Today, we are sharing one of our most popular sessions from WCICON24. Each year, we have a few of our White Coat Investor columnists join Dr. Jim Dahle on stage to answer questions about their columns, finances, and overall feelings about WCI. It is always a favorite of attendees. For this panel, we had four columnists:
along with Dr. Dahle and WCI content director
. We hope you enjoy this peek into what WCICON is and maybe even decide to join us in San Antonio for
this year.
Dr. Jim Dahle:
I want each of the columnists to talk about their favorite column or maybe their most important column. We’re going to start with Julie, whose column was called “The Gender Role Reversal: Being the High Earner of My Family as a Woman.” Why was that so important or why is that your favorite column?
Dr. Julie Alonso:
I’ve only written two columns so far, so I had to pick one of the two. But I think it’s important because it’s a topic that hasn’t been covered as much. In the physician realm there are a lot of women physicians that are the primary earner within their marriage or partnership. I think I actually got a lot of really nice supportive comments from both men and women. So, I think it was a good topic for me to launch with.
Dr. Jim Dahle:
That’s quite a unique experience to get a bunch of supportive comments. OK, let’s go now to Tyler. This was a fun column. I really enjoyed this one.
Thank you. I chose “Here’s How Much We Make, Save, and Spend as ‘Moderate Earners‘” because it was both pragmatic and philosophical, and that’s the sweet spot I try to hit. It is pragmatic inasmuch as if any of you went to Sarah Catherine Gutierrez’s talk yesterday morning, and she talked about budgeting and cash flow. I just listed how much we made and where every dollar went in 2023 and how we prioritize those cash flow decisions and giving some mechanics of how to make that simple.
But the philosophical part is, first, I just want to normalize talking about money and doing it with specificity. I think we’re better off when we talk about how much we make and how much we spend on cars and how much private school costs. When we actually put numbers to those conversations, we, the consumers, are the beneficiaries. I wanted to be the change I wanted to see in the world. I just pulled the curtain back on our finances.
Also, in my new life of working with physicians and dentists, there’s this sense of near happiness that exists for many people with this chaser of scarcity. What I mean by that is whether someone makes $150,000 or $1 million, everyone tells me, “If I could just make 10% or 20% more, then I’d be happy.” They’ve pushed happiness across this financial cognitive horizon that never gets achieved. If we can create a cash flow plan that is intentional, we can bring that happiness into the present and live in an abundance mindset. I just want everyone to have a joyful relationship with their money.
The great thing about that column was people want to know numbers. They want to know how much people make. They want to know how much they spend. It’s hard to get people to tell you what they make. I think Jim maybe used to do that in the past, but they no longer do that. People want that information. When I was editing Tyler’s column, and he was saying, “Hey, here’s how much I make. Here’s how much my wife makes,” I was a little concerned and wanted to be sure he talked to his wife about sharing that. He said she was but I was like, “Let me ask her myself and make sure that she’s cool with it.” That just reflects my discomfort with him being open about this. I wanted to make sure it was cool.
Dr. Jim Dahle:
Did anything bad happen from telling the world what you make and how you spend your money?
I keep finding over and over in my life, the more I lead with vulnerability and honesty and authenticity, those things are meted back to me tenfold. No, it’s been universally positive.
Dr. Jim Dahle:
Dr. Margaret Curtis:
It was all those things. I wrote about my husband’s volunteer work doing medical work in Ukraine in the last two years. I wrote it because I was proud of him. And I wanted to tell people about what he’d done and maybe lay out a pathway that other people could do things that are similar. I enjoyed writing it because it was much more of a narrative arc than we’re used to seeing in columns—less bullet-pointy. And because his work was a good reminder to me of how lucky we are to do this job that pays us well and gives us good security and career opportunities but also gives us the opportunity to do really amazing things in the world. There aren’t many careers that let you do that.
Dr. Jim Dahle:
Dr. Anthony Ellis:
It’s the truth. I thought that, having been on a geriatric psychiatry unit and running it for 11 years, I saw all the ways that the brain can go bad. I saw lots of people who were pushing off retirement with this “One more year, one more year, one more year” mindset, and then they would retire and they would have health problems and they couldn’t do what they wanted to with their money and their bucket list shrank right up.
The reason I wrote that article is because I use that in my life—things like drop down to part-time, retire early, spend some money between 60 and 70—because you don’t know how things are going to go. Every time I talk to people, they say, “Well, I’m going to live to be 95. My grandma lived to be 95.” We just can’t know that. I’ve seen lots of people that have passed away. Most of them were quite surprised. I don’t want to be surprised. I have to make friends with the idea.
Dr. Jim Dahle:
As a journalist, I love telling stories. I love talking to people. I love interviewing people. The idea behind this is I wanted to find some fourth-year medical students who are just about to graduate into residency. I want to follow them through where they are in their financial life, how much student loans they owe, how much they’re going to make as residents, what they’re going to do. Do they have a partner they’re trying couples match with? I’ve found four people who are willing to talk to me under pseudonyms. I want to try to protect their privacy as much as I can.
I talked to them before they graduated. Now once a year, I check back in, see how they’re doing. I am writing stories about these three to four people and what they’re doing and how they’re thinking about finance. It’s funny because I’m sure a lot of you are in this WCI philosophy of live like a resident. But these people are not thinking like that. They’re like, “Oh, I’m going to spend because I have the money now. And hey, I just had my third kid and I owe $400,000 in student loans. But hey, we’re making it work.” It’s really interesting to get them at this young age and hopefully progress over the next five or 10 years, maybe, and see their story arc and where they go. Hopefully it’ll teach them something, teach me something, teach everybody something.
Dr. Anthony Ellis:
I think that some people are going to think it’s strange, but I like to keep over a year’s worth of money available—even two year’s worth of money available—because I’m still doing part-time work. I’m still getting some income. But if it disappeared and the stock market, say, had a huge drop, like it has every three years or every four years or something, then I don’t have to sell anything and I don’t have to go look for another job if I am tooling back even further. So, I have more cash.
I have more cash sitting there because I’m currently being paid 5% on the cash. It works great right now to have a lot of money available just in case. Normally people have like 2%, 3%, or even 1%, almost no money in cash, and all their money is working. But now I think probably if you ask people, they’ve got some money in cash because they’re getting 5.5% on CDs and they’re getting around 5% in high yield savings.
I like the buckets strategy, which Christine Benz has talked about and Jim’s written a really good piece on, that says you can set a certain amount of cash aside. Generally a year or two years worth, whatever helps you sleep at night. Then you’ve got a different bucket for the sort of interim period. Then, you’ve got your third bucket, mostly in equities, so that you’ve got longevity.
The easiest thing in regards to adjusting your asset allocation is a glide path. Other people smarter than both of us have thought about this. And that’s where the glide path on a target date fund comes from. It’s not hard for me. I can look at the 2050 target date fund. That’s about the year I turned 65. I can follow Vanguard’s thoughts about what a rational balance and how that equity to bond ratio should shift as I age. I don’t have to be smarter than they are, and I’m really grateful for that.
Dr. Margaret Curtis:
Thankfully, I’ve not been through a divorce. I certainly have friends who have. I would say the advice I’ve given them is, first of all, take care of yourself and your kids first. Take care of the emotional stuff. The money stuff is really secondary. Don’t get bogged down in fighting over every little thing. It’s not worth it. You want to get out and get on the other side and start over again. Don’t get so caught up in one asset like, “I have to have the house,” that you just lose sight of everything else in the process. I guess that’s my advice. But thankfully, I haven’t been through it.
