee shop and kind of, you know, I was like, OK, I’ve got a little piece of paper, I’ve got one side of this fork and I’ve got the other side of the fork, and I literally went through the pros and cons of each, right?

Tim Ulbrich: Yeah.

Sachin Duggal: And for me, it just stuck out that freedom piece on being debt-free, really having very little expenses, being able to kind of do whatever I wanted — if I wanted to go on a little bit of a vacation, right, I could. I didn’t have to worry about that paycheck-to-paycheck situation. And that really just stuck out to me. And at that moment, I was kind of committed to paying it off. And from that moment, I kind of looked at all the resources available to me and one of the big resources was leveraging my professional student line of credit. So I haven’t mentioned kind of here yet, but in Canada when you’re in professional school — or specifically at least I can speak for Ontario — when you’re in a professional program like dentistry, medicine, pharmacy are kind of the main examples, banks are willing to kind of offer you a line of credit that’s given to you in increments based on your successful completion of studies like —

Tim Ulbrich: Interesting.

Sachin Duggal: Basically, they’ll give you $30,000 per year. Once you’ve proven that you’ve completed Year 1, you haven’t failed, you haven’t flunked out, they’ll unlock the next $30,000. Once you complete Year 2, just shows proof you’re moving onto Year 3. The proof is really simple. It’s just kind of your schedule that you’re in third-year classes. And they’ll unlock another $30,000. So pharmacy school specifically, the major banks, they may have their own kind of rates on what they offer, but the one that I went with offered about $120,000 over the four years, unlocked in $30,000 increments with an interest rate of prime. So for us in Canada, the prime interest rate time I think was — it was around 2.2% or 2.25%.

Tim Ulbrich: Nice.

Sachin Duggal: Much lower than student loans.

Tim Ulbrich: Student loans, yep.

Sachin Duggal: Yeah, so an opportunity right there that I saw was OK, look, student loans, I’m not getting any more student loans. It’s just going to sit there. It’s going to have a much, much higher interest rate. You know, once I graduated, I really started dipping in that line of credit and just thought, let me just pay off these student loans with my line of credit. Much lower interest rate, right, in paying off the line of credit with the bank as well as you get to build your credit score as well. You’ve got a big loan here, you’re paying it back. With the student loans, you may not necessarily be able to build I guess as good will with the bank and kind of show, hey, I can pay off a large amount of debt in a reasonable amount of time.

Tim Ulbrich: Yeah. That’s really interesting. I’m not aware, Sachin, of anything we have like that here in the U.S. Maybe I’ll stand corrected if a borrower lets me know something or perhaps there’s a unique situation here or there, but makes sense, right? I mean, most of our federal loans, you know, rough numbers, looking about 6%, many for pharmacy school outside of this time with the CARES Act and the pandemic and the administrative forbearance is unsubsidized. So makes a whole lot of sense in that strategy. Is that a widely-known strategy? Or is that something that you were able to crack the code on, you know, in terms of when you had that day at the coffee shop and not as many folks know about that?

Sachin Duggal: I would say like a handful of people in the school definitely know about it, at least when I was going through pharmacy school. So this would have been 2015, around that time. I think the program, at least from what I’ve seen in recent years, has been a lot more aggressive with different banks in the sense that everyone’s trying to I guess capture the professional students and providing that kind of service or kind of that option, right? At the time, there was really only one or two banks that understood the pharmacist, the potential salary, right, the safety of that kind of — giving up that kind of money to a professional student, right? I think now, there’s a little bit more of an acceptance with some of the other banks after some of the success of those that kind of pioneered or started it.

Tim Ulbrich: It makes sense, you know. Here, the banks are very much, for good reason, interested in health professionals but long-term relationships, right? Purchasing a home, eventually you might have a business, a line of credit, perhaps you do investments, you know, which wouldn’t necessarily be our choice, but that’s an option of where folks may go to do other things related to the financial plan as well, so they’re very much looking at that from a long-term relationship with an individual who has a good — in theory, a good financial trajectory that’s ahead of them. Sachin, were there specific resources, books, podcasts, blogs, you know, things that were really helpful and motivating to you in your own personal journey?

Sachin Duggal: For sure. So one, of course, was the YFP podcast. I discovered it close to when I graduated. I think it was around probably January of — like around when I got fully licensed. And I was staring at these biweekly paychecks like oh my goodness. Like I need to save this or invest this or pay off — I need to figure out what I’m doing with this stuff instead of having it just sit in my bank account, right, and not working for me. So YFP podcast was huge at the time. And you know, it’s still a great resource and I still listen to it and see what kind of episodes and I love the evolution and the trajectory you guys have taken. Some of the books that were really impactful for me, No. 1 — and it’s a common book I think that you’ve talked about was “I Will Teach You to Be Rich” by Ramit Sethi. That’s a huge book in the sense of there’s one thing that always sticks out to me, and I’m going to butcher kind of the quote, but he basically says, you know, cut back frivolously on the things you don’t care about and spend kind of extravagantly on the things you do care about, right, or you do want. For instance —

Tim Ulbrich: The money dials. Yep. I love that.

