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YFP 120: 5 Ways to Finish 2019 Strong


5 Ways to Finish 2019 Strong

Tim Ulbrich talks through 5 ways to finish 2019 strong. These 5 strategies will help you enter the New Year with a sense of momentum and accomplishment, setting yourself up for an awesome 2020.

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Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? Welcome to this week’s episode of the Your Financial Pharmacist podcast. I’m excited that you are joining me as we talk about five strategies that you can employ in 2019 to finish the year strong. So last week, we heard from one of our Certified Financial Planners, Christina Slavonik, where we did our first episode of a new segment that we will be rolling out going forward called, “Ask a YFP CFP.” Of course, CFP standing for Certified Financial Planner. We had some great questions that we answered from you, the YFP community, and we’d like to tackle more of your questions in the future. So if you have a question that you would like to have featured on the show and answered by one of our fee-only Certified Financial Planners, please do us a favor and shoot us an email at [email protected]. Again, that’s [email protected].

OK, so today’s episode, five strategies, five things that you can employ in 2019 to finish out this last quarter of the year strong. The theme across all five of these strategies is intentionality. The theme is slowing down for a moment and getting out of the month-to-month rush to ask yourself, what am I trying to achieve? Or maybe to remind yourself what am I trying to achieve? To ask yourself, what progress have I made thus far? And to ask yourself, what are some strategies that I can do for this last quarter, this remaining three months of 2019 to finish the year strong and to start 2020 with a bang? You know, I’m a big believer in momentum and running into the new year with some wins. And I think this is a much different situation than just waiting for 2020 to roll around, waiting for the new year to roll around so that you can hit the reset button and get a fresh start on your financial plan on the financial year. Now, don’t get me wrong. I think hitting the reset button every once in awhile can certainly be refreshing, and it does serve a purpose. But choosing to be intentional, choosing to be intentional in this final three months, in this final quarter of the year, and digging in, that’s a growth mindset. And that is putting yourself in a position of playing offense rather than playing defense.

So let’s jump in: Five strategies that you can employ to finish 2019 strong. Now, what would an episode of the YFP podcast, what would it be without us talking student loans? So No. 1 here is reevaluating your student loan repayment option. Or maybe for recent graduates, maybe it’s just evaluating your student loan repayment option for the first time. You know, when I started Your Financial Pharmacist back in 2015, I noticed there were only a handful of pharmacists that were spending the time, the time that is necessary to navigate all of the student loan repayment options that are out there and to determine the one best option for their own personal situation. This takes work. This takes effort. This takes digging into the unknown. This takes really understanding all of the variety of the repayment options and the confusion that could come along with that. And after I graduated from pharmacy school in 2008, I defaulted into the standard 10-year repayment plan because I didn’t know what else was out there. And at the time, that was the easiest path forward, right? It’s the standard, it’s the default repayment plan. The problem was is that I could have saved significant amounts of money by either pursuing Public Service Loan Forgiveness, PSLF, as I did work for a qualifying employer, or refinancing my loans to a lower interest rate because many of my loans at the time were at a fixed 6.8% interest rate, and I certainly could have done better than that if I weren’t pursuing PSLF, which I was not. So don’t get me wrong, while I’m grateful that I eventually got them paid off, I’m grateful that Jess and I were able to work through this journey, I think we learned lots through this journey, but not knowing all of the options that were available to me and just defaulting into the standard 10-year repayment plan certainly cost me big. Thankfully, there is now a lot more resources out there in terms of helping borrowers navigate the maze of student loan repayment. And in the pharmacy space — of course, disclaimer, I’m biased here — there is no better student loan repayment piece for pharmacy professionals than the one put together by our very own Tim Church. And that is the ultimate guide to repayment of student loans. You can get that post and all of the details and all the information for free at YourFinancialPharmacist.com/ultimate. Again, YourFinancialPharmacist.com/ultimate. We’ll link to that in the show notes.

Now, for students that are listening, the question hopefully you’re asking yourself is, you know, you’re note reevaluating repayment options, you haven’t yet evaluated them, and maybe you haven’t even thought about this yet for the first time. After all, this seems like it’s off into the distance as something you need to be thinking about into the future. And so my encouragement for the students listening is to begin to learn about these options that are available. Certainly you’re going to graduate, you’re going to have the grace period, you’re going to have some time, but that’s going to come quick. You’re going to have lots of competing priorities, you’re going to be studying for the NAPLEX, you’re going to be studying for the MPJE, you’re going to be starting a new job or residency or training program, and it may seem like that’s something to worry about in the future. But I think now is really the time to start listening to episodes like this or reading blogs or other resources that are out there to understand these terms, understand what an unsubsidized versus a subsidized loan is, understand what different types of loans are in terms of consolidation and refinancing and loan forgiveness and having the vocabulary, having an awareness that when you need to choose that option, you’re in a position that hopefully does not feel as overwhelming.