Dr. Julie Alonso:
I’ll talk more from a professional perspective. I’ve also not had a divorce, but I’ve had a lot of patients that have gone through divorces and some friends, as well. It’s an extremely stressful experience, and it can be very traumatic if it gets contentious.
But I will say, I think getting some support for yourself and for your kids is critical. Also knowing, within the relationship, is it salvageable or not? Would counseling or therapy help the situation? Obviously, if there’s abuse or addiction or other things going on, can that person get treatment? Is it possible to work through this? Or is it better to cut ties at this point and move forward with your life? Even if it’s financially difficult in the short term, at least from the patients and friends I’ve talked to in the long term, they’re often happier when they’re out of that situation.
I just want to validate that a divorce is not always a tragic thing. My mom has been married four times in my lifetime; my dad three times. I am such a beneficiary of those divorces. I’m an only child. I have no siblings. There can be a narrative sometimes that it is going to lead to familial catastrophe. I am so much better off for having been raised, even though in split households, where there isn’t contention and anger and dissension. I just want to validate that as I’m approaching 40 and about 53% of my friends are divorced. It’s OK. And financially, this doesn’t help with that question, but we always recommend people consider a prenup before marriage. We talk about how getting married without a prenup would be like practicing medicine without malpractice insurance. You never expect something to go wrong, but you’re sure glad you have that if it happens. The questioner has my empathy and my support.
Dr. Jim Dahle:
One of the biggest surprises I’ve had about divorce is I always thought, “Oh, you cut your assets in half; you cut your income in half. This is going to be catastrophic for you.” I’m surprised how many people I’ve run into who are like, “This is great. Yeah, I lost half my assets. Yeah, I lost half my income, but I threw out 90% of the spending.” It’s not always bad financially. You now have 100% of the control of the finances going forward, and you can make the changes it takes to still be financially successful.
Dr. Jim Dahle:
We’ll talk a little bit about splurge, where you don’t worry about the money you spend on something anymore. Maybe, Tyler, you want to start?
It is travel for us. We set aside in our future expense bucket, $25,000 a year for travel, which is just a number that would be incomprehensible to me 15 years ago. This year, we’re going to Iceland for 10 days and Hawaii with the kids. And we’re here. We’re going to Lake Powell. The fact that I can travel in the way I want, I just feel so, so rich. It’s tremendous.
Dr. Anthony Ellis:
I could say before I really learned a lot more about investing, I just took my money and threw it in the 401(k) and put it in some mutual funds. I didn’t have a side gig, and I didn’t have the knowledge that I needed to take advantage of all the tax-advantaged accounts. Since then, I changed my way of being with regard to that, got the side gig, and flooded all those accounts. I think that you get to a point where even if your portfolio made nothing, you could actually be OK. That’s before Social Security. And that happens for most doctors and probably most of the WCI audience somewhere in there between 50-60 years old.
Now, like Tyler said, our most extravagant spending is on travel. To me, the rich life is not having to worry about money. If you have a year or two of expenses in a bucket, it’s not going to be very worrisome. If you can travel wherever you want to go, then it just becomes trying to stay healthy enough to be able to do the things that you have on the bucket list. Don’t put it off until you’re 70 or 80. Do it as soon as you can reasonably so that you don’t end up missing out on a lot of your bucket list.
Today, we are talking with someone near and dear to us at The White Coat Investor. Cindy was the first employee at White Coat, and she has been working here helping Jim make WCI what it is for over 10 years. Her background is in social work, and she and her husband have been working to pay down student debt and build wealth. She shares her story of tax bill shock as their income grew, boring but effective investing, and their excitement around getting rid of student loans.
Health insurance is often viewed as a significant hurdle for those considering early retirement, but in reality, it’s just another expense for which to plan. Many people stress over it because they aren’t used to seeing the full cost, as employers usually cover the majority of the premiums. However, like housing or groceries, it’s something that can be budgeted for. Once you know the price of health insurance—whether through COBRA, private brokers, or government subsidies—you can decide if early retirement is feasible. The key is recognizing that, although health insurance is expensive, it’s not a unique obstacle. It is simply part of your overall retirement plan.
There are several options for covering health insurance between early retirement and Medicare. You can buy health insurance on the open market or consider alternatives like COBRA, health-sharing ministries, or even short-term plans. For some, government subsidies through the Affordable Care Act might make a significant difference in affordability, especially for early retirees with lower taxable income. While Medicare provides coverage at 65, it’s important to remember that Medicare itself isn’t free. You’ll still need to budget for premiums for various parts of Medicare, as well as potential out-of-pocket expenses.
The most important thing is to explore your health insurance options early. If you’ve saved enough for retirement, health insurance should not prevent you from taking that step. The costs may seem daunting, but with proper planning, you can find a solution that fits your financial situation. Whether it’s through the private market, subsidies, or even considering care abroad, there are numerous paths to ensure you’re covered without delaying your retirement plans.
INTRODUCTION
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.
Dr. Jim Dahle:
Hello WCI listeners, I’m still taking some time off to rest and recover from my accident. But don’t worry, I’ll be back in a few weeks. Until then, enjoy this episode from the podcast archives.
This episode is brought to you by SoFi, helping medical professionals like us bank, borrow and invest to achieve financial wellness. SoFi offers up to 4.6% APY on their savings accounts, as well as an investment platform, financial planning and student loan refinancing, featuring an exclusive rate discount for med professionals and $100 a month payments for residents. Check out all that SoFi offers at whitecoatinvestor.com/sofi.
Loans are originated by SoFi Bank, N.A. NMLS 696891. Advisory services by SoFi Wealth LLC. This brokerage product is offered by SoFi Securities LLC, member FINRA/SIPC. Investing comes with risk, including risk of loss. Additional terms and conditions may apply.
All right, this next session we talked about is going to be with some of our columnists. But I first want to just bring to your attention all of the different ways that you can experience the content of WCI.
Chrislyn Wolston:
Being a part of the WCI team is such an honor. I just do this one little event all year, I know. But I get to sit there with this team that creates content all year long in so many different facets and so many different channels. It blows me away. And what is also incredible that you’re going to see today is they bring so many other contributors as well.
But if you don’t know already, WCI has a very popular podcast. We actually have two of them. We also have the courses, like I mentioned. But one of my favorites is the newsletter and the blog. We have so many different voices on there, so many different ways that you can join this conversation.
This is such a great opportunity to really discuss the solutions to the money problems and with other White Coat Investors everywhere. So we really invite you to be a part of that. Follow, subscribe, download, and join that conversation of WCI.
Without further ado, though, we thought we would give you an in-person experience with a bunch of these content contributors. So, please welcome to the stage with me Mr. Jim Dahle and his team of columnists.
Dr. Jim Dahle:
Welcome to one of my favorite parts of this conference. We’ve been thinking about how to do this and planning how to do this now for a year. And we’re going to have some fun. I’ve got some pre-selected questions we’re going to talk about first. And then we’re going to open it up to the audience. And I’m going to start throwing this thing around. Then you’re going to start throwing this thing around, all right? This is called the catch box. And it’s very soft, okay? Maybe you can get a corneal abrasion if you take it right in the eye. So keep an eye out as this thing gets thrown around. But I don’t think I can get it to the ceiling. I think we’re okay.
But we’re going to pass this around. This thing’s actually a microphone. And so, you can ask your questions into this. And we’re going to take live questions from you guys. Here’s the rules on the live questions, though. You have to pick one or two of the columnists to direct them to. And none of the questions can be directed at me.
