WCI #128: Resident Physician Financial Mistakes

This is the White Coat Investor podcast where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high income professionals stop doing dumb things with their money since 2011. Here's your host, Dr. Jim Dali. Welcome to White Coat Investor podcast 128 resident finances. We're having a lot of big changes around here at the White Coat Investor Household. I came home from a trip to Lake Powell earlier this week to find that our entire lot had been deforested. I had no idea that I had 125 trees on the property. We now have two. We have had them all chopped down so we get rid of them in bulk trash pickup day in preparation for our upcoming home renovation. But we're also packing boxes like crazy. We're moving to another house in the neighborhood. We're gonna be renting for about seven months as we move out of here in order to do this home renovation. It's going to be a pretty major deal. You know how these things are. You get started and then you start asking, well, while we're doing that, let's do this. And that just kind of snowballs. Until now. We're knocking out all four walls of our home and having a real major home renovation. It should be an interesting time, but it's going to mean a few changes around here. You may notice a few. I don't think you will, but you might. We're moving from our basement podcasting studio here to basically recording this podcast out of a bedroom at the new place. So maybe the sound will be a little bit different in future podcasts we'll have to see. Hopefully we can still keep it high quality. We're excited though. When we move back into the house we're gonna have dedicated studio space and so hopefully that will even improve the quality of the podcast. But if you've ever been through a home renovation, you know we're going through in the next six or seven months. So we appreciate your patience with that. You know, we're always getting feedback about the podcast and apparently I'm not funny or entertaining or cool enough. So I'm told by my staff that I'm going to have to be a little bit cooler, but we'll see if I can manage that. It seems highly unlikely given the history of my life. If you go back to junior high, I certainly wasn't cool then and I'm not sure I was ever cool in high school or since then. So at least people appreciate that. The podcast is pretty information heavy and useful information, even if it isn't super entertaining. But if you can think of ways that we can make this a little bit more entertaining and funnier, then we're all ears for your suggestions. You know, if we can, we can help 50,000 of you at a time instead of 25,000 of you at a time. That's much better. Speaking of feedback, we're going to be sending you out a survey, or at least giving you a link on the podcast to a survey for ways to improve the podcast. So watch for that coming up. If you're looking to boost returns, lower taxes and build wealth, join the WCI Monthly Real Estate Opportunities List for tips and strategies to maximize your real estate returns. And for introductions to exclusive investment opportunities, expect educational emails that introduce you to syndicators, fund companies, online courses, and online real estate platforms. Go to whitecoatinvestor.com reopportunities to sign up today. You can do this and the white coat investor can help. Thanks for what you do. Being a doc like most of you are, at least I think so. I guess we don't know until we actually survey you is difficult work. It's a long training period. It's competitive, it's high risk. It happens 24 7, 365. It's not easy and there are a lot of difficult things that you have to deal with, but it's also rewarding. You know, I was at Lake Powell as I mentioned recently, and my wife cut her finger just chopping vegetables. First time she'd ever had stitches. She got them at Lake Powell and it's nice to be able to not only have the stuff to do that, but the skills to do it and to do it competently. And so there are a few advantages to being a doc. On a second trip to Lake Powell, I had recently, I was canyoneering with a friend and he tore his calf muscle is what the injury ended up turning out to be in the end, but had been on a blood thinner and so I ended up with a big hematoma and a ton of swelling and a ton of pain. We actually ended up kind of evacuating him, getting him out off the lake earlier to get him into medical care. And he went in and saw an emergency doc and had an MRI read by a radiologist. It had an orthopedic consulted and you know what? That's you guys. And so I appreciate you being out there. I think this was 11 o' clock on Friday night by the time he left the ER. Spending your Friday evening taking care of my friend. So thanks for what you do. It is appreciated. And even if your patients forget to say thanks, I want you to hear it from somebody today. Our quote of the day today comes from Tom Nowak, cfp. He said we do not all need to hire a full time driver if we only need directions. And that's the truth. You know, some investors prefer having a full time driver, you know, a financial advisor that handles everything, and other people just need a little bit of direction and eventually once they figure it out, they can drive themselves wherever they need to go. As far as portfolio management goes. You know, if you are not aware, we have negotiated special deals for you with all of the main student loan refinancing companies. You can find out about these deals by going to the page under the recommendations tab on our site. The first one under the recommended tab, Student Loan Refinancing and Consolidation Guide. And you can find that@whitecoatinvestor.com Student loan refinancing and most of these deals, if you go through the links on the site, will give you something like $300 cash back. That is in addition to getting a low rate on your loan. So you're saving thousands in interest. You get $300 cash back right at the beginning and you can actually serially refinance. You can go from one company to another as long as you can get a lower rate each time. And so every time rates go down, you should refinance. Just remember that if you want the lowest possible interest rates, you're probably going to need a five year term and a variable interest rate. That's what will get you these rates down into the 2 and 3% kind of range. But if you're sitting there with 6, 7, 8, 9% student loans and you are not going for public service loan forgiveness on them, and you do not need the protections of an income driven repayment program, go refinance your loans. There's no reason to be carrying these things around and paying thousands more each year in interest with money that could be going toward principal and getting you out of debt sooner. All right, we got a special guest on today. Let me get him on the phone and we'll introduce him. Okay. Our special guest today is Kyle. Kyle is a resident and I'm gonna give him a chance to introduce himself a little bit, but he took up my invitation that I gave a while back to listeners of this podcast that if they wanna come on the podcast, they got a long list of questions that we can answer and discuss on the podcast that we will do. So. So, welcome to the White Coat Investor podcast, Kyle.

All right, thanks for having me.

So tell them a little bit about where you're at in your training, your family situation, etc.

All right, well, me and my wife are in our second years of training. I am in radiology, so I completed my intern year and Now I'm an R1 and she is a second year OB GYN resident.

Very cool. And you guys been married how long?

We got married our fourth year of med school, like right before the match. So it was a little hectic March in April, but we got married fourth year, so two years.

Okay. So maybe not quite newlyweds anymore, but pretty close to it. Congratulations on that, by the way. And what was your background financially before you ended up in the medical pipeline? Did you come from a family that was relatively well to do or middle class or relatively poor upbringing or what messages did you get about money from your parents?

I think I kind of had a transition throughout my life. I have a brother and a sister and we grew up kind of on the lower side of the scale. My dad worked hard and my mom worked hard, but I think we were kind of living a little bit paycheck to paycheck. But through their kind of hard work ethic, they worked themselves up. And by the time I was going to late college and medical school, we were in the mid upper middle class. But during college they were in the housing industry and that was right through the 0809 era. So it was a little bit on my own to get through undergrad.

And how about your wife? What was her upbringing like?

Her mother is a emergency medicine physician and she grew up kind of on the west coast. I'm from the east coast and kind of similar. She was a couple of classes up above me, but still she has a very good sense of money. Her parents made her work hard. Just kind of how they made my parents made me work hard, and we were able to get a kind of a good value of a dollar.

