Debt Free Theme Hour with the Teacher & Pupil
On episode 82 of the Your Financial Pharmacist Podcast, Tim Ulbrich, co-founder of YFP, welcomes Joe Baker and Blake Johnson to the show for debt free theme hour. They talk about Blake’s journey paying off $150,000 in student loans in three and a half years and how the class he took at the University of Arkansas, taught by Joe Baker, helped prepare him to be on his way to achieving financial freedom.
About Today’s Guests
Joe Baker, MBA, has been a sales representative with Pharmacists Mutual Companies for almost 28 years and an Adjunct Assistant Professor at the University of Arkansas for Medical Sciences College of Pharmacy for 20 years where he teaches a personal finance elective for P3 students. Originally from Emerson, Arkansas, Joe graduated from Southern Arkansas University with a Bachelor of Business Administration (BBA) degree, and earned his Masters of Business Administration (MBA) from the University of Central Arkansas. Joe is also a Chartered Financial Consultant (ChFC) and he obtained his Series 7 securities license in 1986. Joe has been a guest speaker at the NCPA national meeting five times, and has spoken to various pharmacy schools across the country on wealth accumulation, particularly as it relates to young pharmacists.
Blake Johnson is a 2013 graduate of the University of Arkansas for Medical Sciences. Upon graduation, he married his wife Kristyn and he began working in a small town independent pharmacy. He worked there for 2 years and is now working in Conway, Arkansas at a local independent pharmacy. Upon graduation, Blake decided that paying off student loans would be a top priority, while still being able to travel and save for his retirement. After three and a half years, he was able to pay off his and his wife’s student loans. Since then, Blake has been able to increase his savings and start purchasing rental property. In his spare time, he enjoys traveling as much as he can and teaching others about finances.
Summary
This episode of the Your Financial Pharmacist podcasts highlights an inspiring debt free story. Joe Baker is an Adjunct Assistant Professor at the University of Arkansas for Medical Sciences College of Pharmacy and teaches a personal finance elective for P3 students for the last twenty years. Blake Johnson is a pharmacist and former student of Joe’s who has paid off $150,000 of student loan debt in three and a half years.
In this episode, Blake shares his story of not only becoming debt free but also of building wealth through investing. Blake was inspired by Joe’s class and the principles he shared. His wife, Kristyn, grew up with the teachings of Larry Burkett. These two teachings combined helped to create a strong financial foundation for Blake and Kristyn. In regards to prioritization to get to this point, Blake first budgeted to see what they needed to live on. Budgeting is his biggest piece of advice to students while in school and upon graduation. He and Krysten lived like they were still in school after graduation which allowed them to develop a lifestyle of living below their means. After Kristyn graduated, they used her paycheck to pay off student loans and watched their debt melt away. Now, they continue to max out their 401k contributions, increase their savings, and are about to close on their six real estate rental property.
Joe Baker says that creating a lifestyle like this is crucial to getting out of debt and building wealth. He suggests living off of $50,000 as your income each year even if you are making much more. This way, you are sure to stay below your means and have extra money to pay off debt and start contributing to retirement funds or other investments. He has created a list of “Baker’s Dirty Dozen” that he teaches in his college course that are discussed in the show.
Joe Baker’s Dirty Dozen Tips on Getting Rich
- Invest in appreciable items, such as education and house. Minimize depreciable items, such as car, clothes, etc. Student loan money should be spent on bare necessities.
- Utilize the time value of money. Time is on your side when you are young.
- Max out on your 401(k), 403(b), Roth 401(k) and Roth IRA. Stocks, Bonds & Cash. 100% – your age = % in stocks. Stock Index Funds or Target Date Fund (2055 Fund). At the minimum, contribute enough for employer match – free money!
- Save money consistently and systematically throughout your life (dollar cost averaging). Don’t take money out of your retirement account. Penalties and taxes will apply.
- Make sure your future spouse has the same financial goals as you. Pre-marital counseling that includes financial goals and spending habits. If already married, try to get on the same financial page. Dave Ramsey offers a Financial Peace Workshop.
