WCI #156: What to do with a Dramatically Lower Income

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 Dalle. This is White Coat Investor podcast number 156, what to do with a dramatically lower income. We're recording this on April 14th. I think it's going to go live on April 30th. And this is a very exciting moment for us. This is our last podcast being recorded in the bedroom of our rental house. And so we're thrilled about this. We've had this podcast studio, you know, a table in the corner with a bunch of lights and mics set up for the last seven months while we've been in our rental property, while our home was being renovated. And it's caused a lot of funny moments. For instance, we had somebody come over, a young couple that lives nearby come over and watch our kids while we went on vacation a few months ago. So we cleaned everything up and moved out, or didn't move out, but left for the trip. And they came over that evening and they were staying in our bedroom because it was the only place for them to stay. And what do they see? Well, they see a camera and a bunch of lights and a bunch of microphones and they're like, what are these guys doing in their bedroom? And so we're really looking forward to getting out of this space back into our house, especially with the dedicated White Coat Investor office space and a real recording studio. So we're thrilled to get back over there. It's going to be a lot of fun. The kids are loving it. You know, it's mostly done now. We still need carpet and some paint, but by the time you hear this, we'll be moved in over there. So it's going to be great. The kids are loving the fire pole, they're loving the climbing wall, they're loving the secret passageway. They're going to like the theater and the game room and all that kind of stuff. And of course they'll be thrilled to have a little bit more space around. Katie's loving her new kitchen. It's all in. All the appliances and countertops and cabinets and flooring and everything's all in. It's going to be very nice. And of course I'm thrilled. Updated garage and having some space for the White Coat investor and getting all the crap out of the landscaping that I really didn't like in the first place. And so we're all very excited to be back over there. We'll move next week and by the time you hear this, we'll be in the old new house. 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. All right. Our quote of the day today comes from Benjamin Graham, the mentor for Warren Buffett, who said it is absurd to think that the general public can ever make money out of market forecasts. Which I like that quote because it demonstrates just the futility of listening to the talking heads on cnbc. Thanks for what you do out there. I don't know where we're going to be at on April 30. Our predictions around here are that that will be our worst week here in Utah for the pandemic so far. I don't know if it's because we locked down so quickly relative to our increase in cases or not, but it's been a little bit underwhelming so far here. Our volumes are way down in the ERS and our numbers of sick and dying from COVID 19 is much lower than anybody expected. But by the time you hear this, we're supposed to be at our surge at our highest level the end of April. So I hope those of you who are dealing with this across the country are doing well and are able to keep yourselves and your families safe and do all that you can for your patients. For those of you in the hot spots, hang in there. This too shall pass. You know I'm excited. I just got an email this morning that we have an in house test finally for coronavirus. So we're thrilled to start using that. And it's been pretty wild to see all the changes in our er. We put up some temporary wall. We have knocked holes in the outside walls and put in these huge 5 foot by 3 foot machines in each corner. We've got half the ERS now negative pressure rooms. You can't hear a thing in there. And when you combine that with the fact that we're all wearing a mask or two and maybe even a PAPR over the top of that, it's really hard to hear anybody in any of the patient treatment rooms. But so Far so good. I feel like we're ready for our surge here and I hope you are feeling as prepared as we are. All right, a few things to be aware of here at the White Coat Investor. You may not be aware of all of the online courses that we either partner with or offer ourselves. You can find those if you go to the main website under the main banner there there's a page called Courses and under that you can see all of our courses and it has the ones listed that you've heard of, like fire your financial advisor, our course that helps you get a written financial plan, and our newest one, continuing financial education 2020 that we had the promotion of just a couple of weeks ago, encourage you to check those out. But what you may not realize is there's a lot of other courses there too with people we partnered with. For example, how to get started in telemedicine or learn the business side of healthcare, or a negotiation course called Planning to Win. There's also a medical coding and billing course which was put together by a urologist, Henry Rosevir, that's being offered right now at a 30% discount. So if you're still not not able to go anywhere when you hear this and you're still sitting around locked down, this is a great time to take an online course. So be sure to check all of our offerings there. There's something for everybody, no matter where you're at in your career. And you might as well use this time to improve yourself and your knowledge and your finances. Thanks. For those of you who've been leaving us questions on the Speak Pipe, if you would like to leave a question to be on the White Coat Investor podcast, you can do so@speakpipe.com whitecoatinvestor and let's take our first question off the Speak Pipe. It is a frequent caller. It's Tim from San Francisco again. So let's hear his question. Tim.

Hi, Jim. Tim in San Francisco here. How is the COVID 19 pandemic affecting your real estate and hard money loan investments? Thanks.