Okay, let’s get started on this. First of all, a reminder of why we have columnists at the White Coat Investor. And obviously, part of it’s the backup plan. If I step in front of a bus, the airport on the way home, we need White Coat Investor to be able to keep going.
But more importantly, we want a diversification of opinions. We want people from different professions, different specialties, different stages of their life, different genders, different races, etc., etc., etc. Because we want you to be able to learn finance from somebody that you can relate to. And the truth is, the longer this goes, the less relatable I become. And so, we find people you can actually relate to, and they write columns.
So let’s introduce them to each of you. Let’s just go down the line here. I want you to tell them what your name is, what your specialty is, and kind of what your niche is when you write your columns.
Dr. Margaret Curtis:
Thank you. I’m Margaret Curtis. I’m a pediatrician, and I write mostly about our family’s financial life. I write about being part of a two-physician household. And then lately, I’ve become more interested in employment issues facing physicians.
Josh Katzowitz:
And she has a great persona, Auntie Marge.
Dr. Margaret Curtis:
Oh, yeah. I sometimes write as my alter ego, Auntie Marge.
Josh Katzowitz:
Auntie Marge is very snarky.
Dr. Margaret Curtis:
Very salty.
Josh Katzowitz:
Will tell you the way it is. I’m Josh Katzowitz. I’m the content director. I’ve been with the White Coat Investor for about two and a half years. I’m not a doctor, although I am married to one right over there. And I was a sportswriter in journalism for most of my career. And somehow, I squeezed my way into this space.
Dr. Jim Dahle:
And his column runs about every other Sunday. You may have noticed him. He likes to put the tweet of the week in at the bottom, the money song of the week. That’s Josh.
Josh Katzowitz:
I live to make Jim’s eyes twitch a little bit or stomach hurt a little bit with my content. I think it works.
Dr. Julie Alonso-Katzowitz:
Hello. I’m Julie Alonso-Katzowitz. I am a child and forensic psychiatrist, probably the newest columnist of all. And my areas are looking at women’s and family topics, as well as mental wellness and mindset.
Dr. Anthony Ellis:
My name is Anthony Ellis. I’m a psychiatrist. And I write about the transition to retirement that I’m in. And that’s why this tie and shirt are probably the only long-sleeved shirt and tie I still own. And I had to dig them out of the garage to get something to wear.
Dr. Tyler Scott:
My name is Tyler Scott. My first professional chapter in my life was as a dentist. And then as a result of physical disability and mental burnout, I made a career change a few years ago. I’m now a certified financial planner, working mostly with physicians and dentists.
My niche at the blog is to write about dentistry, about my career transition, and our family finance. I’m married to the podcast producer of The White Coat Investor, and we have three little girls. So there’s a lot of things to write about on the family side as well.
WHAT IS YOUR FAVORITE COLUMN YOU HAVE WRITTEN?
Dr. Jim Dahle:
All right. Thank you so much. Next, I want each of the columnists to talk about their favorite column or maybe their most important column. And they all got this question in advance, and so they submitted them. We’re going to start with Julie, whose column was called “The Gender Role Reversal: Being the High Earner of My Family as a Woman.” Why was that so important or why is that your favorite column?
Dr. Julie Alonso-Katzowitz:
Yeah. Well, I’ve only written two columns so far, so I had to pick one of the two. But I think it’s important because it’s a topic that hasn’t been covered as much. In the physician realm there are a lot of women physicians that are the primary earner within their marriage or partnership. And I think I actually got a lot of really nice supportive comments from both men and women. So, I think it was a good topic for me to launch with.
Dr. Jim Dahle:
That’s quite a unique experience to get a bunch of supportive comments. Okay, let’s go now to Tyler. This was a fun column. I really enjoyed this one.
Dr. Tyler Scott:
Thank you. Yeah, I chose this because it was both pragmatic and philosophical, and that’s the sweet spot I try to hit. So, it’s pragmatic in as much as if any of you went to Sarah Catherine Gutierrez talk yesterday morning, and she talked about budgeting and cash flow. I just listed how much we made and where every dollar went in 2023 and how we prioritize those cash flow decisions and giving some mechanics of how to make that simple, like Dr. Zadra talked about yesterday.
But the philosophical part is, first, I just want to normalize talking about money and doing it with specificity. I think we’re better off when we talk about how much we make and how much we spend on cars and how much private school costs. When actually put numbers to those conversations, we, the consumers, are the beneficiaries. I wanted to be the change I wanted to see in the world. So I listed, just pulled the curtain back on our finances.
Also, in my new life of working with physicians and dentists, there’s this sense of near happiness that exists for many people with this just chaser of scarcity. What I mean by that is whether someone makes $150,000 or $1 million, everyone tells me, “And if I could just make 10% or 20% more, then I’d be happy.” They’ve pushed happiness across this financial cognitive horizon that never gets achieved. And if we can create a cash flow plan that is intentional, we can bring that happiness into the present and live in an abundance mindset. And I just want everyone to have a joyful relationship with their money.
Josh Katzowitz:
The great thing about that column was people want to know numbers. They want to know how much people make. They want to know how much they spend. And it’s hard to get people to tell you what they make. I think Jim maybe used to do that in the past. They no longer do that. But people want that information.
So, when I was editing Tyler’s column, and he was saying, “Hey, here’s how much I make. Here’s how much my wife makes.” I was like, “Did you talk to your wife about this before?” And he said, “Yeah.” And then I was like, “Let me ask his wife and make sure that she’s cool with it.” But again, that’s like the idea of, I had a problem with you being open. I want to make sure it was cool. And you’re like, “I have an open book.” And I’m like, “Are you sure?”
Dr. Jim Dahle:
Did anything bad happen from telling the world what you make and how you spend your money?
Tyler Scott:
I keep finding over and over in my life, the more I lead with vulnerability and honesty and authenticity, those things are meted back to me tenfold. And no, it’s been universally positive.
Dr. Jim Dahle:
All right. Up next, Margaret wrote a very adventurous post called “From Maine to Ukraine: A Physician Finds Meaning in a War Zone.” Why was that so meaningful or important or just your favorite?
Dr. Margaret Curtis:
It was all those things. I wrote about my husband’s volunteer work doing medical work in Ukraine in the last two years. And I wrote it because I was proud of him. And I wanted to tell people about what he’d done and maybe lay out a pathway that other people could do things that are similar.
I enjoyed writing it because it was much more of a narrative arc than we’re used to seeing in columns, less bullet pointy. And because his work was a good reminder to me of how lucky we are to do this job that pays us well and gives us good security and career opportunities, but also gives us the opportunity to do really amazing things in the world. And there aren’t many careers that let you do that. So, that’s why I chose this one.
Dr. Jim Dahle:
Very cool. Thank you. Okay. Next up is Tony. “Functional Longevity: What Use Is Retirement If You Can’t Move and Think?”
Dr. Anthony Ellis:
Yes. Well, it’s the truth. I thought that having been on a geriatric psychiatry unit and running it for 11 years, I saw all the ways that the brain can go bad. And I saw lots of people who were pushing off retirement with this “One more year, one more year, one more year”, and then they would retire and they would have health problems and they couldn’t do what they wanted to with their money and their bucket list shrank right up.