- Stay away from credit cards. “If I cannot pay balance off each month, I cannot afford it!” Debt is NOT your friend. ALL debt is bad. Proverbs 22:7
- A vehicle is NOT who you are – it’s transportation only! Beware of the illusion of wealth. This is one of the biggest obstacles in wealth accumulation.
- Keep an eye on the small choices you make in life. Buying Starbucks Coffee. Drink water at restaurants!
- Avoid lotteries, multi-level marketing (pyramid schemes) and time shares.
- Choose a 15 or 20 year mortgage over a 30 year. Pay 20% down (avoids Private Mortgage Interest). Make additional payments toward the principal.
- Protect your assets! Adequate personal liability coverage. Life & disability coverage protection. Have your own individual pharmacist liability policy.
- Read Seven Figure Pharmacist by Tim Ulbrich, Pharm.D & Tim Church, Pharm.D. Sign up for Your Financial Pharmacist blog. Kiplinger’s & Investopedia, like on Facebook.
- Make a difference in your family, community & place of worship. This will make you wealthy in your heart, body and soul. Amen!
Mentioned on the Show
- YNAB. Giveaway
- Larry Burkett
- Dave Ramsey
- YFP 057: The Power of Automating Your Financial Plan
- 7 Figure Pharmacist by Tim Ulbrich, PharmD and Tim Church, PharmD
- Investopedia: Are You In the Top 1% of The World?
- Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money – That the Poor and Middle Class Do Not! by Robert T. Kiyosaki
- Bigger Pockets
- YFP 068: Pros/Cons of the Dave Ramsey 7 Baby Steps
- Contact Joe Baker
- The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich by David Bach
Episode Transcript
Tim Ulbrich: Hey, what’s up, everybody? Welcome to this episode of the Your Financial Pharmacist podcast. I hope your new year is off to a great start. And boy, do we have a special episode for you today, a two-for-one special. We get to interview new practitioner Blake Johnson alongside his personal finance mentor and teacher at the University of Arkansas, Joe Baker. Blake really has an incredible story to share of him and his wife Kristen paying off $150,000 of student loans in a short period of time and building a strong financial foundation, which as you know, we talk about often on this show. And Joe Baker, nearing the end of his career, has a passion for teaching personal finance and has influenced hundreds, if not thousands, of new practitioners to pave a successful financial future. He has the famous Baker’s Dirty Dozen Tips for Getting Rich, which we’ll talk about briefly on the show today. So Joe and Blake, welcome to the show, excited to have you.
Joe Baker: Thank you.
Blake Johnson: Yeah, thanks, Tim.
Tim Ulbrich: So I’m going to start with brief introductions so our audience can get to begin to know each of you before we unpack the story. So Blake, why don’t you start? Give us a quick background on when you graduated, what you and your wife Kristen were facing financially as a new graduate, and the current area of practice that you do in pharmacy.
Blake Johnson: OK. So I practice pharmacy in Conway, Arkansas. It’s about 30 miles north of Little Rock. And I’ve been out of school for almost six years in May. My wife’s a nurse practitioner, she graduated I guess about three years ago. And upon graduating, we had my student loans, they were about $120,000. And then my wife was in school at the time. It took her about two years to graduate after I did, and hers was about another $30,000-40,000, so all together, we had accumulated close to $150,000-160,000 in student loans once you added interest. And we’re proud to work for a community pharmacy in Conway now and been there for about three years. And prior to that, I had worked in Clinton, Arkansas, which is about an hour outside of Little Rock. So been in community pharmacy for since the time I gradated, and I really do enjoy it.
Tim Ulbrich: So we’re going to unpack that more here in a little bit in terms of what allowed you and your wife Kristen to be successful in that journey and how you did it, how you’ve worked together. But first, Joe, give us a brief introduction of yourself, the history of your work in the pharmacy world, and how you became so passionate about teaching this topic of personal finance, which resulted in I think you being the first, I believe, of starting this coursework in pharmacy curriculum. So give us some background.