Very cool. So you've been listening to the White Coat Investor podcast for quite a while. Pretty much all of them was kind of the impression I got. But how long you've been following the White Coat Investor since what point in your training?

I don't quite know what kind of tipped me onto you. I was always interested in money and just kind of, like I said, my dad was very frugal and I was frugal myself and just kind of gravitated towards you and quite get hooked on WCUI until the podcast came Out. And I have probably listened to every podcast 1, 2, 3 times just kind of in passing, working out, traveling to interviews during fourth year med school and stuff like that. I don't read the blog as much, kind of if you reference something or. I try and read the start here, but I'm more of a passive listener certainly. And my wife wants nothing to do with finance. She says that's my. That's my job. I enjoy it. So she does other things. She's a heck of a cook.

Awesome. So before we go too much further, tell us a little bit about your financial situation that you're at now. I mean, you guys are basically PGY Twos. I presume you both have a big old student debt burden or maybe not.

Yeah, I think we're a little bit above average. So I think it's right at 200 is the national average. We're both around like 230 each. We kind of knew we were getting into. We lived it up a little bit. Probably too much in med school, but we went to a state school and the tuition wasn't too high. And after I hear some horror stories on this and reading. I think we're doing better than others.

Yes, you certainly are doing better than others. But you got a pretty big hole there. You know you owe almost a half million dollars in student loans. Do you have other debts that you're carrying around?

No, just those. Both of our cars are paid off. We're just living in an apartment. So rent and kind of monthly deduced, but no debts, no car payments, no deep credit card payments or anything like that.

And any assets so far? You got anything saved for retirement or anything?

Yes. So since we became employed, we've. We maxed out our Roth during intern year and maxed out an HSA last year. Well, kind of maxed it out. That's a question for later. I kind of messed that up a little bit. And then we're just kind of saving. I try and do the 20%. I want to max out a Roth. And now in our new program, we're doing a 403B and I'm doing traditional to try and take advantage of the PSLF a little bit, but it's only just kind of kicked in since it's from the August paycheck. So not too much has been deposited into that. I think 11,000 each in the Roth, around 6,000 each in the HSA, and then very minimal on the 403.

So your plan for now is public service loan forgiveness for your loans?

Yes. Well, at Least we're setting ourselves up for it. It's still 5050 just because the job market changes so much and it kind of depends on where we want to go and if it's available. But I truly enjoy teaching and I think the hospital environment is where I'll be. My wife is not as interested in the pslf, but we're still setting her up for that.

So what income driven repayment programs are you in right now?

We're both in repay. We did the, actually the intern guide from your website. I forget the individual that wrote it, but we did the consolidation right with the zero payments. So we had zero payments throughout our intern year and they actually all qualified for pslf. I did my, my paperwork and along those lines and got 12 $0 qualified payments and then now it actually just made my first direct debit payment last month, I believe.

Awesome. Well, all right, let's get into some of these questions you sent me, the first few of which are actually about me. And I occasionally do get these from listeners, so let's hit them. The first one is what is a typical day or week like for the white coat investor? And as an emergency document, never really had a typical day or a week. You know, I was always working rotating shifts and so every day of the week was different and that really hasn't changed. So my typical day and week just doesn't exist. For example, last week I spent the whole week canyoneering in Southern Utah. You know, a bunch of people that they go to the financial blogger and podcaster conference called fincon. They're like, where? Where is he? And I'm like, dude, if you're going to plan fincon when I could be off canyoneering, I'm probably not going to go. But so I didn't go. I went canyoneering. So I spent the whole week, you know, late Sunday night until Saturday basically at Lake Powell, totally incommunicado, not doing any blogging or podcasting or working shifts or anything, just on vacation. But this week, you know, it's. Yesterday was Sunday, went to church in the morning, checked a few emails, spent some time working on some chores around the house, visited some other people. That was kind of Sunday. Today we had a white coat investor staff meeting, you know, that went for about three hours this morning. Now we're recording this podcast after this is done. I got to do my taxes, unfortunately for the year. Yes, I know it's September, but we filed an extension this year and I finally, finally just got my last K1 and so I get to do my taxes. And that's probably what I'm going to spend the afternoon doing in the evening, going to visit some friends. So tomorrow I've got a shift in the morning I've got a day shift, go and see patients at the hospital. I think there's a trauma meeting I've got Tomorrow evening I have got a webinar I'm doing and this will have already taken place by the time you hear this podcast, but it's a webinar that ASAP's putting on that I'll be doing for emergency physicians. On Wednesday, I've got a podcast I'm on that's about the only event I've got on my calendar for Wednesday. So I'll probably be writing a blog post or two as well as spending some time in the Facebook group this week, where our staff has decided to take big focus on the Facebook group and try to see if we can help a bunch of people in there and see how much of that ends up coming to the blog. And so that's one of our projects for the week. So I'll probably be working on that on Wednesday. On Thursday, as I mentioned at the beginning of the podcast, we are moving out of our house because we're renovating. And so Thursday I'm planning to spend the whole day packing stuff up and putting it in boxes. Friday I've got another shift. This one's also a day shift in the Error. And then I've got some friends coming into town, some high school buddies that'll be coming into town. That evening I'll be spending time with. And on Saturday we'll be going to the BYU Washington football game. That's our big plan for Saturday. That's my week, a relatively easy week. Next week I've got four shifts and I'm going to spend one day moving in addition to that and also recording a podcast with Physician on Fire next week. That's kind of a week in the life of the White Coat investor. It's wonderful because I'm not working any night shifts and so I really actually enjoy almost all aspects of both of my jobs. Now that I'm not doing that, I've basically eliminated the things I didn't like about my work. So that's typical day and week in the life for the White Coat investor. Any other questions about that, Kyle?

Man, that sounds pretty busy. That canyoneering and football game sounds fun. I really enjoy when you and the other WCI folks like physician and fire do out a podcast. Those are some of your best ones. I Believe.

Yeah. So it should be the one that runs after this one. For those who are keeping track, next week we'll have a position on fire. On. Canyoneering is an interesting sport. You know, there's a little bit of climb. It's basically descending slot canyons is what it is. And there's some climbing, there's some rappelling, there's some swimming. There's a lot of problem solving and use of some cool technology as well as exploring some wild places. And so it's a lot of fun. I usually spend at least a couple of weeks a year doing that. All right. How do I maintain balance? It was your next question. I don't think I do. I think my life is incredibly unbalanced, but where the balance is swings around the place. As you can tell just from a typical day in the life kind of schedule. You know, I may have a week off every month. That's actually probably pretty typical. I usually go on vacation for a week every month, so I guess that helps me to maintain balance. But it feels the rest of the time that I'm just keeping balls in the air. You know, you're just trying to juggle and not let anything hit the ground. But as far as all your other responsibilities, between family and white coat investor work and my clinical work and those kinds of aspects, I think we all struggle with this. I think we try to prioritize what's most important, but a lot of times we get in trouble in that we take stuff that's urgent but not important. I don't know if you've ever seen one of these graphs. You divide all the things in your life into urgent and non urgent and important and not important. And what happens is we tend to prioritize the urgent things, even if they're not important, over the more important things that may be less urgent. And so I'm trying to spend a little bit more time on the non urgent but important aspects of my life, most of which involve my family and community service and that kind of stuff.