All right. Real estate in the pandemic. How is it affecting me? Well, I don't really know yet. It's kind of a little bit of a lagging market in that respect, Right. You can see what your stocks are worth any day you want, but when you start talking about private real estate, you don't really know what something's worth. Clearly, private real estate is worth less now than it was in February, whether it's a syndication or whether it's a real estate fund or Whatever the value has clearly gone down. But in general, what the people who work in this space will tell you is that it doesn't go down as quickly or as far as the public markets do, and it doesn't go up as quickly or as far as the public markets do. So it's a little bit moderated that way. But I saw one statistic that said one third of the people paying rent, one third of tenants did not pay rent in April. So I can't imagine that is a good sign for anybody who owns rental real estate. It's a little bit interesting that way. So I've been trying to keep up a little bit with what some of these guys are saying. Most of them are kind of holding off investing new funds until they see how this shakes out. And personally, I've been holding off investing in new real estate investments because in order to rebalance my portfolio, all my new money is going into stocks. As stocks have dropped, that's where my new money goes. And so I haven't invested any money in real estate. Well, that's not true. Had a capital call or two during this time period that I had to meet. But other than that, all my money is going into stocks the last couple of months just because I need to buy them according to my written financial plan to get back to the percentages I want in stocks. It's nice because it forces you to buy low on buying stocks at a discount that way. You know, one interesting thing that happened with one of my investments, this is one that there's been some fraud involved in a syndication, not by the company, this was through a crowdfunding company, but by the sponsor. The sponsor went and got another mortgage on the property without actually telling anybody. He was legally required to tell, that is the investors. And then of course, he's gotten into all kinds of trouble with his other properties and basically gone bankrupt. And so that new lender is foreclosing on the property. And one, one possibility out of what's going to happen here is a total loss for us as the equity investors. I think this one was a preferred equity deal, but still it'd be a total loss for us. And so the crowdfunding company is really put together a pretty creative solution to get the asset, get the property back in the hands of us as the investors. The downside is it's going to require new money, about 50% of the original investment. And so it's a little bit of a prisoner's dilemma, right? They come to us as investors and say, if enough of you will put in money that we can come up with about 50% of what you put in before we can get the property back. We think it's a decent property that's going to return well and we can get a decent return on the new money. But most importantly, by putting in the new money, we'll be able to get your principal back for the old money. So you get your principal back, which you probably won't anyway, by putting in new money. So it's a little bit of a prisoner's dilemma, right? Because if not enough people invest, they're not going to have the money to do this deal. But nobody actually wants to throw good money after bad. So I'm very interested and excited to see what people actually choose in this situation to do. I think we're probably going to put in the money. It's not a very large amount for us. And so I think it's an interesting thing to participate in and hopefully I not only get the original principal back, but I make a good return on the new money. But that's one interesting thing that's happened in the last couple of months, but that's been brewing for a year. That really doesn't have anything to do with the pandemic. Although I'm sure the pandemic is not helping. All right, let's take our next question from my email box. This one's asking most likely, or at least I hope, physicians aren't as impacted by the current health crisis as other non essential areas are. With dentistry, we're limited to emergency exams and treatment only, which means we're seeing a serious dip in income. I completed my backdoor Roth IRA for 2020 at the beginning of January. Things keep going as they currently are and I don't make the modified adjusted gross income as a single guy of $124,000. Will there be penalties I'd have to pay or will this have to be reversed somehow? I can't be the only one out there with this question. Any info is helpful and I hope everyone at the WCI is safe and healthy and appreciate all you do. Okay, the good news, Anybody can do a backdoor Roth IRA. High income earners have to do a backdoor Roth IRA. But I did a backdoor Roth IRA in 2010 thinking I was going to be over the modified adjusted gross income limit and I was not. So no big deal. It was one extra step and I had to fill out an 8,606 that year. But it doesn't hurt anything. So there's nothing Wrong. Even if you don't hit that income limit with doing a backdoor Roth ira, the reverse is a much larger problem. When you contribute to a Roth IRA directly and then find out your MAGI is above the limit, then you got to do all kinds of funky things like recharacterizing the contribution to a traditional IRA and then after a waiting period, converting it to the Roth ira. So much bigger pain that way. No big deal for everybody to do a backdoor Roth ira. All right, let's hear our next question here. This one comes from a Kentucky urologist.

Hi, Jim. I'm a urologist from Kentucky with a question about tax loss harvesting my international stock index fund in my taxable account during this pandemic. We met last year when we spoke in Lexington. My wife and I completely turned our financial lives around. Two years ago when we pulled our heads out of the sand after I finished residency, read your book and many of your recommended books and eventually become what you would call hobbyists. Thank you so much. I am a boglehead with a four fund portfolio with 60% stock, 20% bonds, and 20% in emergency fund in a money market account, all with fidelity. Of my stocks, 75% are domestic and 25% are international in FSPSX in my taxable account and still have about a $10,000 loss since purchase. I assume you would recommend tax loss harvesting them, but correct me if I'm wrong, at this point, would you continue to keep international index funds or focus on domestics during this pandemic? And if so, with what? Most of my domestics are total market index funds such as FXAIX and fskx. Thank you very much for your time and everything that you do. Take care.