Sachin Duggal: Yeah, yeah. So it’s, for instance, like I’ve got the same laptop I’ve had — the personal laptop that I’ve had since 2012. Don’t really care about upgrading it, right? It’s been a decade, but it still works fine. But if I want to go out and eat and have a good dinner, I don’t want to feel guilty about that. I think setting those money dials and setting that up for yourself and being comfortable with that is huge. Another really good book was just “The Psychology of Money.” It’s by Morgan — I think it’s Morgan Housel.

Tim Ulbrich: Yep. Right.

Sachin Duggal: It’s basically a book about just our relationship with money, and this goes back to what I was talking about with — you know, as a student without very much money going to a pharmacist, right, with some money and how that relationship should evolve and should mature and should change and as you get older and get some responsibilities as well in your life. I thought that book was really great. And the last one for my Canadian listeners I have to mention is a really interesting book. It’s specifically on Canadian finances. It’s called “Beat the Bank.” Yeah, it’s called “Beat the Bank” by Larry Gates.

Tim Ulbrich: OK.

Sachin Duggal: It’s a great book on — so he’s a — basically, our equivalent of Wall Street is kind of Bay Street in Toronto. Let’s just call it Wall Street, right, for all intents and purposes. But basically, he was a big hotshot banker for one of the big banks out in Toronto. And he just saw how some of the bank would leverage the average Canadian and he saw an opportunity there to kind of write a book about some of the things Canadians should kind of look at and be cognizant of when you’re kind of working on that financial freedom journey or saving and investing. And he kind of breaks it down to a really easily digestible book on the different avenues of investing and what row advisors are and all those fundamentals. So I think it’s a really great fundamental book if you’re just getting started with investing.

Tim Ulbrich: Appreciate the recommendations. We’ll link to all three of those in the show notes, “The Psychology of Money,” “I Will Teach You to Be Rich,” and then “Beat the Bank.” I’m going to have to bring myself up to speed one, because I’m really curious, two, one of my boys wants to move to Canada. So I feel like I’ve got some homework to do to be able to help him in the future. Great stuff. You know, one of the last questions I wanted to ask you is we don’t talk enough, I don’t think, you know, as we do stories like yours where we share a debt-free journey, we don’t talk enough about that life after debt-free. And one of the things I felt in my own journey is that, you know, I had always the debt being paid off as somewhat of a finish line in my mind. But it very much is just a starting point. And you know, once you get to that position, then it’s like, alright, what’s next? What are the goals? What are the plans? So as you went through this very aggressive debt repayment, putting away 65-70% of your salary towards the debt, here you are, obviously in a good financial position with a strong foundation going forward, if you look ahead over the next 3-5 years, what’s happening? What’s the priority? What’s the goals now that you’ve got this debt behind you?

Sachin Duggal: It kind of goes back to that little fork in the road, right? I’ve been really trying to has out kind of the next steps and where I want to go. And one of the big pieces is owning a piece of real estate. It’s just been really challenging with where the market’s at right now and kind of seeing how that evolves and where that goes. But for me right now, it’s kind of staying the course and continuing to invest. So a lot of my money now goes into investments. You know, I’ve maxed out kind of our equivalent of kind of that Roth IRA and 401k as well. So our equivalents are kind of maxed out. It’s really just kind of seeing where the opportunities are. I think especially with the pandemic, it’s almost like — I’ve kind of never seen such a bounceback in the economics so quickly after I guess something that would be considered kind of a recession, right? When you look at kind of where the stock market was initially when the pandemic hit and where it is now, it’s crazy. It’s only been a year and a half. So I think right now, it’s just investing, looking for an opportunity to invest in real estate that makes sense. And then kind of going from there, I think the most important thing is just not letting your money or that paycheck kind of sit in your bank account and kind of die or lose to inflation. Have that money working for you in some sort of avenue.

Tim Ulbrich: And that’s what I love about the intentionality of what you shared. And I’ve heard among others as well is, you know, if we think about the debt-free journey for some just being the starting point, you’ve got years and repetitions of behaviors now, right? So you’re obviously not forever going to be living on the low expenses that you did. But you’ve done that hard work, you’ve got the mindset. And now it’s about OK, how do I be more opportunistic in terms of growing wealth, taking those next steps with investing in real estate and other goals that you’re going to have in the future. Greatly appreciate, Sachin, you coming on the show. Loved this conversation, learning more about what some of our pharmacy colleagues in Canada are facing and some of the opportunities. And I’m hopeful that not only your peers in Canada will find this helpful but also the YFP community and pharmacists that are practicing here in the U.S. So again, thank you for your time and for coming on the show.

Sachin Duggal: Thanks for having me, Tim. I really appreciate being on and looking forward to more great episodes.

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