I think that's from Seven Habits, I believe. And the only reason I read that book was you suggested on one of your earlier podcasts.

Yeah, it is a great book. I read it a long time ago. It was given. Oh, I don't know. I must have read it in my early 20s. I'll bet. And then when I got married, we had the Seven habits of Healthy Families or Productive families or something given to us as a wedding present. I don't know if I ever read that one, but it was Just kind of adapting the original seven habits to families, I think. But there's a lot of truth to that. If you've never read this book, it's worth your time. It really helps you to put first things first. I think that's one of the habits. And, you know, sharpen the saw, I think, is the seventh habit. I can't remember what all the other ones are, but they're definitely worth applying in your life. All right, your next question also to me is, I know you've said you prefer forums, but what podcast do you listen to? Or is it all music in your car? You know, it's interesting. I just had a discussion about this on the white coat investor forum. People were talking about what podcasts they listen to and how there's so many physician financial podcasts out there. Now. The truth is, I'm not a huge. Not podcasts, blog blogs, Rather, I'm not a huge podcast listener. I'm not a huge blog reader. A lot of people are surprised by this, you know, because I have a podcast and I have a blog. But the way I actually prefer financial information is I prefer books and forums. You know, the books give you the evergreen material they have it in, set up in a, you know, format that's easy to understand and allows you to kind of hang things on framework. And then forums are about as up to date as things get right. As news articles come out and tax law proposals come up, they get discussed on forums. And I like the give and take there and the interaction with the other people that you get on a forum. So those are actually my two favorite ways of learning about financial information. But what I have learned from this white coat investor enterprise is everybody is not like me. Some people are like, I am not going to a forum, going to do a Facebook group, or I'll watch YouTube videos or Reddit, or I'll read a blog, or I'll read email newsletters or books or whatever. Everybody's a little bit different. And I've been surprised. Not so much anymore, but initially, just how many people a new medium reaches that weren't paying any attention whatsoever to the white coat investor message in the old medium. And you sound like you were kind of that way. You said you don't even read the blog, right?

That was definitely me. I'm the. I'm a podcast person for life now. You're really the only one I listen to.

Yeah. So let's see. What podcast do I listen to when I listen to podcasts? Because I do sometimes. Let me just go to my podcast library and see what's in it. So I have got Cycling News. I listen to that one. Velo News, also a cycling podcast. I've got ER Cast on there. I've got Risk Management Monthly, that's kind of aimed at emergency docs as well. I've got Ted Business on there. I've got Hidden Brain from npr. I've got Freakonomics, I've got Planet Money. I've got the Dave Ramsey Show. How I Built this by Guy Raz is kind of an entrepreneur podcast. It's become much more popular since I started listening to it, but it's also great if you're interested in entrepreneurial stuff. I keep track on some of my competitors out there as well. You know, physicians doing podcasts, you know, at least somewhat relevant to money doctors, unbound docs, outside the box, Hippocratic Hustle, you know, Carrie Jenkins over there, married to doctors. I've had Laura McEldery on this podcast. She does that one Financial residency was one of my advertisers, Ryan Inman. I've got his podcast on my list. So a lot of different podcasts I listen to. You know, I don't know that that's a recommended list for anybody, but that's what's on my phone right now as I look at it. So I guess those are the podcasts I do listen to, but I. There's a lot of music in my car and not podcasting, so. All right, let's get into more, a little bit more financial stuff. So you want to talk a little bit about cash flow and budgeting. Why don't you tell us what you guys are doing as far as your budgeting process. Now, you said your wife's not super interested in it, so let's hear about how the two of you have worked out a system.

She's not into money, but she's really good at budgeting and she doesn't spend a bunch of random stuff. But what we kind of have is we sat down, I think you suggested it, and had like a little bit of a meeting and built up an actual budget. And now I don't track my dollar to dollar by, by no means. I, I don't see the utility too much in that, but we have kind of like a primary checking account where our paychecks are like directly deposited and then from there everything is auto drafted out. So before we see anything, the 403 has already been taken out, the Roth is taken out to go to our Vanguard Roth account, and then we each actually Get a grand a month as quote, unquote allowance. And with that allowance, we kind of spend everything. So food comes from there, eating out, gas, any type of travel or anything like that. So it's kind of a rollover. And if you're not going over your thousand dollars, the other partner doesn't ask questions. So it's just kind of along that line. More for I'm real big penny pincher, but more for her. She likes to spend some money on some random stuff that of course, as a guy, I don't understand, but that's kind of just how we kind of have set it up. And it's actually worked out pretty well.

Yeah, I mean, our budgeting process I think I've talked about before on the podcast and on the blog. And we just started using initially just a spreadsheet, a Microsoft Excel spreadsheet. And I've literally got all these spreadsheets from our entire marriage, the last 20 of spreadsheets, one every month of what we spent. And the first few were hilarious. You know, I did a blog post on one of these once I found one. And it talks about our long distance phone bill. Right. Who has one of those these days? But we were really strict in the beginning, you know, because money was pretty tight. You know, I remember what we were living on in med school and residency and it was pretty tight. You know, Katie worked my intern year and after that she was a stay at home mom. And so that was the only real decrease in income we ever had. But it certainly made things tighter. And so we had, we had watched every dollar for years and years and years and kind of the budget served as training wheels in many respects. And once we learned how to ride the bike, the budget probably doesn't matter as much anymore. Now it's mostly just keeping track of the cash flow. It's really hard to keep track of it if you're not doing some sort of meeting every month or some sort of planning process. You just got money flying everywhere and you're not sure where it's coming from, where it's going. And so we've specialized a little bit in the last couple of years to our strengths and what Katie's strength is. You know, this is a little bit traditional, right? Traditionally the man makes the money and the woman spends the money. But in our house, that's kind of the way it works out. And the reason why is because she's better at spending money. She actually shops for stuff and compares prices and gets a better deal on it. Whereas I shop like A hunter. Go out, kill the beast, drag it home, and, you know, whatever price you got on it, you've got it, you've now got the item, you know, and so I'm not much into comparing prices. When I buy something, I don't care. I want to get it as fast as I can, not necessarily get the very best deal I can. And so because of that, we let her do most of the buying and she does a much better job of it. You know, if we're buying airplane tickets or whatever, she buys them. And so as that relates to our budgeting process, she keeps track of the spending. And so she goes over the credit card statements and makes sure and, you know, the bank account statements and make sure it's all, you know, legit and adds it all up, what it was, and then feeds that into one line on our spreadsheet. And that's literally as close as we look at our spending. It is one number. You know, all the gas, all the groceries, all the kids activities, you know, all this stuff. It's one line on our spreadsheet because we just don't care anymore. We don't care what it was spent on. We just care what the total was. And so that's kind of our, you know, tracking that we do now. And I am in charge of moving the money around between the accounts and adding up the income. And so at the beginning of the month or whenever we get around to doing this process, I go through all of our sources of income, you know, and that's the white coat investor profit for that month. That's what I made with my clinical work that month. We look at all our investing accounts and we take the income from that and so on and so forth and add all that up. Then we take. Our effective tax rate is in the 33, 34% range. So we take 34% of what that number is and we set it aside. This is our tax money, basically. So we don't spend that or don't go invest that because we know we're going to need it within the next few months to pay taxes on it. And then we give to charity based on that total as well. And then we decide what we're going to do with the rest. Right? Because right now we're making much more than we spend. And so this is the main thing we do at our monthly meeting is talk about what do we do with the rest. And the rest turns out to be, you know, either invested or the last few months we've been saving up for this Home renovation. And so all of the rest has been going toward this home renovation account lately. But that's kind of what our monthly meeting is about. She brings one number to it, I bring another number to it, and we talk about the difference, really, and what we're going to do with it. And that's kind of our current cash flow budgeting process as far as that tax money. Well, you know, we set aside the 34% because we know we're going to need that eventually. But that's not necessarily what we pay in taxes. As an S Corp for white Coat investor, we're obligated to pay a certain amount of taxes every time we pay ourselves a salary. And so I calculate that out and send that in as required by federal law. And then we make quarterly estimated payments. And the way we make those is we just calculate it as 110% of 1/4 of last year's tax burden. And that's what our quarterly estimated payments are, basically just enough to stay in the safe harbor. So that's what we do with our tax money. And then if we owe more next April, which we usually do, we write that check out of this money that we've been setting aside for taxes. So that's our cash flow and budgeting.