And so, the reason I wrote that article is because I use that in my life. That is a drop down to part-time, retire early, spend some money between 60 and 70, because you don’t know how things are going to go. Every time I talk to people, they say, “Well, I’m going to live to be 95. My grandma lived to be 95.” And I’m like, “Well, I don’t know.” I’ve seen lots of people, they were all the people that I know who passed away. Most of them were quite surprised. And so, I don’t want to be surprised. So, I have to make friends with the idea. In fact, they told me that this week at the conference. They’re like, “You could dement.” Then the other ones told me “You could die. And then you’ve left this mess for your wife.” Anyway, I wrote that because I tried to live that whole idea.
Dr. Jim Dahle:
Very nice. All right.
Can we talk about mine real quick? You skipped me.
I skipped you? Oh, I did skip you. Sorry. We’ve got to go back to Josh. I’ve been trying to cut Josh out of his columns for a long time. So, how’s this any different today? All right. Here’s Josh. “From Fourth Year to the Real World.”
Josh Katzowitz:
From fourth year to the real world. Yeah. As a journalist, I love telling stories. I love talking to people. I love interviewing people. The idea behind this is I want to find some fourth year medical students who are just about to graduate into residency, where they are in their financial life, how much student loans they owe, how much they’re going to make as residents, what they’re going to do. Are they have a partner they’re trying couples match with? I’ve found four people who are willing to talk to me. I gave them pseudonyms. Those aren’t the real names. And I kind of try to protect their privacy as much as I can.
I talked to them before they graduated. And then now once a year, I check back in, see how they’re doing. And for me, it was writing stories about these three to four people and what they’re doing and how they’re thinking about finance. And it’s funny because I’m sure a lot of you are kind of in this WCI philosophy of live like a resident and don’t do crypto too much. But these people are not thinking like that. They’re like, “Oh, I’m going to spend because I got the money now. And hey, I just had my third kid and I owe $400,000 in student loans. But hey, we’re making it work.”
So, it’s really interesting to get them at this young age and kind of hopefully progress over the next five, 10 years, maybe, and see kind of that story arc and see where they go. Hopefully it’ll teach them something, teach me something, teach everybody something.
Dr. Jim Dahle:
And the group’s now second year residents, right?
Josh Katzowitz:
They’re second year residents. Yeah.
Dr. Jim Dahle:
So it’s been fun to follow them along. You can go back and look at the old stuff, too. It’s just cool. All right. This is the question they made me ask. In fact, Josh is like, “We got to do this one.” Josh does a lot of that on the blog. You may have noticed. What is one thing you disagree with when it comes to the WCI philosophy? Live like a resident, invest in index funds, avoid whole life, crypto, whatever. What’s one thing you disagree with? And let’s start with Tyler.
WHAT IS ONE THING YOU DISAGREE WITH WHEN IT COMES TO THE WCI PHILOSOPHY?
Tyler Scott:
Wonderful. I say this with some trepidation. I hope no one throws anything from the first couple rows. I might slow the roll just slightly on the real estate enthusiasm. And this is born out of working with clients that I work with a lot of early and mid-career physicians. And so, I get a pediatrician that’s two years as an attending and she’s like, “Dr. Dahle said, if I buy a duplex, I can retire when I’m 41.” I’m like, okay, so not quite that. And that’s not what he said.
My disagreement here is actually a wholehearted agreement with what Jim mentions, I think very responsibly with the real estate, which is that a good framework to think about when this might be appropriate. I think real estate is a great asset class. It provides meaningful diversification and good returns, but it probably makes sense to be an accredited investor two times over before we get there.
So, if you’re married, that means making $600,000 if you are married, $400,000 if you’re single and having a net worth of two million or more, excluding the value of your home. That’s a nice place to think about starting to include some of these more complicated and potentially risky real estate.
The other thing that Jim says that I think is really smart, which is a good litmus test for if you’re ready, is when you can read the pro forma and the documents and or if the investment can go to zero and you can still reach your goals, that’s another good way to know when this might make sense. So we’re actually, I think, in agreement.
Josh Katzowitz:
Only Tyler could take a question about disagreeing and turn it into, actually, I do agree.
Dr. Jim Dahle:
Does he think this is like a job interview or something? I don’t know. What’s your greatest weakness, Tyler?
Dr. Margaret Curtis:
I like you too much.
Dr. Jim Dahle:
All right, Margaret, let’s go to you next.
Dr. Margaret Curtis:
I do largely agree with the philosophy, but I think a lot of the advice, especially for earlier career docs, has to be adapted for two physician couples or two high earning income couples or two people with demanding careers, I guess I should say, because it’s really different.
All those pressures that are on you when you’re in training, when you have little kids, it’s just like this perfect storm of business means that you can’t save as much money. You may not be as aggressive in paying down your debt. You may have to do things like, when you’re both in training, you may have to do things like get takeout more often, get a better place closer to the hospital. If you have kids, you need a nanny. You have to have reliable child care. So you’re not going to save as much money. You’re going to spend more money. That’s okay, knowing that you’re going to make up for it later on with these two higher salaries.
So, I think there has to be room in that, in the live like a resident advice to accommodate for that possibility, because it’s happening more and more. Two doctor couples are more and more common.
Dr. Jim Dahle:
All right. Tony, let’s have you go next for your biggest disagreement.
Dr. Anthony Ellis:
Right. Well, I agree with the philosophy of the White Coat Investor. I think the only thing I’ve ever disagreed on is I thought there was more room under the tent. Here you have doctors and dentists, mostly there’s a few other white coat peripheral type of people that aren’t doctors or dentists, but they’re still healthcare professionals that make a good wage.
And at one point in the past, I mentioned something “Well, why don’t you bring in the whatevers? The DPTs, the other people that have gone to school for eight years, wear a white coat, do patient care and so forth.” And basically the answer was, well, I’m focused on this group. I know this group, I’ve worked with this group. And I think I have the most offer this group.
And so, really that’s probably the only thing we ever disagreed on is I thought there was more room under the tent for other white coat professionals, so to speak, because it helped me a lot. I told Jim today that when I read his book and then kept reading the blog over the past seven years, you wouldn’t believe the effect it’s had on… Well, you can read my articles.
Dr. Jim Dahle:
Okay, Josh, you can go next.
Josh Katzowitz:
What do you want to talk? What do you think it would be?
Dr. Jim Dahle:
Well, from a guy who bought a Tesla on credit, why don’t we start with that?
Josh Katzowitz:
We talked about that last year, I think. Somebody asked me today, they said, “Do you still have the Tesla?” And I said, “Yeah.” And they said, “You still love it?” And I’m like, “Yeah.” So, we did buy a Tesla. We financed it. But it was the right decision for us. It’s 3%. We were having to pay for our kids’ bar and bat mitzvahs. We cash flow it fine. It’s fine. It’s not an issue.
Dr. Jim Dahle:
He comes to me and tells me he’s going to write a column about how he bought a Tesla. I’m like, “You didn’t finance it, did you? You’re not going to write that, are you?”
Josh Katzowitz:
Yeah. So when we actually bought the Tesla, I took a picture. I kind of posed in front of the Tesla like that, took a picture and said to him, it was really sexy. Yeah, we disagree on that.
The other thing, and actually, Julie and I kind of disagree on this too, is the emphasis on, when you’re a resident, you probably shouldn’t buy a house. And I think maybe you feel that same way too, a little bit. We bought a house when she was in residency, the first year residency. And it probably wasn’t a great time. We bought it in 2005 at kind of the market peak. So in retrospect, it wasn’t a great time to buy it. And then in 2008, it lost a lot of its value.