I would also encourage the students listening that I think you’ve heard me talk about before on this show, I think it’s easy as a student, myself included when I was a student, to fall into the trap of worrying about this in the future, to fall into the trap of it just feels like Monopoly money, it doesn’t feel real. So I would encourage you to inventory your loans, to log on, to look at your balances, to look at the interest rates, to see how that interest is accruing, to ask yourself, what are some things that I can do, especially on my unsubsidized loans, to lower the interest that is ultimately going to be accruing while you’re in school for your unsubsidized loans and, of course, capitalizing and growing beyond that?

And then students, the other thing I would encourage you is to begin to develop a relationship with the financial aid officer at your institution. Again, really building that relationship. Now having these conversations early as possible to begin to understand the terms, understand the options that when you need to make that decision, you’re ready to be in that position of action.

Now, for recent graduates, here I’m talking to the class of 2019, this could be those that are pursuing residency or those that are out in practice already, you know very well that you are in the grace period. You have the grace period, you’re living it right now. And here we are, that grace period is going to come to an end very soon. So now is the time if you have not already done so to evaluate and compare your options. I think for myself as was true for many others probably listening to this, it’s a rude awakening when you get that statement out of the blue to say, by the way, in the standard 10-year repayment option, you need to pay about $1,800 a month for 10 years to get these loans paid off. And so now is the time, before you get that notice, to evaluate, compare your options, understand income-driven repayment, understand some of the nuances between those plans, understand loan forgiveness, understand what are your options in the refinance marketplace so that when you go into active repayment, again, you’re in a position to make an educated decision.

Now, just a separate word for residents, you know, I think the common thing among residents is an automatic decision to defer. And my question for you to consider is is deferment the best option? Have you really thought about that? Have you really determined what’s going to happen to the interest on your loans while you’re in residency? What’s your makeup of subsidized versus unsubsidized loan? And I know, it’s a busy time. It’s a busy time. You finished your orientation, you’re active in your research experiences. Many of you are probably also teaching, balancing patient care and staffing responsibilities. I understand that you’re busy. But now is the time to really dig in and understand these options. And for those that are in active repayment, my question to you is maybe you’ve never sat down and intentionally evaluated all the options that are available to you. Or maybe you at one point refinanced, but you haven’t reevaluated rates. Or for those of you that are pursuing loan forgiveness, maybe you haven’t yet submitted your employer certification form. So my challenge for those that are in active repayment is have you confirmed, have you spent time to determine that the repayment strategy that you’re in right now is really the best option for you?

And I think as we are certainly here in October 2019, we’ve seen interest rates come down, we’ll talk about that here in a moment with refinance, when it comes to student loans, that means we often see the interest rates on a refinance become a greater differentiation or separation from the interest rates that you’re going to get offered through your federal loans. Now, we’ve said many, many times before, refinance is not for everyone. There’s certain considerations and benefits that you have in the federal system that you may not have in the private system, although that gap has closed. And certainly if you’re pursuing Public Service Loan Forgiveness, absolutely you do not want to pursue a refinance. But for those that have decided that is the best option for them, I think now is a good time to check rates. Certainly if you’re just getting initial quotes, it’s a soft pull on your credit, and that’s not going to have an impact until you actually go through the full application. You can learn more at YourFinancialPharmacist.com/refinance to learn more about the refinance process, who we think it’s for, who we think it is not for, and ultimately to check and compare rates. Again, YourFinancialPharmacist.com/refinance. So that’s No. 1 is reevaluating or evaluating your student loan repayment options.