Okay, first of all, anytime you're asking questions to anybody by email, in person, on the speak pipe, don't use ticker symbols. Nobody knows ticker symbols. You know, you guys just heard all those ticker symbols rambled off. And I would bet that 99% of you don't know what funds those are. I didn't know what the funds were. I had to look each of them up. So before we get into this too much, just recognize that these are very commonly used funds. The first one was the Fidelity International Index Fund. The second one was the Fidelity 500 index fund, and the third one was the Fidelity Total Stock Market Fund. Okay, so let's get to the questions. Should you, tax loss, harvest something with a loss in a taxable account? Yes. If you got a loss, sell it and swap it for something very Similar, but not, in the words of the IRS, substantially identical. @ the time you sent this question in, you had a $10,000 loss. You might as well harvest that. That's $10,000 you can use to lower your future capital gains taxes and even can put up to $3,000 a year against your ordinary income. So it's never a bad thing to have a bunch of losses. I had a blog post recently that talked about nine times. You might not want to actually take a loss. They might not want to do tax loss harvesting. But for the most part, if you've got a loss in a taxable account, you pretty much want a tax loss. Harvest it. The other question was would you keep holding international funds during the pandemic? I have no idea what the future holds. I don't know if international is going to outperform domestic. I don't know if the stock market's going to go up in the next three months or go down in the next three months. I really have no idea. So my recommendation, anytime I get one of these questions of how should I time the market or how should I invest during this particular market scenario, I tell you I have a cloudy crystal ball and you should follow your written investment plan. If you don't have a written investment plan, get a written investment plan. There's three ways to do it. The first one's the way I did. It takes a lot of time and a lot of effort, but it works. You can read some books, you can ask a lot of questions on Internet forums, you can read blogs. You can write up your own written financial plan that you can follow. The second way is the shortcut. I created the fire your financial advisor online course. This is about eight hours of coursework, but by the time you get out of it, you will be done with a written financial plan that you wrote yourself and that you can follow to investing success. The third thing that you can do is go hire a good fee only financial planner. A lot of times for a relatively low fee like a couple thousand dollars or a few hours of hourly rate fees, you can have them help you draft up a written financial plan. But no matter how you do it, you need to do a written financial plan to follow. So you never have these questions of what you should do with international funds during a pandemic. Because the bottom line is I don't know whether international is going to go up or down, etc. All right, next question. This one's also by email. I'm getting conflicting information regarding backdoor Roths and I Hope you can take a few seconds to clarify for me. I currently contribute to a pre tax 401k because it's matched up to 6% and I max that out at 19,500. There is an additional employer provided option for a Roth ira but that is not matched and apparently I make too much, so it's off the table. I'm also doing a pre tax 457B and HSA. Started 529s and opened up a brokerage account and post tax traditional IRA with intentions of doing the backdoor Roth as you recommended. Fidelity reps in several online articles have said that any conversion from a traditional Roth will be taxed at the 35% tax margin. But the CPA CFO I hired to do my taxes, who seems qualified by all reasonable standards, says I shouldn't be taxed because it's after tax money I'm using to fund this. This $6,000 is sitting in my traditional IRA and I'd really like to convert it, invest it as soon as I can, but I'm reluctant to do so if it's going to cost me another 35%. I feel like I'm missing something here because it doesn't make sense to give the government 70 cents on the dollar before I even start investing it. But you seem pretty adamant that this backdoor Roth is a must do for almost all positions. Please clarify. All right, I think I can clarify this one. First of all, you never make too much to put money in a Roth 401. So if your employer offers a Roth 401, there's no need to go through the back door to do that. Right? That's just an option. You have to do traditional 401 or Roth 401 inside your employer provided retirement account, don't confuse that with a Roth ira. Very different things. Okay, so the second thing is your CPA is right. If you are putting after tax money into a traditional ira, basically you can't take a deduction for it because you make too much. And then you convert it to a Roth IRA that is a taxable event, but the tax due is $0 because you never got a deduction on the money. And so the cost to convert it is nothing. So no, you don't have to pay tax on that money twice. So you should convert it. If you got money sitting in a traditional ira, convert it to a Roth IRA that's already been taxed. Now if you've got some rollover IRA that you got from rolling over some old 401k or 403b, that's pre tax money. Yes. If you convert that, you've got to pay tax on that at your ordinary income tax rate. And if that's 35%, it's 35%. I think it might be really useful for people, because people get this confused all the time to realize that the backdoor Roth IRA is a process. It's not necessarily one step. It's not one thing. It's a process. And the process has two steps. The first one is you contribute to a traditional ira. Now, because you make too much, that contribution is not deductible. But that's step one is you contribute to a traditional ira. And you can do that anytime between January and the next April of the next year, you can contribute to this account. And that's great. The second step of a backdoor Roth IRA is to do a Roth conversion. And that's moving money from the traditional IRA into the Roth ira. And that can be done at any time. It can be done 10 years from now if you want to. You should do it pretty close together. It certainly makes your paperwork easier if you do both of them during the same calendar year and before there's any significant gains in the traditional ira, especially any losses in the traditional ira, that can make your paperwork really complicated. So the bottom line is you put it in the traditional ira, let it sit there for a few days in a money market fund, and then move it over to the Roth IRA is the way most people do it. That way there's no losses for sure, and the gains are trivial, you know, a dollar or two maybe, that you got to pay taxes on in that conversion. But I think a lot of people that are asking questions about a backdoor Roth IRA in the process have just never even looked at Form 8606. This is the IRS form where you report any non deductible contributions to traditional IRAs, as well as any Roth conversions. If you walk through this form, it really demystifies the whole process. The first line asks, what were your contributions for 2019? You know, so if you put money in there for 2019, whether you did it in 2019 or in the first few months of 2020, that's where that money goes. So for most people, that line's $6,000. The second line is entering your total basis. Now, if you've just been doing backdoor Roth IRAs every year, doing the contribution, doing the conversion, this line's always going to be zero. But in that situation where you put in money for last year, but didn't convert it until this year, then that contribution is going to be basis money that you've already paid taxes on. So you put that on line two, you add them together for line three. Line four is just the money you put in after the first of the year, of the next year. And then you subtract that from line three. Line six, you simply put in the value of all of your traditional simple and SEP IRAs at the end of the year. Hopefully that number is 0 on line 6. Line 7 is usually 0. Line 8 is the amount you did a Roth conversion on. So if you did this the right way, the easy way, put $6,000 into a traditional IRA, and then you converted that $6,000 to a Roth IRA, that line is going to be 6,000. Then you add 6, 7, and 8 together to get line 9. That number again should be 6,000. Then you divide line 5 by line 9. Just a math equation. That number should be 1 most of the time. Then you multiply line 8 by line 10. Again, that's going to be your $6,000. Line 12 is multiplying line 7 by line 10. Again, that'S 0. You add those lines together for line 13. That's $6,000. Again, you then subtract that from line 3, and again that'S 0. So that's your basis. That's what goes on line 2 next year. And then line 16, 17, and 18 is just where you report your Roth conversion. But because of the way you did that, their taxable amount should be zero. So if you need to check something on an 8606 that was prepared by somebody else, by an accountant or whatever, look at line 18. If line 18 is 0, they filled the form out, right? If line 18 is something like $5,500 or $6,000 or something like that, they probably filled the form out. That's where you check. It is line 18. So once you've walked through that form once, it's really not that complicated, at least once you understand what basis is on line two. But it makes you understand that this is a process. It's not just a single thing. And so a lot of times people are just using very imprecise terminology when they're asking questions about a backdoor Roth ira. And it's important to understand that it's really the combination of two separate steps. All right, let's talk for a minute about mortgage forbearance. There are some things you can do in this downturn, this economic downturn. Basically, you can stop Paying your mortgage for a while. You can get mortgage forbearance under the CARES Act. This is permitted. In fact, I think you can get it for up to 12 months with no actual proof of financial hardship. So if you're having trouble making your mortgage, guess what? You don't have to make your mortgage anymore. But there's a few things you need to understand about forbearance. Number one, forbearance is not forgiveness. You're going to have to pay this money eventually, right? These payments are basically being tacked on to the end of your mortgage. It is also not a zero percent period. This is not like what the federal government is offering right now for federal student loans where it's 0% and no payments. This is just no payments. The interest is still accumulating. And so realize that. The other thing to realize is that the mortgage companies, the banks, the lenders, whatever you want to call them, they are allowed