Do you just keep it aside in a money market or.

Yeah, it's just sitting in a Vanguard money market account. You know, I think this month it's in the prime money market account. For some reason, the municipal money market account yields have dropped enough that it actually makes more sense, despite our high tax bracket, to just be in a taxable money market account for now. But that's a calculation you have to run. You take the yield of the taxable money market account and you multiply it by one, minus your marginal tax rate. And if that's higher than the yield on the municipal money market account, you do that. If it's lower, then you put your money in the municipal money market account. And so every few months I do that calculation just to make sure I'm in the right one. But we just let it sit there until it's time to write a check to the irs. All right. Your next question, though, was not for people like me that are self employed, it's for people like you that are employees. About the W4, you had a question about how to fill it out in order to minimize the amount of tax withheld. What's your big concern there as far as the W4 goes?

I think when I originally wrote this question, it was a couple months ago, it actually, I believe you talked about it on the podcast and it got me a little bit interested. And I did my own googling and came across kind of what you just discussed, how you have to pay out a certain amount of taxes within a grand or however much you made last year. And I just, I just don't think I had a firm enough grasp on what the W4 entailed. I had briefly heard of somebody paying their tax bill on a credit card in order to obtain points and stuff, but I just think they were working with a different kind of process than me as a W2 employee.

Yeah, so the W4, I mean, this is a form that an employee fills out for their employer, and you basically pick up how many, you know, mark off a number of exemptions. You know, you get one for you and one for your spouse and one for dependents, etc. And the idea is just to estimate how much tax you're going to owe at the end of the year. That's the whole point of the form. And so the idea is that the employer then withholds that from your paycheck and sends it to the IRS on your behalf. But that amount of money that's withheld actually has very little to do with the amount of taxes that you owe, which is calculated on your return. And so the goal isn't necessarily to minimize the amount of money withheld on the W4. If you want to minimize the amount of money withheld on the W4, you put 10 exemptions on there. Right. Because then they're going to hardly withhold anything. Now, that's probably not even legal to do, nor is it advisable. What you should try to do is just get the amount withheld about. Right? Because if you are not in the safe harbor at the end of the year, you'll not only owe the taxes that you would otherwise owe and the interest that you may owe on that, but you also owe penalties. And so the goal is to be in the safe harbor. What is the safe harbor? Well, the safe harbor is that you have either paid all the tax you owe, that'll obviously keep you in the safe harbor. If you've had that all withheld or paid it as a quarterly estimate, payments that'll keep you in the safe harbor. Also, if you have paid, at least for a high income earner, 110% of what you owed last year, you're in the safe harbor and won't have to pay any penalties. And then the third way you can be in the safe harbor is if you owe less than $1,000, you know there's thousand dollar difference between what was withheld on the W4, what you paid in your quarterly estimated payments, and what you actually owe in taxes. If that's less than $1,000, you're in the safe harbor and don't owe any penalties. So the goal is just to get in that safe harbor. And the W4 is a tool to help you do that. But what a lot of people don't realize is there's a few strategies you can do using the W4. For example, with quarterly estimated tax payments, it matters when you make the money and when you pay the taxes. If you made all your money in the first quarter, but you didn't pay the taxes until your fourth quarter estimated payment, you can get dinged. But with a W4 and money that's being withheld by an employer, the IRS doesn't care. Money withheld in December is exactly the same as money withheld in January. And so what some people have done to game the system a little bit is have a few more exemptions on their W4 earlier in the year and less late in the year. And thus more is withheld from the paycheck late in the year. And so there's a few ways you can game it there. I don't know that I'd recommend it. I'd just try to estimate it correctly. And if you find you're getting huge tax returns every year, well, you probably need to claim more exemptions. And so you're having less withheld from every paycheck. If you find you're writing big checks every April, you probably need to have less withheld from your paychecks. And that's the whole point of the W4. Now you also mentioned paying your tax bill on a credit card. And this can also be pretty slick. A lot of people don't realize this, but the IRS allows you to pay your taxes with a credit card. Let me see if I can find the URL here that it has there. So I give you the right information. It is IRS.gov payments pay- taxes buy credit or debit card and they give you 1, 2, 3 processors you can use there. However, there's a fee. That's what you need to realize. The lowest fee there is 1.87%. So if you're getting 1% back in cash for using the credit card, but you're paying 1.87%, this is not a good strategy for you. So you really need a credit card that's paying you at least 2% cash back in order to come out ahead doing this. Whether those are points, whether those are miles, whether that's cash back, you need a pretty good credit card, a pretty good cash back credit card to make anything doing this. It is convenient. It's nice to not have to mail the check. You get to save yourself the stamp there. But there's not a huge arbitrage here. Even if you've got a 2% card like the fidelity card, you know, you're earning 2%, you're paying 1.87%. You're probably not going to get wealthy on this arbitrage, you know, but it certainly is something that can be done. It gives you a few more weeks to, you know, before the money actually comes out of your bank account. And of course you can get a little bit of cash or points back. But for most people, this is not a huge strategy that you ought to spend a lot of time trying to figure out.

Yeah, I blame a physician on fire for that one.

He got.

Wrote a couple articles on credit card churning, I think. Got me too excited about it.