No. 2, it’s hard to think about the holidays here in October, but if we’re going to finish 2019 strong, we need to set a budget, have a plan, and save for the holidays. And that’s No. 2. Now, we talked about this in detail all the way back in Episode 023. That was a long time ago, and I don’t know about you, but I know that I could use a reminder, and I’m guessing that’s the same for you, that we could all use a reminder about by the way, we’ve got to be thinking about the holidays and the impact that has on your financial plan. So of course, ideally, we’re saving throughout the year, that’s the thing we should be doing. But if you, like me, find yourself looking up at the calendar as we roll into October saying, ‘Is it really time for the holidays again?’ then we need to develop a plan as soon as possible to avoid the stress and the debt that often comes along with the holiday season and impacts how we start the new year. After all, the data shows that on average, on average, those who take on debt accrue approximately $1,000 of new debt from the holidays alone. So if we’re going to be in an offensive position going into the new year, we cannot let the holidays derail our financial plan. So the question here is, how can you have a painless financial holiday season?

So I think first thing that you can do is list all of your holiday expenses. Now, I’m talking all of your holiday expenses. And I know, here we are, it’s October. It’s not even Halloween yet, and we’re talking about later in the year holiday expenses. But this is important, right? Because it sounds easy. But from my experience, I’m sure from your experience, a lot of frustration comes from understanding what really are the true expenses when you reflect back on it. And I think we often underestimate these true expenses. So you know as well as I know it’s not just the gifts for family and friends, although that’s where we typically stop and end with the budget for the holidays. It’s the gifts we often buy for coworkers, it’s the gifts for those that are hosting parties we attend, it’s the gifts and the things associated with various work outings. It’s the expenses associated with hosting family and friends. Of course, it’s the travel, it’s the house decorations, it’s the cards and the postage, and the list goes on and on and on. So I think where we start is listing each item, holding true to that, and hopefully eventually coming up with a budget for each line item to come up with in sum, what do we need to be planning for the holiday season?

Second, for each of those categories, once you get everything down on paper, you know, begin to think about and identify are there some ways that since here we are planning well in advance, are there some ways because of your preparation and because of your diligence that you can be more intentional and save money during the holidays? For example, perhaps an electronic letter with a photo compared to printing cards or shopping in advance to be more intentional and to give yourself time to price shop around and compare. Or maybe it’s taking up those gift cards that have been unused or cashing in on travel or credit card points to help fund gifts or putting a cap on gift amounts with family or friends. And again, the list goes on and on. But the point is if we can plan here in October as we talk about finishing 2019 strong and we don’t wait until the last minute, we can be much more intentional and I think reap the benefits of that going into next year.

Now we have a guide we developed all the way back in Episode 023 if you want more information to help you think about this further and even start to work through the budgeting process of this. Head on over to YourFinancialPharmacist/holidays to get started. Again, YourFinancialPharmacist.com/holidays. So that’s No. 2: Set a budget, be intentional, save for the holidays. s

No. 3, evaluate a mortgage refinance. So for those of you that currently own a home, you know, here we are at the time of this recording, early October 2019, and we have seen a significant reduction in mortgage interest rates compared to this time last year. And I think there’s even talks of further reduction in Quarter 4 of 2019. So as an example, this time last year, my wife Jess and I moved down to Columbus from northeast Ohio, and interest rates on a 30-year fixed loan 12 months ago were north of 4.5%. So 12 months ago, we saw interest rates on 30-year fixed loans be above 4.5%. We actually closed on a loan at 4.625%. Now, today, we are seeing rates, a year later — depending on credit scores, of course if you buy points in the process and other factors — we’re seeing 30-year rates that are below 4%, high 3’s, and we’re seeing 15-year rates that are in the low 3’s. And I’ve even seen some offers in the high 2’s, especially if you’re buying points in the process. Now, it may not seem significant, but when you talk about a percentage, percentage and a half, even three-quarters of a percentage, depending on your mortgage, depending on where you’re at in the repayment process, this can be significant, especially over a 15- or 30-year term. So what I encourage you to do is take a moment to stop, look at the interest rate, look at the current market of rates — you can look at that without having to impact your credit score — and calculate a break-even on what this would mean if you would refinance your home. How much would you save relative to how much you would cost, how much you would spend in the closing process? So pretty simple, you can run a calculator. We’ve got some great resources on our site. If you go to YourFinancialPharmacist.com/calculators, we’ve got lots of resources that can help you here. But essentially, you do a simple calculation to say OK, if this is my current balance on my loan, here’s my current interest rate, here’s the rate I’m assuming in a refinance, how much would I save per month? And obviously, you have to make this as close to an apples-to-apples comparison as possible because if you currently have 26 years left on your mortgage and you’re going to refi to a 30-year, obviously you need to account for that time difference. There’s certainly calculators that can help you do that. So once you calculate the savings over the life of the loan, then you want to ask yourself, well, how much are you going to pay in closing costs, in fees? And this would include things like bank fees, title costs, third-party costs, appraisals or attorney fees, escrow charges and so forth. What’s your total cost to close? And based on your monthly savings, when will you get to a break-even? And typically, what you see like in the situation where Jess and I are in right now, if we had a 30-year mortgage that we just closed on a year ago of 4.625% and we can get a 30-year in the low 4’s or the high 3’s, then certainly we’re going to see a significant return on investment in a fairly short period of time. So that’s No. 3 is evaluating a mortgage refinance if you haven’t looked at that in awhile.