to determine how they're going to be repaid. And it varies by the lender. So what you may find is that you don't have to make any payments for three months and then you have to make all the payments at once with a big balloon payment. So get into the fine print and find out how you're going to have to pay on this later. Maybe they stack them on to the end of the loan. Maybe they're all due after three months or 12 months or whatever. So you need to look into that. The devil is in the details. You don't want to assume that it goes to regular payments after three months or six months or 12 months. It might be a balloon payment. So read the fine print. And then the last thing to realize is that this is getting tacked onto the end of the loan. So when you sell, your payoff amount is going to be higher. It's going to take you longer if you're going to pay off the mortgage and stay in it. Just realize there's not a free lunch here. The only free lunch is you don't have to make payments for a few months. It's still going to cost you at least as much and probably significantly more in interest to do a mortgage forbearance. All right, our next question comes in via Twitter. Thing you got to love about Twitter is its brevity. Here's the question. Is AMC too risky of a buy? For those of you who don't know, AMC is a movie company, right? They make movie theaters. There's the AMC channel, but that's what they do. They do movies. So as you can imagine with all the movie theaters closed right now, they are not doing very well and in fact a lot of people are worried they're going to go bankrupt. And so the stock price has absolutely tanked. It's down about when, as I record this in mid April, it's down about 75% from the peak in February. And in fact I think earlier this week it dropped 25% in a single day. Which makes you go, well, is this, you know, a great bargain now? Well, you only know if you know the future. Yes, if this company recovers and does great, buying it at such a discount is probably going to pay off really well. But the reason the price is so low is because there is significant risk of this company going bankruptcy. It may just not exist. And so any investment you put into an investment that goes to zero is not going to perform well. So I don't recommend you buy individual stocks at all. Just buy all the stocks using an index fund. Buy the whole stock market. Then you don't have to worry about whether AMC is a good buy or a bad buy. You already own it. I own AMC along with every other stock in the world. And so yes, I own it. I owned it before, I owned it now. If it does great, I'm going to own it. If it does poorly, I'm going to own it. But I'm not going to get wiped out on my entire investment because I own five or 10,000 stocks. Okay, next question comes in via the subreddit. I work for a large contract management group in medicine in response to a drastic reduction in ED volume. This is just like me. They have stated they do not have the revenue coming in to pay us. As usual, they have taken measures like reduced hours, bonuses, 401k match and even laid off or furloughed staff to minimum necessary numbers. Will they be getting a bailout from the government? That should be passed on to us. Also, is there a good general strategy for being able to see the real numbers to justify this downstaffing? With smaller groups I was in, these numbers were always discussed at monthly meetings but are not since joining this group. Welcome to the world of contract management groups. When you give up ownership to a private equity funded group or even a group that's not funded by private equity, you lose a lot of control over the group. Now maybe you don't have to go to monthly business meetings, maybe you don't have to take quite as much risk as you had before. But the downside is in those situations when you want control, you don't have control in my small democratic group. When I want to see the books, when I want to see how much money is coming in, when I want to see what somebody else's productivity numbers are, I can see all that stuff because I'm the owner of the business as a partner. When you join a contract management group as an employee, you have given up that right, and there's not a lot you can do about it now. You can ask what the volume is and you can ask what the RVUs are, and maybe they'll tell you if it's to their advantage to tell you, or maybe they'll just lie to you. You never know. But the point is, once you've given up that ownership, you don't really have the option of getting that information. So good luck with that. Maybe you can get it, maybe you can't. I agree. I much prefer being in a group where you can get that information. And that's why when I came out of the military, I went looking for a small democratic group. Now, as far as the bailout from the government, yes, it is highly likely that they will be getting a bailout. Will they pass it along to you or should they pass it on to you? That's up to them. You got to realize the way these things work is they're giving to a business. And I've talked about these on recent blog posts. There's the disaster loan program, the EIDL, where the first $10,000 to the business can be forgiven. I think it's only about $1,000 per employee up to $10,000. The other program is probably more. More likely to be used in this sort of a situation is the paycheck protection program. And this one works out to be where the business can get about two and a half months worth of payroll expenses as a loan, which is forgivable if you then spend it on payroll. So their incentive is to keep you on the job, keep all their employees, keep paying them exactly what they've been paying them, because basically the government is paying their payroll for the next two and a half months. Yes. As you negotiate your new salary, this lower salary you now have, you can point out that they should be getting the PPP loan and that they ought to pass that along to you, but they have no obligation to do so. Certainly my partnership is applying for this and we plan to keep paying our employees the few that we have, you know, using that money. But the truth is we got to pay the employees either way or we got to fire them. And so that Money basically goes in our pockets is where it's going as the owners of the business. And I suspect that it's going to go to the shareholders of your contract management group rather than to the employees themselves. But like I said, you know, the devil's in the details with these things. And when you become an employee, you've given up the right necessarily to see those details. Okay, next question. Also off the subreddit, my company has the option to make some 401k contributions as Roth 401k contributions. How do Roth 401k contributions work? Should I be putting some $401 toward the Roth part or stick to the regular 401k? I'm early career and currently contributing the max to the 401 the employer contributes through a profit sharing model that I don't qualify for yet because I have to be employed two years plus first. Okay, here's the way they work. If you put money into a tax deferred 401, that money is not taxed that year. As it grows over the years, the money is not taxed on the distributions. It kicks out capital gains and dividends as well as if you buy and sell anything in there with a gain, you don't have to pay any capital gains taxes on that. When you pull the money out in retirement, you have to pay taxes on it at your then ordinary income tax rates. Now you can use those withdrawals to fill the buckets. You take out enough to fill up the 10% bucket and the 12% bucket and so on and so forth, but they're taxed at ordinary income tax rates. With a Roth 401, you basically pay taxes on the money as you make it. Then you put it into the Roth 401, it grows tax protected, meaning you don't have to pay taxes as it kicks off dividends, as it kicks off long term capital gains distributions, or any capital gains you might have as you buy and sell within the account. Then when you take the money out in retirement, you don't have to pay taxes on it. Okay, so it's pre tax versus essentially an after tax or a tax free account. So which one should you use? Well, there's a lot of variables that go into it. It can actually be pretty complex, one of the more complex things in personal finance. But the general rule of thumb is that in any year where you are not at your peak earnings years, meaning you're a resident, you're a fellow, it's the year you leave your training, it's a year you're on sabbatical, it's a year. You take a big, long maternity leave or something. That is a year you should do Roth contributions. And all the other years, your peak earnings years, you should use tax deferred contributions. Now, there's some other things that go into it. For example, if you're a super saver and you expect to have, you know, $15 million in retirement, well, maybe you want to start making Roth contributions a little bit sooner. There's some other variables that go into it, but that's the general rule. I hope that's helpful. All right, our next question comes in from the Facebook group. It's an interesting one. It's pretty simple, as are many of the questions in the Facebook group. Why do you invest despite a good income from your job? Well, the main reason is because you don't want to have that job until the day you die. And as many doctors have learned, the income from that job isn't as guaranteed as you might think. And so the benefit of investing is it provides you options. It provides you money down the road. And the nice thing about it is if you save enough, eventually your money makes more money than you do. And that's a wonderful feeling to watch those dividends and watch those capital gains roll in in a given month and realize you made more from your portfolio than you did from your earned income from going into the hospital and seeing patients or whatever it is that you do. So that's why you invest in case something goes wrong, you have some money, and, of course, because you don't want to work until the day you die. And another question from the Facebook group. Would someone explain what is the timeline when your Roth IRA or traditional IRA contribution starts counting toward the $6,000 limit? I heard the deadline is typically April when tax is due. So is April to next year April? Now, you can contribute to an IRA from January 1st until April 15th of the next year. And if taxes are delayed, like in this pandemic, you don't have to pay your taxes until July 15th. You have until July 15th to make your IRA contribution. Whether you're going to use it for a backdoor Roth IRA or whatever, you have until the tax date of the next year to make it for that year. All right, we're gonna bring a special guest on the program now. All right, I've got a special guest on the podcast today. We're gonna go over some of his questions. Dr. K, welcome to the White Coat Investor Podcast.