Yeah, I think, I think what a lot of those credit card folks that are really into these credit cards, you know, they have 20 credit cards at a time. They got a spreadsheet to keep track of them all. What they have found is the money is not in the cash back. It's not in getting 2% back after spending 1.87%. The money is in the signup bonuses. Right. That you got to spend $3,000 on the card in the next three months and then you get 50,000 miles. You know, that signup bonus is obviously at a much higher rate than the ongoing use of the card. And so if you're into credit card churning and credit card. What do they call it, arbitrage, I can't remember what the term is right now, credit card farming, whatever you want to call it. But you need to come up with a way to spend a few thousand dollars on a card. Yeah, paying your taxes with it is a pretty good way to do it for most employees. It's not going to work though, because most of your taxes are withheld from your paycheck by your employer. I guess you could do it if you owe money come April, but otherwise that one's kind of mostly for the self employed that are making quarterly estimated tax payments.

Yeah, I think that's where my original question came from. Bring it down. So I had something to pay in April.

Yeah, exactly. Well, that would give you an option if you had less money withheld from each paycheck and owed money in April, then you could pay that with a credit card. But you got to keep in mind, if you don't have enough withheld to stay in the safe harbor, it's going to cost you some penalties and that's going to reduce the amount that you're getting from the credit card churning. I worry about people that get into this credit card game. I think it's relatively easy to screw it up and end up paying a bunch of interest. And you don't have to pay a lot of interest on a credit card to eliminate all the benefits you got in the previous year. From your careful tracking of your credit cards, nobody ever gets rich off this. This is definitely a little bit on the side, a little bit of a side hustle. It's not something that's going to make a dramatic difference in your financial life. Maybe you get a few trips to Europe for free and that's about it.

I think when I did the math, it was just more trouble than it's worth.

Yeah. Okay, so let's talk a little bit about your HSA woes. Now, you mentioned you had an HSA because you had a high deductible health plan as an intern and now it's going to sit because your new program, your residency program, this four year program, does not have a high deductible health plan. So you just got a few thousand dollars in that hsa. So what should you do with it? Well, you basically have two choices, right? Your first choice is you can just spend it on your health care needs.

Hey, Jim, one sec.

Yes?

Actually, since writing these questions, I actually developed another kind of problem with it. I maxed it out intern year under the last month rule. And then when I came to my new program without a high deductible health insurance program, I now will have to kind of do pay, I believe a 10% fee on my next on my 2019 income taxes due to overfunding that account.

Oh, yeah.

So that was kind of another question I was leading to.

Yeah, let's address that too. But basically the two questions, as far as the money you have in there, you can certainly just leave it. You can leave it in the hsa. If you have it in a good hsa, you can invest it. You don't have to leave it in the employer's hsa. You can roll it over to a good one like Lively, that I've got an affiliate relationship with. You can roll it over to Fidelity. That's where my HSA is at. Those are both great places, low fees to invest your HSA and just let it grow for the long term. So that's option number one is just leave it there. Option number two is to just spend it on your healthcare needs. You know, I mean, they come with a debit card, they come with a checkbook. As you spend money on healthcare, write the check out of the hsa. That's a totally legitimate use of an hsa. What you probably shouldn't do is pull all the money out of the HSA and pay taxes and penalties on it. You know, there's a pretty good penalty if you pull it out and spend it on something besides health care, at least up until age 65. You got a separate issue, though. Your issue is that you put too much money in there. Now they have a cool rule called the Last month rule, which basically says if for the last month of the year you're eligible for an hsa, you can make a whole year's contribution for that hsa. And that's what you took advantage of for last year. Even though you were only an intern for six months of that year. You basically got to make a whole year's contribution. But there's a catch. You also have to stay eligible for the next year, which you did not, because when you left your internship at the end of June, you're now in a program without a high deductible health plan. And so I'd have to look at the regs to see exactly how much you're going to have to pull out of there. I suspect you probably can probably still leave, you know, a significant amount of that money in there because you should still be eligible for contributions for that last six months of 2018 as well as the first six months of 2019. So you may not actually have to withdraw that much and pay penalties on that much. But a careful reading of the rules surrounding the last month rule would definitely be in order for you. And then of course, you're probably going to end up having to pull some of that money out and paying at least a little bit in penalties. But it's not going to be the whole thing. It's not like you're going to be just nailed on it. You should still get significant benefit out of using that hsa. So I wouldn't beat yourself up too much about it. But as a general rule, people should be aware of that, that if you're not going to have an HSA for the whole next year, that last month rule has a special provision that Kind of nails you. So something to be careful about.

Certainly.

Have you actually run the numbers yet to see how much you have to take out of that account?

So I did kind of run the numbers, actually. Me and you had a discussion. I don't know if it was through email or some other form. I contact with the WCI through multiple outlets and it comes down to I have to pay a 10% fee on the overdrafts and the earnings on my 2019 income taxes for that. It's a little bit fishy. I haven't looked at it in a while, but I'm pretty sure it comes down to a 10% fee on everything that was put in there that wasn't supposed to be there.

Right. The question is how much wasn't supposed to be in there?

Oh, it's half. So six months. I maxed it out. So I was able to do this six months. I believe it was like 3750 that year. So half of 3750 wasn't supposed to be in there, right?

That sounds right.

So I have to pay 10% on that, plus 10%, I believe, on all the earnings of that.

But you should be eligible to make contributions for part of 2019 as well, correct?

Yes, and I did. I did. I made the full six months and that'll be fine.

Okay, so. So you're basically taking out, you know, 1800 bucks or whatever and paying a 10% penalty on it. And the earnings I have to fill.

Out part three of form 8889. And that kind of. It'll do my math from it on there. It's part of the hsa. That's what you fill out every year for the hsa.

So it'll calculate it for you there. So you're gonna have a penalty of a couple hundred bucks, something like that. Yep. Not the end of the world.

You know, you live in, you learn.

But how are you supposed to know, right? Actually, you taught me well, I guess. But did you know your new employer wasn't going to have an HSA eligible plan?

No, I did not.

Yeah, I mean, when did you find that out? You know, I guess when you go through the match. Really, Right, Exactly. Yeah.

So I went through the match as an intern.

Yeah. So if you are, you know, going to a new employer anytime soon, it's definitely worth getting in touch with the HR department of the new employer to make sure you're not going to get burned by this. But in the end, as you can see, it's not like you got to pull. You know, you don't owe thousands to the irs. You owe a couple hundred bucks. No big deal. You're going to be able to handle that even on a resident income?

Yeah.