Joe Baker: Well thank you, Tim. It really goes back to the late ‘70s, when I graduated from Southern Arkansas University with a business administration degree. And going from different jobs, including real estate, which unfortunately, at the time of the late ‘70s and early ‘80s was 17% interest on mortgages. It was a tough time. But I did find my niche teaching high school marketing. And I really loved the education because of the immediate feedback. And I would probably still be there today if it had not been for a friend of mine who ran for Congress and asked me to help him, to get involved in his campaign. I did so. Unfortunately — or fortunately — as life has it, we lost in runoff by 2 points, so then, after that, I had to get a real job and found my way into insurance and was fortunate enough to get on board with Pharmacists Mutual Insurance, which was 27 years ago. And during that time, I always wanted to get back into education in some way. And I thought the best way or the one that I was looking for was to teach college on some level. So I decided after 20 years to get my Master’s degree, got an MBA. And during this time, I was about to wrap up, I happened to be at the College of Pharmacy at UAMS, University of Arkansas Medical School, and I was visiting with the dean and the assistant dean. And this was in the late ‘90s, 1999, and I said, “You know, what about teaching some type of business course for the pharmacy students?” And they were very open. They said, “Yes. Our pharmacy students are making around $45,000 a year and going out and getting broke making this type of big money.” So you can see how the money has changed.
Tim Ulbrich: Times have changed.
Joe Baker: And even today at $120,000, we have pharmacists and other professionals going out and getting broke. So the fall of 1999 was when we started the personal finance class, a 2-hour elective at UAMS College of Pharmacy in Little Rock, Arkansas, and it has really blossomed. And it has just helped me fulfill my education desire. And with the financial literacy, I just think it all worked out greatly.
Tim Ulbrich: Yeah, and I appreciate — I was actually stalking you on LinkedIn, Joe, I know we’ve been getting to know each other. I didn’t know the background of the congressional campaigns, and I knew the rest of the story. So appreciate your support of what we’ve been doing at YFP. And for those that have been following our journey at YFP, Joe has been at this long before we have. So speaking on this topic, he mentioned the personal finance course since 1999, we’ve got some exciting collaborations coming forward. You’re going to be hearing more from Joe and hopefully seeing about their speaking and on the blog, so we’re excited to be collaborating and working with you. And I certainly appreciate the path you’ve paved that has even made it a little bit easier for us at YFP as we’ve been on this journey. So what I want to do, actually, what stimulated this interview is Blake had sent an email over to Joe, so his former professor, on this topic. And I’m going to take a minute to read this email because I think, Blake, as I went back and looked at this as I was preparing for the show, I feel like it really helps outline your story but also helps outline what I think to be the importance of personal finance education and helping especially young pharmacists get started. So here’s that email, and then we’ll begin to unpack a little bit further. So Blake says, “Joe, things are going great for me. I’ve been out five years now. I am so glad I took your class. It has been a truly amazing journey. I came out of school and my wife, who’s a new practitioner and I had $150,000 in student loans. We paid those off in 3.5 years. During that time, I maxed out my 401k and was able to put 20% down on my house!! I’m about halfway to my ‘millionaire net worth journey’ that you talked about in class. The best thing that we ever did was partner up with a friend on some real estate. We have five rental homes right now. It has been very good for us. Anyways, I thought I would share that with you because I really do trace it back to your class. On top of that, I’m now able to teach this principles in a class at our church in Conway.” So Joe, as you saw that email, what was your feeling as you kind of reflected on the success that Blake has had and the impact that your class had on that.
Joe Baker: Well Tim, I was just ecstatic because, you know, to get that type of feedback from one of your former students is just — makes you feel really, really good that you’re really accomplishing what you have set out to do. I know there are many success stories out there, but to see it in print and to someone that I’ve known for several years, I just can’t put it in words how it made me feel.
Tim Ulbrich: Yeah, that’s great. I think as I read it, I got fired up. I can only imagine as you guys have that relationship and teaching that course. So Blake, as I read that and I read that email, five years out of school, no debt, of course, except the home, which you mentioned putting 20% down on. I’m guessing you have that even further paid down, you maxed out your 401k while doing that, which is no small feat. And you have five rental properties in that time period. And so to me, as I read that, this is really the definition of what we talk about on this show and on the blog about a good foundation. No debt, equity in the home, a fast start to retirement savings, and I’m assuming obviously an emergency fund in there as well. So my question, Blake, is what were the secrets for you and your wife Kristen that allowed you to have such significant progress in a short amount of time. If you had to distill that down to a few things, what do you think allowed you guys to have progress in such a quick amount of time?