Hey, Jim, thanks for having me. Great to be here.

Now, you wrote in saying Hey, I got some questions I can ask on the podcast, you know, and these are pretty up to the minute questions because a lot of it has to do with changes you've had in your finances in the last month in light of the pandemic and the bear market and the economic downturn and all that. So let's get into your first question. You want to give that to us?

Well, sure. So I'm a ophthalmologist and our clinics and our practice is made up mostly of elective cases and so a lot of that has been shut down. And so we're not taking much revenue in the practice. And so because of that we've had to furlough some of our physicians and in my case I've had to take a pretty significant reduction in pay. And so as we're going through this process with this pandemic and not really sure a lot of unknowns, just kind of wondering if you have any general advice of how to kind of get back on track once things kind of pick back up, get back on track with your finances. But also kind of mentally, this is a big setback, I think for a lot of us that had a, a financial goal and financial plans that we were striving for. And this is quite a setback in that sense.

Yeah, I totally agree with you. And as I mentioned before we started recording, you are not alone. There are a lot of docs out there in this situation that have had their income decrease, that have been told you're going to take your paid time off, that have been told you're not coming back. And then the self employed docs of course are worried too about covering their overhead. You know, they're wondering, do I need to let people go? And they're applying for these EIDL and PPP loans through the Small Business Administration. And so I think that's probably the most black swany part of this whole economic downturn is that docs are out of work. You would have thought in this terrible pandemic that someone working in healthcare would be the only person still working, but that's absolutely not the case. Even for those of us on the front lines, we're seeing our volumes go down. You know, I don't know where the heart attacks and strokes and CHF and COPD is this, but it's not in my er. And so I think that's one of the most difficult things to do. But at the end of the day it comes down to, you know, your personal family budget and what are you going to do personally about this, you know, despite the fact that there's hundreds of hundreds of thousands of other docs in the same situation, that doesn't necessarily change anything in what's got to be paid in your household. And so I think that's where we got to get down to it. I think you mentioned you'd taken something like a 50% or so decrease in salary and it's possible that even that could go away.

Yeah, that's true.

So where are you at in your career? How far out of residency are you?

I'm second year out of training.

Okay, so still relatively early career, kind of still in those live like a resident kind of years. So hopefully. And I have my fingers crossed as I ask you this, are you living like a resident now or something similar to it, or do you feel like you've kind of already grown into that income?

No, I definitely was taking your advice and trying to live like a resident, trying to pay down our loans. I would say since this has all come about, I've definitely been living like a resident. We've cut all our discretionary spending at this point and really been sticking very strict to a new budget. Previously, before this was going on, I was throwing as much as I could at student loans and I've had to actually put all those into forbearance now. So I put those into forbearance. I refinanced through private companies, so I didn't get the federal government forgiveness on the interest, but they're allowing us to do a forbearance for 90 days. So that's what we've been doing. We put all those loans into forbearance currently and then trying to scrap by until things pick back up. The one thing that I didn't do, didn't take your advice on, was make an emergency fund. And I think the reason why was trying to attack so much with the loans that I just didn't really think that an emergency would come like this. And so I didn't put as much cash aside. We have a little bit of cash savings, but not enough to really get us by the three to six months. So we're living off the, you know, the 50% income that I have now. Unfortunately, we're able to still pay the bills, but we've had to cut back quite a bit.

So that's the good news, right, that you weren't living on your whole income. So even though your income got cut in half, you can still keep the lights on and keep the roof over your head and keep, keep Food on the table and all that. So that's the good news. There's a lot of docs that just instantly grow into their income and they've all of a sudden got this massive, huge house and two payments on a Tesla's. And you know, and it's really, it would be a big deal for them to live on half their income. And it doesn't sound like you're in that situation. So you've done some good things here. I think putting your loans on forbearance, even for 90 days was probably the right move. You're cash poor because, you know, you've been trying to get out of debt. You're putting all your money after your student loans and trying to save that interest. The downside of course, is that now when you need cash, you don't have any cash. So you've done exactly the right thing in that you've cut your spending and you can drop a lot of variable spending right away. Your variable expenses tend to go away. And in fact the economic downturn has probably forced a lot of those to go away. You can no longer go on vacation, you can't go out to eat, you can't go to the theater, you can't go to the show, you can't go to the game. And so you're not driving around as much. You're forced to spend less money. So that's one thing. But putting them into forbearance I think was a good move. If you are still having income problems in 90 days, I think you ought to consider refinancing those loans not for a lower rate, but for a longer term. Right? All these student loan refinancing companies, they will give you a 20 year term, you're going to have a higher interest rate. You know, you might be going from 3% to 5.5% or something like that. But you know, what you need right now is low payments. And that is one way you could get low payments. The other thing you get is a cash back, right? If you go through the links on the white coat investor, you know, even three or four hundred bucks always helps, you know, when you're on a lower income. So you get a little cash back, you get lower payments. And if you go to a new company, you might get another forbearance period. The only downside you might have as you go to a new company and they go and they're going to look at your income when they decide whether to refinance you. And so that might not, they might not refinance you at all, or you may just end up with a little bit higher rate. But the idea here is that this higher rate is only for a few months. When things come back and you're working more and your income is back up, then you can refinance again into a five year loan and get that interest rate back down. So it's almost like a partial forbearance kind of situation. Now obviously those of you out there that have federal loans, you're not in this situation because your loans just disappeared for six months, basically no interest and no payment payments. But for those who had done the right thing and actually tried to decrease the amount of interest they're paying and actually plan to pay off their loans, they're kind of getting hosed in this situation like you are. And that's unfortunate, but not much you can do about it. You've also cut your discretionary spending, which I think is great. I think that was exactly the right move. You've stopped investing, which I think is also great. You're not making 401 contributions. And so I think you basically cut all the, all the fat out of the budget, you know, and you've taken all the savings and the extra debt pay down and all that kind of stuff out of the budget. And I think that's, I think you've done exactly the right thing as far as that goes. Just trying to weather the storm. It's like when you see something coming, what do you do? Well, you cut your expenses, you try to save up as much cash as you can in advance. And then once you're in the storm, which we kind of are now, you know, it's like in a startup company, they talk about a Runway, right? You have so much cash and you got to get the business off the ground and have it be profitable in a certain time period, you know, whether that's a year or two years before you run out of cash. And basically the less you spend, the longer your Runway is. That's why a business that's bootstrapped from the beginning can essentially take years to take off because you never run out of cash. But the idea here is the less you spend, the longer the cash that you do have will last. So I think you're doing the right things there. I wish I had some awesome suggestions to you. I mean, I think there's a few things you can do. One is starting looking around for other work. You know, it might be worth looking into some locum tenens. Maybe there's some place that, you know, really does need an ophthalmologist and that would be one thing you could do. Some people are doing, trying to do more surveys. You know, there's still survey companies out there doing doctor surveys that you might be able to get, you know, a few hundred dollars from. Some people are doing telemedicine. I'm not sure how well that would work in ophthalmology, but maybe there's an opportunity there, I don't know.