Okay. Your next question was about your Roth IRA contributions. So you and your wife auto draft your Roth IRA contributions to Vanguard every month, and there's a reinvest option. Should you do that or should you not? Well, first of all, I'd caution you about the auto drafts. What happens with these is it's great to automate your finances. Don't get me wrong. You know, the book the Automatic Millionaire has a lot of truth to it, where they basically advocate for automating everything. The problem with this is you and your wife are eventually going to need to do your Roth IRA contributions through the back door. And it may not be clear exactly which year you have to start doing that. It could even be during your residency if you start doing significant amount of moonlighting. Once you get that modified adjusted gross income up over, I think it's about $190,000 a year right now, you're no longer eligible to make direct Roth IRA contributions. So you got to keep an eye on that. And before that year starts, for whatever year you're going to be over that amount, you got to stop this auto draft Roth IRA contribution, because those are direct Roth IRA contributions. And so that's one thing to be aware of there. They're great, but you just got to realize that at some point, you got to start doing these through the back door. But the reinvest option is just about reinvesting dividends. And I'm a big fan of reinvesting your dividends and your capital gains distributions. As long as you're inside a retirement account, in a taxable account, what that does is it gives you a whole bunch of different tax lots to keep track of. And they might be really small tax lots. You know, they might only be a few dollars even. And while the brokerage will keep track of those for you, I prefer to just have all my dividends and other distributions in a taxable account go into my sweep account or my money market account, and then I reinvest them with the next month's investments. So I'm still reinvesting the money, but I'm doing it manually rather than automatically into the same investment. But inside a Roth ira, I see no reason not to just reinvest and automate your finances in that respect. Does that make sense?

Yep. I was just. There was a little option on it, and I again, I'VE done a little bit of reading on it since then, but yeah, you perfectly summed it up. Thank you.

Yeah. So you guys are a two physician resident couple who decided not to get insurance at all. You guys don't have disability insurance or life or has that changed since you sent these questions to me?

No. Disability or life?

Yeah. Tell us about your reasoning when you went through that because it's not necessarily unreasonable. There's a lot of different things people choose when they're a two physician couple. But tell us about your reasoning to do it that way.

So originally I was planning on doing that and I think I actually reached out on the forums and a couple people in the forums are like, convinced me otherwise of like, hey, you need to look into getting disability insurance. And I reached out to a couple people and due to kind of conditions that both me and my wife have had previously, it was not the perfect definition of disability insurance and it was just not going to cover what was needed. It wasn't the typical disability insurance I'm sure most people are obtaining. So we just decided to basically self insurance her. I'm her disability insurance and she's mine.

And the same for your life insurance and life insurance.

Basically the only debts we had was student loans. So under my understanding that we won't be liable for each other's student loans, so we'd be able to obtain or basically take care of ourselves with the income or physician income.

Yeah. So that's generally the case for federal loans as well as most refinance loans. They just go away at death. You know, there are few when you refinance your loans, you got to read the fine print and make sure that the company's not going to apply that to your estate. If it is, it's definitely worth buying some life insurance to cover that risk. That's a heck of a lot cheaper than paying the higher interest rate on an unrefinanced student loan. But just be aware when you're refinancing your loans to look into that provision. But there are a lot of dual physician couples that have struggled with this question. And the responses and decisions basically range from what you guys are doing, no insurance at all, to both partners being, you know, kind of fully insured. But you guys are in a very different situation than my wife and I was when I came out as an attending physician. You know, we had no assets. This is long before we were financially independent. My wife was a teacher and I was a physician. And you know what if I became disabled? Our financial life was Going to be dramatically different, you know, without that disability insurance. And so it was a really important part of our financial plan for a dual physician couple. You know, you're married to a gynecologist, she's married to a radiologist, essentially. You know, you can have a very nice life on a radiologist income, you know, just one, without being married to another doctor. And so it's totally reasonable to go to the complete other extreme and say we're not going to have insurance at all. But what I see most dual physician couples do is pick something in the middle. You know, they realize, well, if one of us became disabled, I might not want to work as much. We might not want our income to drop as much. And so they both kind of get partially insured. You know, that keeps the premiums down so they're not quite spending so much money, but also provides something coming in. If one of you were to get disabled. Same with life insurance. You know, there are a lot of costs that come up when one person is having to do all of the breadwinning. You know, you got to go out there and you got to maybe work a little bit more than you were, or you got to hire a housekeeper, you got to hire out more childcare, whatever it might be, and so they choose to buy some sort of smaller life insurance policy. The other thing you got to keep in mind is there's always a possibility that you guys both become disabled or both die at the same time. And if you've got kids relying on you, you know, especially then, that there is a certain risk there, it might be pretty low. There's a certain risk there. And the benefit of buying at least a small policy on each of you is you're kind of insuring against that possibility as well. And so lots of different ways to slice that. I don't think there's a right answer. I think you do just need to think through, what is the plan if I die? What is the plan if she dies? What is the plan if I get disabled? What is the plan if she gets disabled? What is the plan if we both die? What is the plan if we both become disabled? And work through the possibilities and if those are not acceptable to you without buying disability or life insurance, we'll buy the insurance, at least enough until the plan becomes acceptable in the event of those relatively rare but catastrophic financially outcomes. Does that make sense?

Yeah, it makes perfect sense. And we don't have any kids currently, but we did discuss possible obtaining more insurance when that was in the horizon. And also when I actually approached the forms, they brought up another good point. Kind of an unspeakable, kind of a not really polite way. But they also brought up the divorce rate where that could mess up your whole finances as well. So I just wanted to put that out there. Of course that's not on anybody's plans.

Yeah, for sure.

You have to mention it.

Yeah. Well, it's actually pretty good for dual physician couples. You know, they always say docs are always getting divorced, but if you actually look at the data for a dual physician couple, the divorce rate is only about 10%. So it's much lower than the 50% that it is in the general population. So you got that going for you, but it certainly isn't zero and you know, is a pretty significant risk that you should do what you can about. For sure.

I was saying you can get through step one, you can get through the match together. It's pretty taxing on anybody.

So for sure. It's like I tell people all the time, your best asset protection move is probably date night, you know, because that really is your biggest, biggest risk of loss is getting divorced.

Oh man, now my wife's gonna pressure me into date night. Thanks a lot.

All right, well, let's talk about this next question, which is a very good question. It relates to your guys student loan plans. You're both, at least for now, at least keeping public service loan forgiveness on the table. Now how should that affect your retirement account contributions as a resident is basically what you're asking, right? Because the general rule is that residents and other people that are in lower income units years, they're not in their peak earnings years should use Roth accounts and those in their peak earnings years should use tax deferred accounts. But you are noting essentially one exception to that general rule. And the reason why is if during residency, if you're going for public service loan forgiveness, if you use a tax deferred retirement account, it lowers your income. And with a lower income, you have a lower income driven repayment program payment due. And the lower the payments you make, like the $0 payments you made last year, the more that is left to be forgiven after 10 years in the public service loan forgiveness program. So now you got these two factors weighing against you. You've got the extra taxes you're probably going to end up paying by virtue of, you know, not using the right retirement account. But you're weighing that against the possibility of getting more money forgiven. And so it actually becomes a very complex calculation to decide exactly what to do. But if you Go to the, you know, recommended student loan advice people I have on my website. That's again, under the recommended tab under student loan advice. They can help you run the numbers for those. And this sort of situation, like the one that you're in where you're, you're thinking about going for public service loan forgiveness, it's a dual physician couple, you're not sure contributing to retirement accounts, but you're not sure which ones. I mean, this is the ideal person to go spend, you know, three or four or five hundred dollars with these student loan advisors and help work out what exactly the right plan is for you. Because the plan could very well be tax deferred contributions to keep those payments down. But it's possible to put too much in there. Right. If you got your payments down to $0 already, you know, more tax deferred contributions are not going to help lower that payment any further. And so you can, you can go too far too. You really just have to run the numbers. And I wish the government hadn't made the rules for these programs so complicated, but unfortunately they have, and there's no way around it. If you're in a complex student loan situation, you got to look at all these things. You got to look at how you file your taxes, you got to look at what IDR program you're in. You got to look at what retirement accounts you're using, because it all goes into the calculation of what exactly is right in your situation. And it can be pretty complex, unfortunately. So that is a noted exception to the Roth is for residence rule. If you thought you were almost surely going for public service loan forgiveness, I would say, okay, lean toward the tax deferred accounts. If you're like, well, we might, but we probably won't, then I would still lean toward the Roth accounts, even if it made your payments bigger. Just because in the end, I think you'll be glad you got more money into a Roth account in relatively low tax bracket years.