Blake Johnson: I think two things. No. 1, Joe’s class. At that time, right when I was taking that, my wife and I had just started dating, and so I attribute it to Joe’s class and teaching that. But No. 2, also to my wife. Her parents taught her the old school Larry Burkett, Dave Ramsey-type stuff. So when we got married, we were able to within about six months, add to what she had saved up to be able to put 20% down on a real nice home just because of that and Joe’s principles, we were able to kind of kick it out of the gate with this good of money principles. I had read Dave Ramsey while we were engaged. And between Joe’s class and what Dave Ramsey teaches, we kind of took that, kind of agreed on what we would live on, and just kind of went from there.
Tim Ulbrich: And what I love about your story, Blake, as I mentioned, we talk so much on the podcast or when we’re speaking on the blog about the importance of this foundation and really investing the first number of years out of school to build this foundation where you’ve got a solid position to work from because as I’ve seen with so many practitioners that are 10, 15, 20 years out, it’s really hard to unwind some of the things and to play catch-up. And so Joe, I’m curious from your perspective, you know, what I’ve seen and I’m guessing you’ve seen — you’ve been at this longer than I have — is that it seems like some new practitioners like Blake and his wife Kristen get a quick start and really have some momentum at a very early point in their career whereas others, you know, maybe it takes 10 or 15 years or even longer to turn things around and kind of come to that “Aha!” moment where my salary is good, but it doesn’t necessarily mean a good salary is a secure financial foundation. What do you think differentiates the two of those? Is it mindset? Is it knowledge? Is it behavior? Is it a combination of it? What do you think?
Joe Baker: Well, I do think it’s a combination. But what I have stressed to the students is when you get out, making six figures, don’t live like you’re making six figures. Don’t buy a huge house, automobiles, which is the biggest obstacle for wealth accumulation. If you can just live like you’ve lived, hopefully like you’ve lived through your college years and put back the money, you can do great things. It all begins as soon as you come out of the blocks. Just like a race, you’ve got to live below your means starting out because then, it’s much more difficult to get where you want to be financially if you live like a person making six figures. So behavior and what you do.
Tim Ulbrich: Yeah, and I think just to build on that, Joe, what I’ve seen — and I’m guessing what Blake and Kristen did almost treating it as if you make some lower percentage of your salary. If you can really convince yourself that I make $100,000 a year, but really I make $50,000 or $60,000 and budget off of that, and then use the remainder for paying down debt, building equity on the home, getting involved in investments, real estate, all of a sudden, it’s a lot easier to pivot to those opportunities. But then also when life throws you something unexpected, you’ve got margin, right? And I think that that peace of mind when you have margin — so as I look at Blake and Kristen’s story, no debt, equity in the home, fast start to retirement savings, they’ve got rental property, they’re building equity. If life throws them something that they’re not expecting, they’ve got options to handle that. Whereas if you’re living up to your entire income or beyond, obviously that can be taken away from you. So Blake, as you and Kristen were going at this, one of the things I see a lot of young pharmacist struggle with is trying to balance multiple priorities. And so I see here, you obviously were paying down debt, which is a lot in five years by itself. But then also, you were able to build up equity and max out retirement savings and get involved in real estate. So my question is, did you prioritize and focus on one or two of these at a time? Or were you really balancing all of these priorities at once?