But for me, we learned a lot. We were saddled with not great terms on the mortgage. And then when we couldn’t feel like we could sell it, when we left that city, we became a landlord, which I decided I didn’t like doing that either. So, there were some good lessons in maybe making the wrong decision. And then I think that helped us when we bought another house.
Dr. Julie Alonso-Katzowitz:
We did make a profit when we sold the first house. We held out long enough.
Josh Katzowitz:
Like $3,000.
Dr. Julie Alonso-Katzowitz:
More than that.
Josh Katzowitz:
Yeah. Do you disagree? Do you think we shouldn’t have bought the house?
Dr. Julie Alonso-Katzowitz:
I’m not sure. I think there were pros and cons.
Josh Katzowitz:
Yeah.
Dr. Jim Dahle:
All right. Julie.
Dr. Julie Alonso-Katzowitz:
Yeah. I generally agree with a lot of the philosophy, otherwise I wouldn’t be here. And I’ve really abided by a lot of it. But I would say that the one thing similar to what Margaret said is the live like a resident. I think you really have to personalize that and individualize that to your own situation.
I had moonlighted a lot, moonlit, not sure what the word is, during residency quite a bit, saved up for a down payment. And I was very fortunate to not have a lot of student loans coming out of fellowship, already had my twins. And so, I worked for a year as an attending, saved up a bit more. And we ended up liking the city and the job, making sure about that. And then we did buy the nicest house that we could afford within moderation within our budget. And we’ve lived in that house for 12 years now. We’re going to have it paid off in the next couple of years. Our kids are going to stay there through high school. And so, I think it was worthwhile.
Josh Katzowitz:
That is the thing with the Tesla. I drove the 2003 Camry into the ground.
Dr. Julie Alonso-Katzowitz:
It’s true.
Josh Katzowitz:
Then 2010 Mazda CX-9, I drove that for like 12 years. Don’t I deserve a Tesla?
Dr. Jim Dahle:
It is a very nice house. I’ve been to their house. I went to visit them in Austin not that long ago. It’s dangerous to the deer in the area, it turns out. The spikes on the fence is not a good idea. But it’s a very nice house.
All right. Oh, Josh, it says here I’m supposed to let you ask the next question.
Josh Katzowitz:
This site, it was started in 2011. It was Jim’s blog, right? For the most part. For many years, Jim wrote a lot of the content, most of the content probably. He has some guest posts that probably maybe differed a little bit with your philosophy. But it was the philosophy of the White Coat Investor, which at the time was Jim.
HOW DOES DR DAHLE FEEL WHEN COLUMNISTS WRITE THINGS HE DISAGREES WITH?
Now we’re bringing more viewpoints into the world. We’re bringing, like Jim said, different genders and different races and different periods of life. And now the blog is maybe not quite as Jim-centric as it used to be. And I wanted to know, when you read something that’s not something that you agree with necessarily, or something that you wouldn’t have written, this is the thing you started, how do you feel when you see something that like, “Man, I’m not sure I agree with that?” Which happens probably every other Sunday when I write.
Dr. Jim Dahle:
The most interesting part of it is I’m assumed to be far more dogmatic than I actually am. I hear from people, they’re like, “Oh, he says you’re never supposed to spend anything.” And I’m like, “You know I use a helicopter to go skiing, right?”
And so, I think that’s widely misunderstood. I really don’t feel terribly dogmatic about different methods of investing, about how you spend, about how you choose your life. I just want you to do it deliberately and make a conscious decision when you decide “I’m going to spend more in this phase of my life, or I’m going to finance a Tesla, or I’m going to dabble in crypto” or whatever. I want you to have the information you need and make a conscious decision. I’m far less dogmatic, I think, than people make me out.
The problem is being dogmatic gets you clicks. You got to live a little bit like this is the way it is. And all of a sudden you get a lot of reaction that spreads on social media, and you end up helping a lot of people because they come to the site because of that. So, don’t assume I’m quite as dogmatic as maybe the online persona seems to be at times.
WORST CRITICISM COLUMNISTS HAVE EVER GOTTEN ON A POST
Okay, let’s do the criticism question. Weirdest criticism, worst criticism, whatever you want to say about criticism. When you put your ideas out there into the blogosphere, you’re going to get criticism. It’s not a good place for thin-skinned people to exist. So, why don’t we start… Well, Josh likes criticism a lot. So let’s not start with him. Let’s start with Margaret. We’ll go across this way.
Dr. Margaret Curtis:
Okay. I feel like a lot of the really weird criticism has kind of died down over time, like people got it out of their system, I think. But I was really surprised when I wrote a column last spring. It wasn’t my story, it was the story of someone I knew, a colleague who had left a very, very difficult marriage and started over with like $40 in her bank account and no confidence as a mid-career pediatrician and built her way back up.
I thought it was this great story. And lots of people really seemed to resonate with them. And some people just got like all up in their feelings about this article, like they were mad, mad, mad, mad. They thought I was making statements about marriage or about it was just a referendum on whether or not she should have left her marriage. And it totally caught me by surprise. Totally caught me by surprise.
Josh Katzowitz:
Another one that was interesting with yours, the one that was showed about the Ukraine, which caught me by surprise. Usually, I think we know what’s going to get some criticism and what’s not. But I was surprised, there was a lot of pro-Russia sentiment.
Dr. Margaret Curtis:
Yeah. I think that was from like one bot.
Josh Katzowitz:
And that was a lot, it was a busy bot. It was a lot of comments.
Dr. Margaret Curtis:
Well, it was a slow day in Moldova that day and it had nothing better to do. So, that one was easy. I was like, “Yeah, I don’t even need to respond to that.”
Josh Katzowitz:
But when that happens, when this woman, this anonymous woman told you their personal story and then people criticized it, how did you feel about that?
Dr. Margaret Curtis:
I felt very protective of her because I talked with her a lot and there were things I left out of the column because I didn’t think they were germane to her financial status or because I really wanted to protect her privacy. She was very nervous about doing this. So there are things I left out.
Getting this criticism, first of all, I was like, you missed the whole point of that column. It wasn’t about, “Should she have left this marriage or not?” It was about how did she start over having thought her whole life that she was no good at money and how’d she figure it out. And so, they missed the point.
And then I felt very protective. I’m very upset that people would write things and she didn’t read the columns. And she didn’t read the comments. So I felt very protective of her much more than I think I would have of myself. With myself, I would have been like, you can disagree with me, but yeah, I didn’t like it. I didn’t like it.
Dr. Jim Dahle:
All right. Josh writes columns purposely to try to get criticism. I’m curious what your favorite criticism is.
Josh Katzowitz:
My favorite criticism. Why don’t you skip me and go to somebody else?
Dr. Jim Dahle:
We’ll come to you last. You’ve probably got a lot more opportunities to think through this. All right, Julie, let’s go to you next.
Dr. Julie Alonso-Katzowitz:
Well, as I said, I’ve only written two columns and I really didn’t get a lot of criticism, thankfully, but I will say with the second column I wrote about making a selective extravagance, justifying spending a lot on something that’s meaningful to you, which I actually felt like Jim’s talk last year really helped me work through that because I have trouble spending large amounts on things as well.
But I tried to preempt the criticism and that by having a little disclaimer in the first paragraph about this is not an article about whether or not you should throw a wedding or a big family reunion or whatever. It’s about if that’s meaningful for you, how do you pay for that? And then how do you get into the mindset and justify that to yourself?
Dr. Jim Dahle:
Very nice. Tony, favorite or worst criticism?
Dr. Anthony Ellis:
Well, the only criticism I get generally is when I put things down that aren’t smart. And then you come in and say…
Josh Katzowitz:
Some of the worst criticism that we get, it comes from Jim.