Now, No. 4 is one that’s near and dear to my heart, and it’s something I’m becoming more and more passionate about as I really understand the power and value in continuing to have a mindset of professional development and learning and learning and learning. No. 4 is making a commitment to read at least one book per month. Some of you may already be doing that, some of you that may seem a stretch. It’s just a place, a recommendation of where to start. Now, where does this come from? My wife and I are recently watching the Bill Gates documentary on Netflix, which is fantastic, by the way. It’s called “Inside Bill’s Brain,” and one of the things you’ll notice in that documentary is he just carries around this sack of books. He’s constantly reading and reading a wide variety of things. And his passion to learn, his desire to learn is so evident as a part of the fabric of who he is as a leader. And we’ll link to in the show notes, he actually has a summer books 2019 reading list, a suggestion of books if you’re looking to get started. But he’s reported to read approximately 50 books per year, and he’s quoted as saying, “You don’t really start getting old until you stop learning.” And when you look at some of the most successful people that are out there — and here I’m defining success by a combination of both net worth as well as the impact they have had and the work that they’re doing. This could be business related or philanthropic related, which certainly Bill Gates would fall into both of those. And what you see among these people is a common thread of a quest for knowledge, a deep desire to learn more and the humility to accept that what they know is only a fraction of what there is to learn, no matter where they are in their career. And so this just got me thinking, why is this so for such famous, successful people like Bill Gates, Oprah Winfrey, Warren Buffett, all of whom are worth billions of dollars, extremely busy, have lots of competing priorities? How in the world do they have time to read, time to learn more? And why is that such a significant priority for them? In many of these leaders what you see, as I’ve already alluded to, is that despite being extremely busy, they set aside at least an hour a day, five hours a week, over their entire career, or at least most of their career, for activities that could be classified as deliberate practice or learning. And this has been written about, it is known as the “Five-Hour Rule,” this five hours a week, and there’s a 2016 article that was written by serial entrepreneur and bestselling author Michael Simmons, and he quotes these individuals as exhibiting these behaviors and habits: Warren Buffett, for example, which is referenced in the Bill Gates documentary as well, spends 5-6 hours per day reading five newspapers and 500 pages of corporate reports. Not sure how he stays awake for that, but he does. Bill Gates reads 50 books per year, I already mentioned that. Mark Zuckerberg reads at least one book every two weeks. Elon Musk grew up reading two books a day, according to his brother. Mark Cuban reads more than three hours every day. Arthur Blank, co-founder of Home Depot, reads two hours a day. Dan Gilbert, self-made billionaire, owner of the Cleveland Cavaliers, reads 1-2 hours a day.

So my encouragement to you is to start making a habit of reading and learning more, whether that is the old-school book-in-hand method, maybe it’s a Kindle, an audiobook, podcast. Make this commitment to learn more of a priority. Set a goal for the number of books — I gave you an example as we started here point No. 4, one book per month — but set a number of books that you want to read for the remainder of 2019 and do the same for 2020. So we’ll link in the show notes to Bill Gates’ Summer of 2019 reading list if you’re looking for a place to get started. And I hope that you will share with the YFP community and our Facebook group what you’re reading and what you’re learning. And of course, if you’re looking for a good financial book to get started, I have to mention “Seven Figure Pharmacist,” I have a bias for that. Also I will throw out there, “I Will Teach You to Be Rich” by Ramit Sethi, “Rich Dad Poor Dad” by Robert Kiyosaki, “Friend of a Friend” by David Burkus, which we recently interviewed on the podcast, and one if you want to get ready for an interview you’re going to be doing in the future is “The Behavioral Investor” by Daniel Crosby. It talks a lot about the behavioral aspects of finance and has built a career with his PhD studying this information about how behavior impacts our financial plan. So there’s some ideas to get started. So that’s No. 4. No. 4 is making a commitment to read and doing so with reading at least one book per month.