Blake Johnson: So we sat down when we got married and kind of made some decisions. No. 1, we kind of went against what Dave Ramsey teaches in paying off all debt before you start doing the 401k. Because we noticed at 25 years old when I graduated, I could at that time put close to $18,000 a year into my 401k. And it didn’t really reduce my paycheck by that much. So that was our No. 1 priority. The second priority was we wanted to put a minimum amount on our loans until my wife got out of school. So those two things were set. I mean, we did our whole budget based on those two amounts taken out. And outside of that too, we also love to travel. So we wanted to be able to travel some too. So what we did was just do a budget every month. We would say, “Hey, we want x amount of money to travel on a year. We’re going to put this minimum amount on the loans. And we’re also going to put towards the 401k.” So until my wife graduated, we did that. And as soon as she graduated, we had this lifestyle that was set, and we never increased it at all. We just basically took her paycheck as a nurse practitioner for about a year, and that literally took the hammer down on the loans. We were used to a lifestyle, we didn’t change it, and just kind of hammered it down until it was all paid off. We looked up, we had money in our 401k, we had equity in the house, and now we’ve been able to build more and more off the top of that. Our lifestyle — honestly, our lifestyle and budget hadn’t changed since the day I graduated.
Tim Ulbrich: Yeah, and as you know, once you get to the point where you are, now it’s game on with really starting to see the benefits of those investments grow and compound and take over time. And I wanted to take you a little bit deeper there because I think sometimes, when we have guests on the show and we share a success story like yours, and it’s like five years, you paid off debt, you’ve got retirement, you’ve got some equity in your home. And it’s like, poof! It’s magic. But I heard in there, you know, you talked about budgeting. And I’m guessing that was a fundamental piece for you and Kristen in doing this. So tell us exactly what that looked like for you. What’s the budgeting method that you use? Did one of you take the lead on that? How did you come to consensus and agreement on it? What did that process look like for you and Kristen?
Blake Johnson: It was a rocky start to start out with because I’m all about Excel sheets. I can remember out of the gun, coming out of the — as Dave Ramsey says, coming out of the den with this huge spreadsheet. And it was overwhelming. I mean, it was ridiculous. I think I had like $300 for groceries per month and like $100 for going out to eat. And I mean, that’s evolved into a lot more. But I mean, it is tamed down kind of over 4-5 months, figuring out what we lived on, what we felt comfortable with, and other than that, we’ve used it from then on out. It took time to get a grip on things. The No. 1 thing too is set goals. So I mean, if you want to go on a vacation a year from now, why don’t you start now saving a small amount each month. That way, in a year, you’ve got the money set back instead of having to scrounge for it. So I just think it’s, you know, it’s a push and pull type thing. You sit down, work with your spouse and just kind of figure out what works best for you.
Tim Ulbrich: Yeah, and I like that. We talked about to your last point there, I think it was in Episode 057, we talked about the power of automation and sinking funds, getting your concept there. If you have a vacation in 12 months or whatever is planned, really being thoughtful about what those goals are and funding those. So Joe, my question here for you is, you know, when you hear Blake’s story, it appears from the outside looking in that he and Kristen were working together on this, although as he mentioned, you know, may have had a rocky start. But they obviously got there. And I know you’ve talked about this before, you and I have as well, is the importance of two people working together on their financial plan. So my question for you is what advice do you have for new graduates that are facing a financial uphill battle? Lots of student loans, maybe they have aspirations on a home, but they don’t have a down payment. So they’re really trying to figure this out. And what advice would you have for them in trying to get on the same page and work together?
Joe Baker: Well, a number of things. First, the keyword is lifestyle that Blake used. Starting after graduation, I know it can be overwhelming if you’re looking at $150,000-200,000 in student loans, just sit down and develop a plan. And if you are in a situation, relationship, married, fiancee or whatever, make sure you’re on the same financial page because that is very, very important. Blake was very fortunate. I know his wife, Kristen, and they were on the same page financially. And that is — I cannot stress how important that is to make sure you’re on the same financial page. Because it would be really tough if you were not so. But I do tell them that if you can start off with a lower lifestyle and I also even point out to plug your “Seven Figure Pharmacist” book, there’s a section in there — and I’m paraphrasing — about living on $50,000, which is the median income of the United States right now?
Tim Ulbrich: Yeah. Household.
Joe Baker: Yes. And $50,000, that’s — at least in Arkansas — that is a lot more than most make. So if you could live with that lifestyle of making $50,000 a year and start paying off your student loans like Blake and contributing to a 401k or 403b, Roth IRA, you’ll be just way ahead in the years to come. So that’s what I try to get across, not only to the students but also whenever I speak to pharmacy students is your lifestyle.