So I kind of have taken similar thoughts to that. And I max out my Roth just IRA every year. That's the plan. I think I have a kind of a fundamental confusion on the retirement accounts as well. So I max out my Roth ira. That has nothing to do with my maximum contribution for 403. Correct. Because in my institution we're actually able to do traditional tax deferred, and then we're also able to do Roth 403 contributions. So I actually could maybe put a little bit more into it. Is that correct?

That's right. They're Completely separate contribution limits. So you can put $6,000 into each of your Roth IRAs each year, and you can put $19,000 into each of your 403s each year. So that's a heck of a lot of savings for a resident couple, even a dual resident couple. I mean, what's that work out to be, 50 grand? I mean, that's gotta be pretty close to half your income as a resident is pretty impressive, right? But it's the same question whether you do Roth or whether you do tax deferred. Now, the truth is, for your ira, you should almost surely do Roth, because the presence of that retirement account at work and your income are going to make it such that you are not eligible to deduct a traditional IRA contribution. And if you can't deduct that, you might as well do the Roth IRA contribution. So that one's probably a no brainer for you. But you do have a little bit of debate there deciding whether to do the Roth or the tax deferred 403.

Currently we're doing the Roth IRA and then just the tax deferred 403.

Yeah, that's probably not a bad way to go. But to know whether that's right for you, you honestly got to sit down and run the numbers. And if you need help doing that, I'd get one of those student loan professionals and get some, you know, pay for some formal advice. Which segues us well into your next question, which is when is the best time to talk to a student loan professional? Earlier or later in residency. And obviously you guys are pretty early in residency and you've got all these questions, you're not sure what to do. So the answer is early, right? Because you want to do it sooner rather than later. Now, I know you know, four or five hundred bucks is a lot of money to an intern, but you know, this could mean the difference in tens of thousands of dollars to some doctors and how much you have forgiven, how much you pay in interest, how much you make in your retirement accounts. And so I think it's really being penny wise and pound foolish if you're in any sort of a complex student loan situation to not hire that advice early on in residency. And it doesn't need to be an annual meeting, not necessarily for a lot of people. A one time meeting to set up the plan would be fine. But it's probably a good idea to meet early in residency and then again late in residency and put together that plan of what you're going to do as an Attending, because maybe by now you know you're not going for public service loan forgiveness and it's time to refinance, or you want to make sure you're in the right plan as you become an attending. And you want to know, well, what retirement account should I be using as I become an attending? And so probably a couple of meetings during residency are worthwhile. I think most of the people I have on my recommended list give you some sort of a discount on a repeat or a second meeting anyway. So it's not like that second one's super expensive. But most people probably don't need an annual meeting. But if you're in a complex enough situation and stuff is changing and one spouse's income is moving around or you start moonlighting or something, you might need to look at this again annually. But again, that's way cheaper than anything else you hire in financial services. You know, you go hire an investment manager and you're probably going to spend five grand a year. You go talk to these guys for three or four hundred bucks. It's just not nearly as expensive. Okay, next question. You're now in a new state, I understand, right?

Yeah, we switched states from.

And you need some new insurance. So I assume you've already got the insurance now. Right.

So there's a little bit of a leeway from my previous date that I've able to kind of keep those policies for a little bit as I'm pricing it out and getting used to a new program, getting used to a new kind of moving and everything like that. And it's just got bumped further and further down on the to do list. So I actually have not obtained it.

Okay. So, I mean, you go to a new state, a lot of times you just modify the insurance policy you have. You know, as I've moved state to state, I've had the same insurance policies. Mine are through usaa, which is available to military members, and they're used to people moving around all the time. So it's no big deal. My premiums may go up or down when I go to a new state, but, you know, I basically kept the same policy. You can even keep the same agent or broker that you've been using for your home and renters and auto policies and umbrella policies. You can keep the same person. Usually they're licensed to sell in more than one state. If they're not, they can refer you to somebody else. But it's not that big of a deal to shop this out. You can call two or three companies and just get Quotes. And as long as you're okay with the service that company offers, you just take the lowest price. A lot of people are surprised just how much they can save by shopping it around. Oftentimes you can cut your costs significantly in this department. They're also surprised when they find out that these costs are much more expensive in some states than others. And it's like disability insurance, right? If you're going to buy disability insurance and at some point you're going to, this is going to involve California, buy it in the other state. You know, whether you're going to move to California, buy it before you go. If you're moving from California, move it, buy it after you leave, you know, just because it's much more expensive to buy in California. But, you know, as far as those policies, what are absolute needs? Well, I think the liability is really a big need, especially for a document. That's the main reason you're buying these policies. And your state likely has a minimum amount of liability you got to carry on your auto policy, it's probably only 50 or 100,000, which is not nearly enough. You think about people out there driving around $130,000. Teslas just totaling their car is going to get you over your liability limit. So you need to increase those limits to several hundred thousand dollars and then typically stack an umbrella or a personal liability policy on top of that. And you buy that from the same person you get your auto or your homeowners or your renters insurance from most of the time. As far as other absolute necessities, there aren't a lot. You know, some people prefer having collision comprehensive coverage on the car, especially if it would be a major financial burden to replace it. We typically carry it on our newer cars and not necessarily on our older cars. A lot of people wonder about uninsured and underinsured coverage. That can be a good idea as well. That will cover, you know, for example, let's say an occupant of your car is injured in an accident that is not your fault, but the other person who caused the accident doesn't have any insurance, well, they may turn to you and sue you for their losses. And that's where the uninsured and underinsured coverage would kick in. And you got to be aware that there's a lot of umbrella policies out there now that don't cover that risk. And so make sure you read the fine print carefully. I was talking to an advisor on the podcast not that long ago who pointed out that USAA umbrella policy no longer Covers that. So I may be shopping for a new policy myself soon too. But those are the main things, you know, as far as renters policy goes, just make sure everything's covered. You know, there's a lot of fine print in there, and it's worth going through it and seeing what is and what isn't covered. Like, a lot of times people are surpr find that firearms above a certain dollar amount or jewelry above a certain dollar amount is not covered by their homeowners or renters policy. You actually got to buy a special additional rider with an additional premium to get those sorts of things covered. Also, flood insurance has to be covered, has to be purchased separately, and earthquake insurance has to be purchased separately as well if you want those things covered. You know, it's interesting because a lot of people think they have coverage from hurricanes and they don't realize that their policy only covers wind damage, it doesn't cover water damage. And so even though it's all one weather event, you know, the insurance adjusters are out there trying to decide whether it was wind or water that caused the damage. And so if you're in an area where you could see those storms in the southeast, you got to be careful exactly what you have covered. It may not be adequate. So those are kind of my general rules for getting new auto and renters insurance. If you have any specific questions about them.