Dr. Anthony Ellis:
I’m like, it is actually from Jim. And so, I’m not sure that that makes good sense. Or for example, if I gave my equities over to an assets under management company and said, “Okay, I want hands off for a while because I don’t want to think about my accounts and I don’t want to look at them for a long time.” Jim made a good point that you don’t have to pay 1.125% for that service, that you could get that service for less money if you feel you need the service and that they ought to offer something more than just stock picking since it doesn’t work. And so, I was like, “Well, I am paying them a decent chunk for stock picking. And then over time now I’ve been convinced that I should give them the boot.”
And so, that sometimes it’s not criticism. It’s kind of advice to really kind of come back to what he was talking about during that keynote in the, uh, index funds. And so sometimes I kind of buck against the entire phenomenon thinking that I’m Warren Buffett or something, and it mostly doesn’t work out that well.
I guess a couple of criticisms, there’s some odd characters that come in there. They give themselves odd screen names. You can always tell if it’s going to be something odd because their screen name will be something like Screechy McBeechies or something. And then you’re like, “What is this guy talking about?” And luckily they filter those. And if you don’t have something reasonable to say, this is probably a part, a lot of the reason I like the blog. If you come in there and are just doing foolishness, they’ll tell you. Either Jim will tell you or somebody else will tell you, or that person’s Screechy McBeechies will disappear. I’m like, good, let’s get that out of here. But I haven’t got that much criticism. It’s mostly been, “Are you sure this is what you want to do?”
Josh Katzowitz:
It’s Scoochy McBoochy.
Dr. Anthony Ellis:
Yeah, that guy.
Josh Katzowitz:
And I’m curious if Scoochy McBoochy is here, because that would be hilarious.
Dr. Jim Dahle:
And would they admit it? Scoochy, where you at, buddy? All right, Tyler, worst or favorite criticism?
Tyler Scott:
Most of my criticism comes from Josh that I’m too nice and don’t garner enough criticism.
Josh Katzowitz:
He’s so nice, right? He just radiates it.
Tyler Scott:
But I did wear it as a badge of honor that in the comments section, I did eventually get my first ad hominem attack comment deleted. And I’ve been seeing those for years. And so I felt like I arrived. Got one of those. And that was in my column about disability. And my experience going through filing a personal own occupation, long term disability claim. And there was some sentiment in there. And at some point, someone said, “Why don’t you just take opioids and go to work like the rest of us?” Which was a fascinating observation.
Josh Katzowitz:
And it’s Scoochy.
Tyler Scott:
Yeah. But in that same column, this wasn’t criticism, but the part that maybe hurt me the most in anything I wrote was there was this sort of celebration energy that I was disabled. And I know where that comes from. They weren’t happy that I was hurt. But it was from dentists mostly being like, “Dude, you won the like long term disability lottery. That’s so sick. You get paid and you don’t have to do dentistry. Oh, you did it. That’s the best.”
And that I think reveals the like burnout and some of the problematic stuff going on in dentistry that. And what hurt me, I wasn’t offended by it, but my disability is real. And it makes me emotional almost to say that out loud. I spent 60 minutes in the tub this morning at 07:00 A.M. in really hot water so I could walk down here today. And it hurts. And this notion that somehow it is worth it was complicated to unpack because I am very grateful for that safety net of income that has allowed me to make this transition. And I would give it all back to be able to play and lean over and have tea time with my girls and not have it hurt.
Dr. Julie Alonso-Katzowitz:
Good thing he’s sitting next to two psychiatrists.
Dr. Jim Dahle:
Well said, Tyler. Well said. All right. Well, I guess I got to share some criticism, and I get a lot of criticism. I just picked the most recent criticism. This is from last week. We had a couple of our columnists and none of the ones here on the podcast to talk about some of the side gigs, some of the interesting stuff they’re doing out there medically related stuff.
We had one person who talked about how she’s doing some medical legal work and sells a course to teach you how to do that. And we had Rikki Racela came on and talks about how he takes a bunch of medical surveys. And then we had Dan Smith come on and talk about this I.V. clinic thing he’s doing to rehydrate people so they don’t have to go to the ER.
Well, Reddit didn’t like that I did that interview. They really didn’t like it. This guy who calls himself Giant Gaping Butthole puts a thread up on Reddit saying, “What is WCI promoting this snake oil salesmen providing overpriced I.V. fluid replenishment?” Okay, well, number one, we didn’t get paid. It’s just like, I thought this was interesting. I thought you’d like to hear about it. Giant Gaping Butthole did not share that sentiment.
And later in the thread, this guy who calls himself Reasonable Blue Jay, I didn’t think he was very reasonable at all. He says, “You’re a sellout, a rich sellout. And I guess that’s the point. But a sellout, nonetheless. Classic leech. Go away now to your island and leave us alone.”
So, it’s fun living an online life. But you got to remember, as Taryn said this morning, it’s not about you. It’s not about you. I don’t know what’s going on in Reasonable Blue Jay’s life. He’s an emergency doc. I looked up a couple of old posts. I’m like, “Who is this guy?” He’s an emergency doc, came out of residency about the same time as me. And I’m like, “Boy, you really hate those night shifts. You got to get rid of them.”
Josh Katzowitz:
Yeah. To be fair, Jim got pretty nasty with him, too. It was not a one way street. It went back and forth. It’s weird because Giant Gaping Butthole usually is pretty calm and reserved. You must have really struck a chord.
Can I tell my criticism? You forget me again.
Dr. Jim Dahle:
Oh, I forgot you, sorry. You didn’t want to go. I gave you a chance, you passed.
Josh Katzowitz:
I said, come back to me.
Dr. Jim Dahle:
All right, we’re back. Let Josh do this.
Josh Katzowitz:
Last year, we do these annual surveys every year and just to say, “Hey, what do you like about White Coat Investor? What do you want to see more of? What can we do to improve the product?” And so, we sometimes get called out by name. I get called out by name. I don’t like Katzowitz’s stuff. I think it’s a waste. His Money Song of the Week stuff sucks, all this stuff.
But last year, somebody had said, “If I have to read one more of his posts, I’m going to stop reading the site.” And I thought that was hilarious. It was so funny. This person may have been here since 2011 because I wrote a post he didn’t like, he’s like, “Forget it. I’m done. I don’t like White Coat Investor.” I thought that was so funny.
Dr. Julie Alonso-Katzowitz:
That’s power.
Dr. Jim Dahle:
The ability to not just take what’s useful and leave the rest among some people is pretty amazing, isn’t it? All right. Well, we’ve got about 26 minutes left. So, let’s do this. We’re going to take some questions from the audience. Let’s see what happens.
Okay, here’s the rules again. You got to specify who you want the question to go to. We’re not going to have all six people answer your questions. And I can’t be one of the people you specify. I’ll chime in occasionally, maybe.
AUDIENCE QUESTIONS
All right. So you can ask any question you want and we’ll take it. And this is being streamed to the Internet. All the people out there in virtual land, thank you for coming, by the way. We hope you can make it in person next year. But let’s take a question. All you got to do is raise your hand. I’ll throw this to you. It’s pretty soft, I promise. So, if you don’t catch it, it won’t kill the person next to you. But don’t let it break your glasses or something. Who’s got a question they want to ask to some of the columns? Let’s start right here.
Josh Katzowitz:
Oh, you almost hit the ceiling that time.