Tim Ulbrich: I think that’s a great point there, and I think there’s wisdom in reframing the perspective of your salary, right? Because I think that I know what I felt coming out of school in 2008 is there tends to be that pressure of peer comparisons. If I’m in residency and I’m making a whopping $31,000, and I look up and my friend’s making $120,000 with a sign-on bonus, which I understand don’t exist these days, that feels like it’s unmanageable, right? But if I reframe the perspective to me as a single person or even me and my wife as a combined income, and then you put that in the perspective of a median household income in the United States or we recently shared an article on the Facebook group this week about the top 1% in the world when you look at it in terms of the world economy, I think that helps reset the perspective of really what are you working with and what are the opportunities that are ahead. So Blake, one question I have for you is that as you think back, even though you’ve done a lot of things well, I’m guessing you look back to your former P1 self and say, “I wish I would have…” or “I wish I would have known this or done this differently.” What advice would you have for the students that are listening of some things that you may have done differently in your journey?
Blake Johnson: I think the No. 1 thing to look back on is budget while you’re in school. I mean, one thing that Joe talked about in the class is the power of compounding interest. It works for you, and it can work against you. If you come out with $120,000, you’ve got 6-7% interest working against you. Or you could have more money to put in the market and have that work for you. So I think during school, the less amount that you can take out, maybe by working more or just watching your expenses, I think that’s one of the big things because interest rates really do work against you and do take a good amount out of pocket.
Tim Ulbrich: Absolutely. And the follow-up question I have for you is we actually just wrapped up a book discussion with YFP, we’re doing a book discussion on “Rich Dad, Poor Dad,” by Robert Kiyosaki, which for those listeners who haven’t read that book, I would highly recommend it. It’s a great book that really just helps shape your mindset around money. But what really stood out to me in that book, second time through, is this focus on real estate investing, which obviously you are tuned into. You mentioned five properties. So tell us a little bit about why you are interested in real estate is my first question. And my follow-up is for those of the listeners that are thinking, maybe I want to get started in real estate investing, where would you recommend they even begin to learn more?
Blake Johnson: It all started, I guess about two years ago, right when we were wrapping up paying our debt off. I was looking at different ways for us to invest. And I love the stock market, we were maxing out our 401k, and I started a Vanguard fund, I started that and putting money in that. But I wanted something that could be “passive income” down the road. With the Roth IRA, you can’t access it until you’re 59.5, and other investments, it’s hard to get to. So I wanted something that could work for me and earlier in my lifetime that I could use as investment. So I started doing research, and me and my wife were talking about it for a long time. And I’ve always just enjoyed real estate. So it takes me a long time to decide on something. So after about two years of really looking into it, a friend of mine who moved back in town, we got back together, and he already had rental property here in Conway. And after about three or four months listening to him, I just kind of asked, “Hey, would you like to partner on something?” And we ended up partnering on something, and it ended up being nice because his interest and my interest as far as partnership meshed real well together, so we purchased two homes together out of the chute. That was back in April, and here we are in November. We actually just closed on our sixth home as of last month. So it’s been a fun journey and going back to where you can find info for that, there’s a great website called BiggerPockets. It’s basically a Facebook for real estate investors. And it is packed full of information. And I highly recommend it because real estate’s something you need to do a lot of reading on because you can get yourself in big trouble if you don’t get in there with good equity in homes to make the right decisions.