Yeah, we're doing it some within our practice, but it is a little bit tricky. You can't really get a great exam over the phone, but we are trying to do that some to generate a little bit of revenue for the practice and also for patients to really, I think they really appreciate seeing their provider and kind of talking with someone.

The other thing to keep in mind is you are, you know, whether you realize it or not, you're in a negotiation right now with your employer, right? They're trying to decide how little can I pay you and not have you leave. Right. And without, without us going out of business, you know, and they're going, well, let's apply for the PPP loan and let's try to keep the doors open and let's try to get as much revenue in there as we can. This is the time to show that you're the team player, you're the guy that is going to try to bring in the telemedicine consults, you're the guy that's ready to go and when, as soon as patients start coming back, you're the guy who's willing to do, you know, Friday evening clinic or, or whatever it is and to really be that valuable person. So when this comes back that you're the last guy they want to fire and the first guy you hire back, et cetera, et cetera. Because as you've mentioned, some of the part timers in the practice are already gone. And so you as the full timer kind of got the priority because the full time guys committed more to the practice. And so I think every opportunity you have to kind of show that would be helpful in making sure that you're, like I said, seen as a very essential player in this business. Because what I worry about is that incomes are not going to snap right back, that we're not going to flip a switch, open the country and all of a sudden clinics are all full or incomes are exactly what they were. I think there's going to be at least a ramp up over a matter of months and maybe years before we're back to where we were. And I'm just amazed in the emergency department how much less abdominal pain and chest pain I'm seeing in the emergency department department. And I think there may be a reset among the population of just how much healthcare they really need. And I worry that maybe they'll consume a little less healthcare than they used to, which may be good for our national budget, but it certainly isn't going to be good for physician incomes. So I don't know that this is necessarily going to snap right back in just a few months, although I expect it to be a lot better three months from now than it is for most docs this month.

Yeah. A lot of unknowns.

Yeah. Any other questions about the kind of restructuring your budget for the dramatic drop in income?

No, I think that's great advice. And I think also just trying to stay mentally sane and optimistic about the future, I think, is what we're planning on doing and take it one day at a time.

Yeah. I mean, as bad as it is for us. Right. It's way worse for so many people. And so we could sit around and complain all day. And certainly even with the white coat investor, we've had significant drops in revenue. My clinical revenue is way down, and so it's definitely affecting everybody, but to different degrees. But even half of an ophthalmologist salary sounds really good to an awful lot of people in the country right now. So it's hard to complain too loudly.

Yeah, exactly.

All right, let's get into your next question.

So the next question's about some of the investments that we made. We did a backdoor Roth for myself and my spouse in 2019. That was the first time that we'd ever done that. And we contributed the max. Each did $6,000 for each of us. For my spouse's backdoor Roth, we ended up investing that in the stock market through some index funds. That's where it is right now. But for the investment or the contribution I did on my backdoor Roth, I wasn't sure exactly what our investment plan was going to be as far as what we should invest for the long haul. We were still trying to figure that out. So I never actually put it into a stock market investment. It's just been sitting there. So my question now is I still have $6,000 in this kind of money market fund, and I'm wondering, is there any strategy for if I should be putting that into the market right now or should I be putting that into something else, like bonds, or should I just hold off and wait for us to really figure out what our finalized investment plan should be. Any tips or strategies that we should be thinking about during this particular time with the current circumstances?

Well, I mean, when cash is at a premium, this might be money you need to spend in the next few months. So I'm a little hesitant to tell you to invest it at all. If you think you're going to be okay without having to spend that money, then I think it's time to look at a written investment plan. Do you have any sort of a written asset allocation or mix of investments that you want for your retirement money? Have you guys ever sat down and thought about that or written anything down or.

We have. We're actually going through your, your financial course right now. So those are some of the things that we've been talking about. And I think we've been looking a lot at a traditional three fund portfolio that we've talked about a little bit but haven't really set it into writing yet as a finalized plan. But that's one of the things that we're looking at.

What's her Roth IRA invested in?

Hers is invested in Fidelity Market Index Fund.

Just a total stock market fund?

Yeah, the Total Stock Market Fund.

And what about the 401k?

The 401k is invested in a Fidelity International Index Fund.

Okay, so you've got a two fund portfolio right now, right?

Yes.

So if your goal is a three fund portfolio, what percentage were you planning to put into bonds?

Maybe about 25%.

Yeah. So it sounds like most of this is going to go into a total bond market index fund. If your goal is a three fund portfolio where 25% of it's in bonds. Because right now you don't have any money in bonds.

Right now I don't have any money in bonds.

So this is the nice thing about having a written investment plan. Right. Every month I've got this decision. I get money to invest whether it's profit from the business or whether it's money we didn't spend out of my clinical paycheck or whatever. And so every month I'm faced with this decision of what do I invest in and so what do I always do? Well, I, I go back to my spreadsheet that says I'm going to put 20% into. Or mine says 25% in total stock market index, 15% into small value index, 15% into total international index, and 5% into international small. Then we got about 20% in bonds and 20% real estate. So I just look at whatever's behind on Those percentages, my goal percentages, and I add the money there, and so I don't have to make this decision every month. Market's up, market's down. This is the plan, this is where the money goes, you know, and so in a time like this, like my last two contributions, the one in March and the one I just made yesterday for April, it is going all towards stocks because stocks have just been pummeled lately. And so I got more bonds in my percentage and I got less stocks than my percentage. And so all my money's going towards stocks. But it goes into the same four or five, you know, stock index funds every time, you know, just based on which one's the lowest right now, small value has been getting killed the most. And so that's where a lot of my money went this month. But once you have that written investment plan, it totally gets you out of having to want what to do with the money or how to time it. You just follow the plan. And what's amazing is after a decade or two of doing this, you're like, wow, we're multimillionaires. This really worked. All we had to do is keep putting the money in and forgetting about it. It's like I tell people all the time, it's buy stocks every month and never sell them. That's the way you become a successful stock market investor. You pick a low cost, broadly diversified index fund, you buy stocks every single month and you never sell them. And that's basically how it works. Yeah, you sell them sometimes to rebalance or to tax loss, harvest in a taxable account. But for the most part, the idea is that the stuff's going to grow and grow and grow for decades. So I think you guys just need to finalize your plan. It sounds like you're almost there, and then follow it. And that's really all there is to it. And in your case, it sounds like a good chunk of that's going to go into bonds, which is, you know, in the event that you do, heaven forbid, need to raid that money for living expenses in the next few months, that at least it's going to be a bond. So it'll be much less volatile than if you put it right into stocks. Does that make sense? Yeah, I mean, everybody always asks, how should I invest in this market? And what they're really asking. And they ask this question a hundred different ways. But when you boil right down to it, it's what is going to happen in the market in the future? And the truth is, I don't know, and neither does anybody else. And so when people ask how should I invest in this market? What they're really asking is, is the market going to go up or down? And if you don't know the answer to that question, the only logical answer is follow your written investment plan. So that's what I recommend you do. All right, let's talk about your last question about life insurance.