Speaker 1:
Thanks for taking my question. This is for Tyler. You’re a young person. You look like the youngest on the panel. So, that’s great.
There’s lots of young millennials. You’re interested in alternative asset classes. We don’t talk much here about crypto and other things like that. But I’m interested for you, what percentage of the portfolio do you think should be allocated to bronze?
Dr. Tyler Scott:
Specifically bronze? Yes. I’m a boring investor personally. I’ve got a three fund portfolio and target date funds where I can. But I advise other young people that ask me and I’m just so young. So, thank you for that. I think 5% of a portfolio can be allocated to alternative investments in this way. So whether that’s crypto or commodities, specific precious metal that makes you happy, that’s appropriate. It’s not going to completely derail your long term goals if that does go to zero.
And then the other agreement I try to make with my clients is like, “Okay, if you’re going to go all in on Dogecoin because that’s just you’re sure then let’s do that with 5%. And if it hits and if it turns into 15 percent of your portfolio, let’s agree to sell back to the five percent position, put those gains to work so they can be realized and actualized in your plan. And then you can keep that 5% for kicks and giggles.”
Dr. Jim Dahle:
All right. Who remembers bronze funds? Raise your hand if you remember bronze funds. Very few people. This is an inside joke from 2021 where our moderator, our host, didn’t really have a lot of financial training. And that question came in and she thought she was supposed to ask, I think was Alan Roth was the financial advisor. What do you think about bronze funds? And it’s supposed to be bond funds. The whole conference just took it and ran with it. Well, from this year, everyone’s going to remember the metal falling from the ceiling. But that year, everybody remembered bronze funds.
All right. Raise your hand if you’ve got a question and we’ll throw the box to you. So, keep your heads up. So we don’t hit anybody in the head.
Speaker 2:
Hi WCI. I’m a podcast listener since the last year and a half. And I knew that you started in 2011. Which is the most changed in your position since 2011 to 2024?
Dr. Jim Dahle:
Now, are you asking this to the columnist or me? Because the rules are you got to ask the columnist.
Speaker 2:
Anyone.
Dr. Jim Dahle:
All right. We’re going to talk about changes, changes in your positions over time. Who’s had the biggest change or what’s one change you’ve had in your position over time?
Dr. Anthony Ellis:
I bought my 2020 Honda Odyssey van with cash.
Josh Katzowitz:
You want to keep writing columns?
Dr. Margaret Curtis:
I can try to answer that. In the last, I would say, seven, eight years, we’ve gone from having I would call him a financial manager who charges asset under management to doing entirely our own investments, from having just generic managed mutual funds to only index funds. We sold a house. Instead of having two mortgages, we have one. I think those are the three biggest changes, but those are some pretty big changes. That’s what my family has done in the last seven, eight years.
Dr. Jim Dahle:
Yeah. The most recent portfolio change I had is I dropped some certain index funds like VBR and VIOB instead of getting my small value tilt with that. I recently changed to the Avantis small value ETF. There’s a couple of columns on it this year that you may have seen. That was a pretty significant change. My portfolio doesn’t change very much, but that was a pretty significant change this year.
All right. Raise your hand if you got a question. We’ll throw the catch box to you. We got somebody back there. That might take two throws, depending on how good your arm is. But throw it back there. Heads up, everybody between these two. Oh, he made it. Wow. Very nice.
Speaker 3:
Very nice. Very nice throw. This question is for Auntie Marge. I went to your talk the other day about contracts, and I wanted to hear a little more about the indemnity clauses and has the words hold harmless. Can you summarize again why that’s very bad and why we should avoid that? Because I think a lot of people don’t know about that. And I wanted to get a little more info.
Dr. Margaret Curtis:
Yeah, thank you. So if I were to go full Auntie Marge, I would have to work myself up into a rage. And in my head, she has a Scottish accent, but I won’t do that. Maybe I shouldn’t have said that.
So, hold harmless or indemnity clauses are this clause that can get snuck into contracts. Many people have them and don’t realize them. You need to know about them. Indemnity clause means that you accept liability from all other parties in case there’s a lawsuit. You accept liability from other parties onto yourself. If you and your hospital get sued for malpractice, the hospital can sign a settlement and then you have to pay their settlement as well as their legal fees. And your malpractice insurance will not cover you.
Several organizations, the American College of Emergency Physicians has come up with a blanket statement saying physicians should never sign indemnity clauses. And I don’t know how many of us know that these even exist. But if you’re not sure, you should go check your contract and see if it’s in there, because it’s like a ticking time bomb, because we all know we can get sued for trivial reasons and it can really be ruin us. Rare, but it does happen.
Dr. Jim Dahle:
Very nice. All right. Let’s take a question from the online folks. Thanks for being there, by the way. I know we can’t quite get the box to you, but we’ll take your question anyway. And this will be a lightning round question. We’ll go all the way across the panel. We just want to hear what your favorite money or investing app or software is. Name one or two.
Dr. Tyler Scott:
I am still mourning the loss of Mint, as maybe many of you are. That was my longest relationship and now it’s gone. I’ve been really pleased as I’ve switched tracking my spending to Monarch. Monarch Money has been a good app. I’m only three or four months in, but I was able to bring my old Mint history with me. It has a great platform for tracking my net worth, organizing my transactions. So far, I’ve been really happy with Monarch.
Dr. Jim Dahle:
Okay, let me remind you how a lightning round works. You don’t get to plug your affiliate deals here or anything. Rapid fire, favorite one or two apps or software.
Dr. Anthony Ellis:
I used to use something called personalcapital.com. Now it’s called empower.com. And I have all my investments there and I can keep track of things that way. And so, that’s the main way I keep track of my investments and net worth. And I use something called Rocket Money to make sure I don’t have subscriptions lying around that I forgot about. And it also tracks all of your expenses. And I like those two.
Dr. Julie Alonso-Katzowitz:
We also have used Personal Capital/Empower for many years. We have a shared account with a shared password. That’s where we are in the relationship at this point.
Josh Katzowitz:
Big stuff, big stuff.
Dr. Julie Alonso-Katzowitz:
But I like it because you can visualize all your spending, your income, your investments, and I can track our credit card transactions, just look them over. And it’s all in one place.
Yeah, I would say the same, Empower. And I was not necessarily before I became more financially illiterate. I was not the finance person. Julie was the one who was taking care of our finances. We don’t have an affiliate with Empower, do we? I don’t think we do. Okay, thanks to Empower I’m able to track the credit cards. And it used to be, “Josh, what is this $50 charge? Why do you spend $160 on this?” Now I can be like, “Julie, I just spent $400 on this.” So, it’s been nice to track credit cards and our investments and stuff. So, definitely Empower.
Dr. Jim Dahle:
Okay, your job now is to go to Empower and get an affiliate deal with what you just said. All right, Margaret.
Dr. Margaret Curtis:
We also use Empower, although I’d like to hear your experience, you talk later because I feel like it is not as good since it’s switched from Personal Capital to Empower. I feel like there’s glitches in it now. So, I still use an Excel spreadsheet.
And the other thing we just started using is we started using a Password Manager because we realized between my husband and I and different accounts and trying to keep track of passwords that you have to change so often. We were just wasting our time. So we now finally got a password manager so we can share passwords and they get updated in real time.
Josh Katzowitz:
But haven’t all password managers been hacked at some point or another?
Dr. Margaret Curtis:
Banks can get hacked. It’s all out there now.
Josh Katzowitz:
It’s all out there, right?