Tim Ulbrich: I second your recommendation of BiggerPockets, I’m actually binge listening right now to their podcast, so it’s fantastic. And I feel like every day, it just provides some new insight into I had no idea about this aspect of real estate or this aspect, especially if you grew up in a home where real estate investing wasn’t a part of growing up. So great stuff. Congratulations on the closing of the sixth property, that’s awesome. And I think the reason I wanted to bring that up is I know many of our listeners are interested in identifying potential revenue streams that don’t necessarily have to wait until withdrawal of retirement funds at the age of 59.5. So I think real estate is something we’re going to be talking a little bit more about. So Joe, I want to briefly just mention what I think are your famous Baker’s Dirty Dozen Tips on Getting Rich that I’ve seen referenced from coursework and people on LinkedIn where you’ve done talks and social media posts and engagement. I think they’ve become quite well known and famous. And we’ll link to them in the show notes, but I’m just going to briefly read through a few of them and then reference our listeners to the show notes and ask you a couple follow-up questions. So in this list, you have things like invest in appreciable items such as education and a house, minimize depreciable items such as car, clothes, etc. Student loan money should be spent on bare necessities. You mentioned utilizing the time value of money, that time is on your side when you’re young. You mentioned save money consistently and systematically throughout your life, such as dollar cost averaging. Don’t take money out of your retirement account; penalties and taxes will apply. You mentioned choosing a 15- or a 20-year mortgage over a 30-year, paying 20% down, avoiding PMI and making additional payments. So as you think through that list, do any of these stick out to you more than others in terms of their level of significance when you think of your own journey and mentoring numerous pharmacy students on their own financial path?
Joe Baker: Well in class, I’m pretty much an open book. And not to go into any personal details of my financial path — I did not achieve true financial wealth until all debt was paid off. Because I believe — I disagree with a lot of financial planners that say there’s good debt and bad debt. Eh. I think all debt is bad. There’s some that’s less bad than others if you forgive my grammar, so being that, I say, “Listen. I didn’t make a six-figure income until I was 47 years old. And completely debt-free at age 50 and then it was just amazing how much money was accumulated.” And fortunately, Blake is, he’s 20-25 years ahead of where I was at his age. It’s just amazing. I don’t think it was mentioned, but Blake, I’m going to tell on you. You’re 30 years old. So quite amazing. When I was 30 years old, I wasn’t even married. And had a little credit card debt, but found a lady that was a math teacher, taught me a little bit about the time value of money and saw that I had potential and married me. So I was very fortunate in that. But I really stress to my students and even when I speak too is you’ve got to get rid of the debt. The debt is the biggest albatross, and then I’ll speak also on buying automobiles. That seems to be a big hindrance in wealth accumulation. But the debt is the biggie in my book.
Tim Ulbrich: Yeah, and I’m thinking back to Episode 068 where Tim Baker and I talked about what we thought are kind of the pros and cons of Dave Ramsey’s baby steps, and I think one of the things we’ve realized, whether it’s our own financial plan or talking with hundreds and thousands of pharmacists is that for everyone, obviously different situations are going to allow for unique circumstances, but I think the piece that is often consistently missing in financial advice — although to Tim Baker’s credit, I think he does an outstanding job of this — is the behavioral mindset components. And it’s very hard to put a value to that. And for some people, it’s more important than others. But I share a similar belief, Joe, and when my wife and I hit that point of becoming debt-free with student loans, there was a mindset shift that happened that I cannot even put a value on what that’s done for how we’ve thought in terms of opportunistic ways of our financial plan. Now, could we have gotten there while doing it while we were in debt? Maybe. But I think it’s hard to articulate exactly the impact that that had, and it certainly has been significant for us. So Joe, talk us through your course a little bit. How do you approach that course? And the reason why I want to do address this is I think that while we have a handful of pharmacy schools out there that teach personal finance, we have probably 90+% that do not, and I know we have many faculty that may be listening to this or students that may go back to the school and say, “Hey, we want to do something like what Joe is doing.” So what does that course look like? And what are the fundamentals that you’re trying to teach and address in that course? And even the level of students that take that course.