No. 5 is start visualizing what success will look like for you in 2020. You know, several years ago, I read a book called “The Miracle Morning,” and one of the activities they talk about in “The Miracle Morning” by Hal Elrod, it’s a great book, great process, is this concept of visualization. Pat Flynn talks about this a lot as well in his book, “Will It Fly?” And they talk about this process of not only setting goals but visualizing those goals becoming a reality and then revisiting those goals each and every day or maybe it’s once a week or maybe it’s several times a month. And when you do that, an amazing thing happens between you start with the goal that maybe feels like a hope or a dream or a wish, and then you articulate it, and then you become more specific, and then you put a number to it, and then you start to repeat that and see it and think about what would this feel like? What would this look like if this were to become a reality? And you begin to convince yourself through visualization that it will become a reality.

So I want you to answer this question as you think about visualizing success for 2020. And that question is, at the end of 2020, finish this statement: I will feel like I am winning financially if… So write it down. Look at it. What is happening for you at the end of 2020 that you will feel like you are winning financially if these things happen? The more specific you can get here, the better. Maybe it’s a certain amount that you want to have paid off of debt, credit card debt, student loan debt. Maybe it’s a certain amount that you want saved for a rainy day. Maybe it’s a certain amount for investing or for paying on a mortgage or for starting to get invested in real estate. And I would encourage you in addition to just writing these down, maybe some things that come to mind that you’re already thinking about, set one big, audacious, stretch goal for 2020. One thing that may seem like, you know what, it’s a hope or it’s a dream, it’s out of sight, it’s out of touch, but this is something I’m going to put down on paper, and I’m going to begin to think about that if I get these other things achieved, I’m going to be in a position to work towards this bigger goal.

So for Jess and I in 2019, this was real estate. We said, you know what, we want to invest in our first real estate property. We want to do that in 2019. Now, at the time, we had a big $0 invested to do that, but we knew it was a goal. We were able to articulate why that was a goal for our family. We created a sinking fund in Ally that had a big $0 for a long time, but it was a constant visual reminder of why we needed to achieve the other things within our financial plan that were ultimately going to allow us to unlock this part of it. We’re going to talk more about what that process was for us and our first property and hopefully soon our second property in the next couple weeks.

So I want to finish here with a quote from Seth Godin that I think really gets to this concept of visualizing for the future, really gets to this concept of setting big goals and often that our limitations are internal, our limitations are the variable that we can’t see a big enough picture to be able to realize what we’re actually capable of. And this is really this concept of a growth mindset. Seth Godin says, “Not the limit of our skills, not the limit of our knowledge, not the limit of our physical capacity. It’s almost always the limits of our internal narrative, our guts, our willingness to be kind, to believe, to care enough to lead. We can’t do anything about the limitations of physics, and we can never do enough to change the limitations of our culture.” But Seth says, “But we can begin today on changing the internal limits we place on ourselves. Yes, it’s your turn.” I love that from Seth Godin.

So there you have it. Five ways to finish 2019 strong. I hope you can take away one of these five, maybe all of these five, and as always, I’d love to hear what your thoughts are and would love to have you share your progress with the Your Financial Pharmacist community over at the Your Financial Pharmacist Facebook group.

Before we wrap up today’s episode of the Your Financial Pharmacist podcast, I want to again thank today’s sponsor, the American Pharmacists Association. Founded in 1852, APhA is the largest association of pharmacists in the U.S. with more than 62,000 practicing pharmacists, pharmaceutical scientists, student pharmacists, and pharmacy technicians as members. Join APhA now to gain premier access to YFP-facilitated webinars, financial articles, live events, resources, and consultations. Your membership will also allow you to receive exclusive discounts on YFP products and services. You can join APhA at a 20% discount by visiting pharmacists.com/join and using the coupon code A19YFP. For more information about the financial resources we offer in partnership with APhA, visit pharmacists.com/YFP.

And one last thing if you could do us a favor, if you like what you heard on this week’s episode, please leave us a rating or review in Apple podcasts or wherever you listen to your podcasts each and every week. Also, make sure to head on over to YourFinancialPharmacist.com, where you’ll find a wide array of resources designed specifically for you, the pharmacy professional, to help you on the path towards achieving financial freedom. Have a great rest of your week.

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