Yeah, so I have a life insurance policy. It's a 3 million term life and policy that's just on myself and my wife is the beneficiary. But I guess I'm wondering what would happen in the incident of both my wife and myself were terminated in some car accident or something. Then would that benefit, could that potentially go on to anybody else, like my children, for example, or is that policy just wiped out? When I put together this policy, I asked them if that was possible to put a child on it, and they told me that it wasn't, or I believe that's what I understood, that you couldn't put a minor on the policy. So I'm just wondering if there's any workaround or any solution to that or if that's just the way that those policies work.

Yeah, I think you got some bad information. I mean, any policy, whether it's an annuity, whether it's a life insurance policy or any retirement account, like a Roth IRA or a 401, there's always a primary beneficiary and then there's a secondary beneficiary or beneficiaries. So when I go look at, you know, any of my life insurance policies or retirement accounts, they all list my wife as my primary beneficiary. And then usually it's something like to all of my children per therpes. And what that means basically is that it's divided equally among them. But if, you know, one of them happened to be deceased as well, it would be divided. Their portion would be divided among their kids is basically what that phrase means. But that's the way most of mars you can name a secondary beneficiary. If for some reason you couldn't. What you would probably do is form a trust or direct that a trust be formed at that time and that it's paid into the trust. But you would not want to name a caretaker, for instance. You wouldn't want to do that because if you leave money to your sister or to your neighbor or something, and your idea is they will use it to take care of your kids, there is no legal requirement that they use that money to Take care of your kids. Kids. Whereas if you leave it to your kids or you leave it to a trust that's formed to protect your kids interest, then they can only use it, the caretaker can only use it to benefit the kids rather than to go buy their own Corvette or whatever they want to do. And so that's the way you'd want to set that up. But almost surely you can just name a secondary beneficiary. My kids are named on all of mine, so I don't see what the big deal is. Now, what that usually means is that somebody has to manage it for them in that sort of a situation. But your will or other estate planning documents can outline who that's going to be. Do you have a will in place?

No, we don't.

Yeah, you need to get a will, like stat. That's obviously the big deal. And the main reason you need the will isn't so much to say who gets the sofa. The main reason you need the will is to name who's going to take care of your kids in the event that you're both wiped out and who's going to manage the money on their behalf in the event that you're wiped out.

Okay.

That's the main point of a will for you and you guys need to do it right away. And if you're like, if the whole go sit down with an estate planning attorney thing is an obstacle, just go online and get a will done. Wills R Us or whatever the latest thing is, legal Zoom or there's a half dozen of these companies out there that will put together a basic will that's totally valid in your state. And if nothing else, you leave everything to your kids and you name somebody to take care of them and somebody to manage the assets. And sometimes that's the same person. But I think there's some benefit in having those be different people. But as far as the life insurance policy, they ought to just be able to name secondary beneficiaries. That shouldn't be an issue at all. Okay, hope that's helpful.

Yeah, very helpful. I'll check into that again.

Any other questions for me while we got you on the podcast?

No, I think that's it. I think you answered the questions I sent in and I really appreciate all the advice.

You're very welcome. And I hope your income's back up very quickly and that this all just becomes a little blip and a little learning incident. You know, it's. When I first saw your question, I'm like, oh, no, emergency fund. But then When I realized the reason why was because you were so aggressively paying down your loans, it's pretty hard to fault you for that. There's been lots of people that have learned in the last month or two the importance of an emergency fund. And to point that out at this point, it feels like a mean thing to do. To say, I told you so, I told you so. But where would I have been at paying off student loans a year out of residency? I probably wouldn't have had a lot of cash sitting around eating either, because I would have been aggressively trying to pay off those loans. So I totally get where you're at and I think you guys are going to muddle through. Okay. The good news is you're savers and you've been living like a resident and you've been very proactive. Rather than keeping your spending where it was, you quickly cut it back to as low as you can to try to make do with the income you've got. So I think you guys are doing great. I think you're going to come out of this just fine and stay safe in the pandemic.

Yeah, thanks, Jim. I don't think we'd be in the place we are if we hadn't been listening to you and reading your books and listening to your podcasts and stuff. So we really appreciate all that you're doing for us and for all your work. It really changes lives. So thank you.