Joe Baker: Well first of all, if anyone is interested, I would be happy to share any information that I have for you to take back to your dean of the college of pharmacy, even my syllabus, etc. And the way you sell it to your college of pharmacy is to say, “Listen. We’ve got people going out, and if they become financially independent, accumulate wealth, it will benefit the college of pharmacy in the future because the students will be more — the former students will be more inclined to give because they have, quite frankly, deeper pockets.” So that’s how to sell it. But the course that I teach, it’s at the beginning, we talk about all the different styles of stocks, bonds, mutual funds, ETFs. Then I graduate a little bit into the — not a little bit, a lot — into the retirement plans and some of those all the while, showing them examples. And then we gravitate into some other areas. It’s a two-hour elective, which is 30 classroom hours. So it’s hard to get really in-depth for too many subjects. So I want to give them a little overview, get them a little excited, showing them how if they start investing early versus investing late, then we go into some areas like buying and selling a house. I have a mortgage speaker that comes in and speaks along that. I also have an income tax person that comes in. She is not only a CPA but an attorney, so we cover the basis in the income tax area. I personally cover the personal property taxes, which we have in Arkansas. Of course, the insurance areas and then towards the end of the course, I have the student loan speakers come in from the state and explain how, what to do with their loans, some ways of paying them off, etc. So basically, it’s we have 15 class periods, two hours per week, can’t get it all in, but at least it sets a foundation. I tell them, “If I can just motivate you to do the things that you need to do at the beginning, everything else will take care of itself.” But it’s a lot of fun. It is. It is a blast. I get immediate feedback and quite frankly, I tell you, “You’re not doing this for a grade because if you miss one class, it could be $1 million. So you want to make sure you come in for all the classes, participate,” and I will say, up until your book was introduced — and I will brag on your book again — I finally had a book that I said, “Wow. I have a true textbook for my class.” Because before your book, I had “The Automatic Millionaire,” but it —
Tim Ulbrich: Yeah, David Bach, yeah.
Joe Baker: But it obviously wasn’t directed towards the pharmacy students. So thank you for that. But I was just so excited when I saw your book. And that’s the textbook, if you will, that we use in class.
Tim Ulbrich: And I love to hear your outline of the curriculum, but also obviously to hear Blake’s story and the success it’s had, and I think a key piece there you mentioned is motivation. It’s really planting seeds, right? You’re not going to cover everything about the financial plan in 30 hours. But you’re beginning to train behavior, beginning to establish mindset, and Blake’s story is one example. I’m sure there are hundreds of others that have had success because of that course. So I would also like to throw out there — and Joe, I know you and I have talked about this — we have a vision at YFP to see every college of pharmacy in the country be educating their students on personal finance. I personally believe — I obviously have a bias — but I personally believe this is a fundamental part of professional development of pharmacy students and new graduates, which to your point, has benefits to a college beyond their graduation, but I feel is an obligation that we have as a part of the professional development because what I’ve seen personally in my own life, in research I’ve done, in working with other pharmacists is personal finance and the stability of one’s personal finance impacts other areas of their life, including their career and the impact that they’re having in their day-to-day work. If we can help provide stability and a foundation through education, I think we’re going to have a better workforce that’s out there. So other colleges that are listening, this is the call to action. We would love to see you pick up an elective course. Anyone from ACP is out there listening — I’m not sure they are — we’d love to see this long-term as a portion of the accreditation standards in the future. So Blake, I want to end on this question. So you and your wife Kristen have done an unbelievable job in setting a strong financial foundation. We’ve talked about you guys becoming debt free, having equity in your home, maxing out retirement accounts, getting into rental properties, and you’re an incredibly young age. What is next for you guys? What are the goals that you have going forward?
Blake: You know, the biggest thing that I love about being debt free and being able to accumulate wealth is the fact that it frees you up to give. I feel like as a community leader, as a pharmacist, you know, we’re called to be leaders in the community. And through that, whether it’s to church or just to any type of organization, it frees you up to give more. So that’s kind of our goal. As years go by, we want to be able to give more and give more away. And we really do enjoy it. It brings a lot of joy to us when we can help others and do that type of thing. So outside of that, we’d like to get some more rental property and just continue to save. I’d like to leave a good inheritance to my kids and grandkids in the future.
Tim Ulbrich: That’s awesome. And I love your vision that you and your wife have on giving, which takes us to No. 13 in the Baker’s Dirty Dozen Tips on Getting Rich, which is make a difference in your family, community and place of worship. This will make you wealthy in your heart, body and soul. And I can see he has helped cast that vision to you all as well as obviously the impact that your family has had. So hopefully we look forward to having you back on the show when we get to that net worth of $1 million. And let me say to both Blake and Joe, on behalf of the YFP community and the YFP team, thank you so much for coming on today’s show and for your support of the work that we’re doing over at Your Financial Pharmacist. We greatly appreciate it. So thank you.
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