No, just kind of the process, or if you had a specific kind of process that you went through. I. My people that covered me in my previous state are not, Don't. Are not qualified in the state I moved to. So I'm not gonna have to do the shopping. But I was just wondering if there's a kind of an easier way to do it, but. Nope. Sounds like you're gonna have to.

No, you just gotta shop it. I mean, you can get a broker, right? Just like if you're buying health insurance on your own, you can go to a broker and they can kind of shop it around for you. And that's not a bad idea because the broker essentially functions as an independent insurance agent, and they can go out there and find you the best policy. It generally doesn't cost you any more to use a broker because the commission would just be kept by the company if it wasn't paid to the broker. And so that's probably what I do if I was going to a new place and had to really shop it around is I'd find essentially an independent automobile and homeowners insurance broker and have them shop it around for me. Tell them what you want and find the best deal for you in that state. There we go.

There's the tip I wanted. My last question I think I have for you. I've taken up a bunch of your time and I appreciate your. Appreciate you talking with me was. Me and my wife are. She's obgyn, she's gonna, she only has a four year program. She's got three more years and I have four more years. And what to do in the transition from fellowship to attending hood to possibly moving and all that kind of on top of. I've heard several of you discuss about Roth conversions during that time too. So just kind of how everything's timed, if there's, if there's any certain principles that need to be kind of followed during that time as well.

Sure. Well, I think there's a few things to think about during that unique year that you've got. The first one is jobs. You know, I mean, chances are unless you were going to stay in the same geographic area, then she's only have a job for a year, presumably unless you guys are going to separate for a year while she goes to a new geographic area and works. And so as she negotiates that position, it's more about the short term than it is about the long term. Things like student loan repayment programs may matter more than the total dollar amount of the contracts. You know, partnership doesn't really matter to her. She's looking for the highest paycheck. And so the employer that she takes a job with for that year may be very different than it would be if it was more likely to be a long term situation. So I think that's consideration number one. Consideration number two is housing, right? I mean, at this point you probably don't want to get into a permanent house yet your job situation is not stable, you know, not with one of you coming out of residency. And so it's probably a year to continue renting. Ideally you guys just stay in the same place you're in now. I mean, that, that would be living like a resident, right? You're now earning as one attending and one resident and still living like a resident. I mean, that will allow you to, you know, pay a massive amount towards student loans, max out retirement plans, save up, you know, a down payment, save up a big emergency fund, you know, you don't have any, but for a lot of docs, pay off personal loans and credit card loans and those kinds of things and just really get on top of your finances that year. So it's really a Big financially focused year in that respect. The only other real consideration aside from those two factors, I think, is the opportunity to still use Roth accounts. And that might be different for you guys if you were still going for public service loan forgiveness at that point. You may still want to be in tax deferred accounts in order to maximize the amount forgiven. But someone who was not going for public service loan forgiveness. This is a good year to use Roths, because while, yes, one of you is an attending, you are still not in your peak earnings years. And so if you had any tax deferred accounts left over from residency or fellowship, that would be a good year to convert them. You know, it's an even better year the year that. That she leaves residency rather than the year that you leave residency. But both are lower than your peak earnings years. But that's a good time to do Roth conversions, do Roth IRA contributions, to do Roth 403 contributions, etc. It's just a great year to be able to take advantage of your lower tax bracket to get a little bit more money into Roth accounts. Those are about the only considerations I can think of for that year. Is there anything else specifically? You had a question about what to do that year?

No, I think you kind of summed it up. It's gonna be a hectic little time, but we'll just take it one step.

Yeah, but it's so wonderful, right, because you're finally at the light at the end of the tunnel. And if you have got your financial ducks in a row coming out and then you start getting attending paychecks, it feels like you've got money coming out your ears, you know? Yes. You've got all these great things to do with it, and you still got lots of debt, but it's like, finally we're there. We're actually being paid for all this work we put in for a decade, and we can actually start really making progress toward our financial goals. That's really the most important year in your financial life is that year that you leave residency. And so it's really kind of a wonderful time, too. So maybe it makes you a little bit anxious, but I assure you it is much better than getting resident paychecks.

Money coming out of your ear. Sounds like a good problem to have.

Yeah, it's wonderful. So I think that's. I think we've addressed all the questions. Unless you've come up with more while we've been talking.

No, none. None specifically. You've answered a ton of them. I appreciate everything.

Well, you've Got an opportunity here. You've got 20 or 25,000 docs here that you can say anything you want to, any messages you have for them.

I just would repeat the same old stuff that you say. Save a good chunk, live like a resident for the first five years. And that's my goal.

I'm sure you guys will be very successful given how much attention you're paying to this. I mean, keep in mind, at your stage of residency, I was completely financially illiterate. And so you are way ahead of where I was. And I'm sure you'll be even more successful. And so I wish you both a lot of success, both in your careers and in your finances. And I'm sure you will have a financially wonderful life given how much attention you're paying to this stuff early on in your career.

Thank you so much. I owe a lot of it to you.

Well, thanks for coming on the podcast, Kyle. I'm sure a lot of other residents will find your questions very useful and interesting. Cool.

That'd be awesome.

Okay, that was great. It's always fun to have a real live listener on. You know, they always worry that they might sound silly or that they. They're not a professional podcaster. But you know what, you guys seem to love those episodes. So if you are one of these folks that would like to come on and talk about your finances and your struggles and maybe your, your mistakes, let us know and we'll see if we can get you on the podcast. If you're looking to boost returns, lower taxes and build wealth, join the WCI monthly Real Estate Opportunities list for tips and strategies to maximize your real estate returns. And for introductions to exclusive investment opportunities. Expect educational emails that introduce you to syndicators, fund companies, online courses, and online real estate platforms. Go to whitecoatinvestor.com reopportunities to sign up today. You can do this and the White Coat Investor can help. Thanks for subscribing and leaving us a five star review. Doing those things actually helps spread the word and get financial literacy out to doctors and other high income professionals. So thanks to those of you who have left us five star reviews. We appreciate that. Head up, shoulders back. You've got this and we can help. We'll see you next time on the White Coat Investor podcast. My dad, your host, Dr. Dahl, is a practicing emergency physician, blogger, author and podcaster. He is not a licensed accountant, attorney or financial advisor. So this podcast is for your entertainment and information only and should not be considered official personalized financial advice.