You're very welcome. It's a pleasure to serve. Okay, that was great to have a reader on the program. If you have some questions that you'd like to come on live and ask questions. I know our listeners really enjoy those segments, so. So shoot. Cindyhitecodeinvestor.com an email. Include the questions you'd like to ask on the podcast and we'll try to get you right on and get them answered. My next question comes in via email. Hey Jim, I just finished your book. Many, many thanks for helping get us on the right foot. I'm very new to this. My questions will reflect that. But I have a quick question about getting my retirement started. I know you and many others recommend a broad based index fund like a Target fund and just leaving it alone. But assuming I'll be working for 20 to 25 years and can stomach the ups and downs, why isn't a better approach to just swing for the fence for the next 10 to 15 years and go 100% stocks seems like they have lower expense ratios and have always outperformed over that long of a period. Then once we're within a decade of retirement. Sell it on an uptick and dial it back down to the target fund. Alright, well, there's a couple of reasons and many people have learned those reasons in the last few weeks. The first reason is that it's entirely possible that bonds might outperform stocks over a very long period of time. Yes, there have been periods of time, 10 years or longer where bonds outperform stocks. So far in the US markets, there hasn't been a period of time where bonds outperform stocks for longer than 20 years. But it's entirely possible that it could happen. So one reason that people invest in bonds is just because they don't know what the best performing asset class going forward is going to be. Yes, most people bet on stocks outperforming bonds in the long run and that's probably the way it's going to play out. But there's no guarantee there. That's reason number one. Reason number two is that it's hard for lots of folks to hold 100% stock portfolios in a pandemic or other stock market downturn. Just look and see how many people are abandoning their plans in the last month or two. It's like a daily event on the Bogleheads forum where somebody bails out of stocks. It's better to have a less aggressive plan you can stick with than a more aggressive one that you can't when you're losing real money. Now, in March, I lost seven figures in the stock market despite a 60, 20, 20 portfolio. No problem. I've lost a lot of money before and I'll do it again. I hope to lose even more money in the next stock market downturn. But lots of people panic sold at the market bottom after losing money. Don't overestimate your risk tolerance. Okay, so all that said, yes, the expected return on 100% stock portfolio is higher in the long run, but no promises that that's going to actually show up. And this idea of timing the market later in life is a little bit wishy washy. You realize you can only identify an uptick in retrospect right after it goes back down. That's the only reason you knew it was an uptick. So if that's your plan to sell it on an uptick, you better define what that is in your written investing plan. He has another question as well. For those of us willing to give it a crack, where does one go to get a copy of the tax code? I can only find expensive online selections of the code and links to historic codes. Well, most people don't actually read the tax code itself. What they do is they read the IRS publications and the instructions for each form. And those are written not so much in legalese accounting language, but in, you know, it's maybe a little bit hard to understand, but it's supposed to be in layman's language in the IRS publications and instructions. So when I talk about reading the tax code or doing your own taxes or learning about taxes, that's what I'm talking about. I'm talking about reading the publications and the instructions that are designed for you as a normal human to read, not the tax code itself. Very few people actually read the tax code. And the final question was, my fiance is also a physician. We couples matched into radiology, though she left residency to be a mom, now stays home with kids. We both came out owing the max, about $300,000 each and her an IBR 0% for her and 10% for me on my way to the public service loan. For we've been wanting to get married, but I've been unable to find a way to get around having to pay back her loans. If we did so and filed jointly, it seems like our only option is to stay unmarried and for me to file head of household. This filing separately would cost me so much more in standard deduction. Have you heard of anyone in a similar position who found a way to marry, file jointly but not have to double their monthly student loan repayment in the IBR program? No, I don't know of a scheme that's going to allow you to do that. You know, the only potential thing you might want to think about is, and I probably don't recommend this, but one thing you could do is you could file married filing separately for years, for the next two decades, and have her get forgiveness through the pay program. That's pay as you earn. IBR program requires 25 years of payments. The pay program requires 20 years of payments, and whatever is left is forgiven. The problem is that forgiveness is taxable. And chances are by that point the tax bill is going to be pretty similar to what the loan is at this point. So in general, in this sort of a situation, what I tell you to do is why not, why don't you refinance these loans, you know, obviously in September when the 0% interest goes away on federal loans and then pay them off. Yes, every marriage is different, but if this were my marriage and my wife owed $300,000 in student loans, she'd be working full time for a year or maybe part time for two years in order to pay those off before she'd get to go on the parent track. And yes, my wife did go on the parent track for a decade plus before she started working at White Coat Investor. But she didn't have $300,000 in student loans. When you commit to borrow that sum of money for medical school or dental school, you're committing to work for at least a little while to pay that off. It's just not a very practical situation to wait 20 years and hope for IBR or pay forgiveness, nor to put that burden necessarily on your spouse. Now, if you marry a high earning physician, maybe you guys can actually swing $600,000 in student loans just on your income. And maybe you guys choose to do that. That is your choice. But I can tell you in my marriage that's not the way it would go. She would have to work at least for a little while, at least to pay off the student loans. All right, this next question's come in via email. I'm a third year general surgery resident with roughly $200,000 in debt. I'm relatively new to. I appreciate very much all the help and information you made available. I've been planning on trying for the public service loan forgiveness, but just spoke to another resident whose financial advisor informed him that many if not most physician groups would not qualify as qualified employment because they are for profit contractors under a nonprofit hospital system. I did some research and confirmed that on studentaid.gov so my question is this. Would a private physician group working for a hospital qualify for the public service loan forgiveness program? No, it does not. If the private groups contracted with the hospital, they would not qualify. So do I have any light to shed on this matter? Yes, I do. If you want to get public service loan forgiveness, you must work full time for a 501C3 or government employer. That means you're an employee of the DOD or you're an active duty military doc. You are an employee of the va. You are an employee of some other public entity. But what that usually means is you're an academic doc. You're an academic doc because most University hospitals are 501c3. So you're their employee and you're a qualifying doc in that manner. Now there are nonprofit hospitals that are not university hospitals. If you are their employee, yes, that job would count toward public service loan forgiveness. Same thing if you're an employee of a community health center or something like that. These jobs count. But just contracting with a non profit hospital does not count. So in my area, in my specialty here in Salt Lake City, there's about half the hospitals are non profit, but the emergency physician group that provides services in those hospitals is a private group that contracts with the nonprofit hospital. So that job does not count for public service loan forgiveness. And the other half of the hospitals are for profit hospitals that have a for profit physician group contract with them to provide emergency physician service. So those docs don't qualify for public service Loan forgiveness. The only job in town that's for emergency physicians that qualifies for public Service Loan Forgiveness is at the University Hospital where they're academic docs on faculty, they're employees of the university. That job counts. The rest do not, including at the VA. Even the VA's Emergency Physician Services in my town are provided by a private group that contracts with the va. But when I polled docs on Twitter not that long ago, I was surprised to see that 60% or so of those who responded to the poll said their job does qualify for public Service Loan forgiveness. So there's lots of jobs out there. It's specialty and location dependent, but you can certainly find a job if you must, or you really want to, and you're willing to live wherever and take a job wherever. You can certainly find a job in almost any specialty that will qualify for Public Service Loan forgiveness. But if you want to control your destiny, you want to control your location, you want to control exactly where you're going to live, then you may not necessarily be able to get a job that qualifies for public Service loan forgiveness. So keep that in mind. Don't borrow any more than you have to. Make sure it's an amount that you're going to be able to pay off with your specialty and job choice. And then if you do end up in academics or you do end up qualifying for Public Service Loan forgiveness, then that's just icing on the cake. I hope those questions are helpful to you. It's always a pleasure to answer them and to help you out and to serve you. It really does bring a lot of meaning to my life to be able to serve such a great group of people out there. 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 to sign up today. You can do this and The White Coat Investor can help. If you haven't checked out our online courses page, now is a great time while you're in lockdown to take an online course. Check that out. It's underwhitecoatinvestor.com under courses. Thanks. For those of you who've left us a five star review and told your friends about the podcast, send us any questions by email or preferably on the speakpipespeakpipe.com whitecoatinvestor. Send us any negative feedback or suggestions for improvement by email to editoritecoatinvestor.com Keep your head up, your shoulders back. You've got this and we can help. Stay safe out there. We'll see you next week 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 advisors. Spice.