Dr. Margaret Curtis:
It’s all out there. We used one password. Number one password. That’s my password. Also, they do not monetize. I don’t have a deal with them. I would be open to one, but I don’t have one. I just did like a Consumer Reports best password manager. And there’s risk in all of these. There’s risk in having online banking. But what are you going to do? Are you going to have gold bullion under your pillow, Josh? Is that what you do?
Dr. Jim Dahle:
Don’t tempt him, he might. He’ll write a column about it. And store it in the back of the Tesla. Microsoft Excel, Last Pass. I just feel like if you don’t know how to use a spreadsheet, you have no business managing your own money. The basic spreadsheet functions you really need to learn how to use. Or you need to go hire a financial advisor because it’s just critical to the process of running your portfolio.
All right, let’s do another crowd question. Let’s get the box moving. Raise your hand if you got a question. There we go, we got one there.
Speaker 4:
That was easy. Okay, Josh, question for you. It isn’t financial, I’m a music lover. How do you go through the process of coming up with a song for the blog? Is that one minute before you write it? During the time of writing it? Is it two weeks before?
Josh Katzowitz:
Now, so for those who don’t know, in a lot of my columns, I have the main column, the main focus of the column. And then just because I think it’s fun, I do a money song of the week, which is like finding a song that talks about money or finance or wellness or whatever. And I put a little YouTube embed in there because I think it’s fun.
The money song of the week mostly is music that I like. And it depends if something’s happened in the news, like when Tina Turner died, I was like, “Well, I should do the money song of the week with Tina Turner.” And I found a Tina Turner song where she was talking about money. I think it was called Money Inc or Money something.
I go to a lot of shows or concerts, so if I go see a band and they have a money song, I’ll do that. Because I’m mostly like a punk metal rock kind of guy, I feel like I need to expand for that. So, I’ll throw some hip hop in there or some country. Yeah, it’s just kind of whatever it just suits me in the moment.
Dr. Julie Alonso-Katzowitz:
But he’s a secret Swifty. And he did put a Taylor Swift song in there the week that I bought Taylor Swift tickets.
Josh Katzowitz:
Yeah, that’s right. I’m not secret Swifty.
Dr. Jim Dahle:
Raise your hand if you got a question. Let’s get the box moving. See if we can make a big throw this time. Who can you find that’s the furthest away from you? Tim Tebow, is that you?
Speaker 5:
Okay. I’m approaching retirement and my question is to Tony and possibly Tyler. What, if any, adjustment to your asset allocation should you make to account for a sequence of return risk?
Dr. Tyler Scott:
You’re closer than I am.
Dr. Anthony Ellis:
That’s an actual financial question. I think that some people are going to think it’s strange, but I like to keep over a year’s worth of money available, even two year’s worth of money available, because I’m still doing part time work. I’m still getting some income. But if it disappeared and the stock market, say, had a huge drop, like it has every three years or every four years or something, then I don’t have to sell anything and I don’t have to go look for another job if I am tooling back even further. So I have more cash. That’s how come I could buy that car, man.
I have more cash sitting there because I’m currently being paid 5% on the cash. So, it works great right now to have a lot of money available in case, I don’t know, something goes wrong, so to speak. So, that’s a difference. Normally people have like two, three or even one percent, almost no money in cash, all their money is working. But now I think probably if you ask people, they’ve got some money in cash because they’re getting 5.5% on CDs and they’re getting 5% in high yield savings and or 4.75%. So I have more money in cash right now as I’ve gone into the semi-retired mode because I’m always worried something could go wrong and I could lose the income. And then I don’t really want to go find another one at that point, probably because I’m so close to finishing up.
Dr. Tyler Scott:
Yeah, what Tony is referring to is there’s the buckets strategy, which Christine Benz has talked about and Jim’s written a really good piece that you can set a certain amount of cash aside a year or two years, whatever helps you sleep at night. And then you’ve got a different bucket for the sort of interim period. And then you’ve got your third bucket, mostly in equities, so that you’ve got longevity and that is functional.
The simplified, the easy button there is to adjust your asset allocation. And other people smarter than both of us have thought about this. And that’s where the glide path on a target date fund comes from.
So it’s not hard for me. I can look at the 2050 target date fund. That’s about the year I turned 65. And I can follow Vanguard’s thoughts about what a rational balance and how that equity to bond ratio should shift as I age. So, I don’t have to be smarter than they are and I’m really grateful for that.
Dr. Jim Dahle:
All right, let’s take a question from the online audience. This one’s about divorce really. They say there’s so much push for one spouse. One house, one spouse. You’ve all heard it before. Sometimes it just doesn’t work out, though. What’s your best advice for financially working through a divorce? Since you guys just answer, let’s have you two give your answer to this. Margaret, best financial advice for someone going through a divorce. And then, Josh, you’ll be next.
Josh Katzowitz:
Julie can answer.
Dr. Margaret Curtis:
Thankfully I’ve not been through a divorce. I certainly have friends who have. I would say the advice I’ve given them is, first of all, take care of yourself and your kids first, take care of the emotional stuff. The money stuff is really secondary. Don’t get bogged down in fighting over every little thing. It’s not worth it. You want to get out and get on the other side and start over again. And don’t get so caught up in one asset like “I got to have the house” and that you just lose sight of everything else in the process. I guess that’s my advice. But yeah, thankfully, I haven’t been through it.
Dr. Jim Dahle:
Julie?
Dr. Julie Alonso-Katzowitz:
Well, I’ll talk more from a professional perspective. I’ve also not had a divorce, but I’ve had a lot of patients that have gone through divorces and some friends as well. And it’s an extremely stressful experience and can be very traumatic if it gets contentious.
But I will say, I think getting some support for yourself and for your kids and also knowing, I think, within the relationship, is it salvageable or not? Would counseling or therapy help the situation? Obviously, if there’s abuse or other addiction or other things going on, can that person get treatment? Is it possible to work through this? Or is it better to cut ties at this point and move forward with your life? Even if it’s financially difficult in the short term, at least from patients I’ve talked to and friends in the long term, they’re often happier when they’re out of that situation.
Dr. Tyler Scott:
And can I just add one thing on that? I just want to validate that a divorce is not always a tragic thing. My mom has been married four times in my lifetime, my dad three times. And I am such a beneficiary of those divorces. I’m an only child. I have no siblings. And there can be a narrative sometimes that it is going to lead to familial catastrophe. And I am so much better off for having been raised, even though in split households, where there isn’t contention and anger and dissension. And so, I just want to validate that as I’m approaching 40, about 53% of my friends are divorced.
Anyway, it’s okay. And financially, this doesn’t help with that question, but we always recommend people consider a prenup before marriage. We talk about how getting married without a prenup would be like practicing medicine without malpractice insurance. You never expect something to go wrong, but you’re sure glad you have that if it happens. The questioner has my empathy and my support.
Dr. Jim Dahle:
Yeah, I one of the biggest surprises I’ve had about divorce is I always thought, “Oh, you cut your assets in half, you cut your income in half. This is going to be catastrophic for you.” I’m surprised how many people I’ve run into who are like, “This is great. Yeah, I lost half my assets. Yeah, I lost half my income, but I threw out 90% of the spending.” And so, it’s not always bad financially. You now have 100% of the control of the finances going forward and you can make the changes it takes to still be financially successful.
Josh Katzowitz:
One of the most controversial posts, columns that we’ve run in the last couple of years was from a columnist, Joy Eberhardt, the master who wrote, “I got divorced to save money on taxes.” So it goes both ways.
Dr. Jim Dahle:
Yeah, we certainly got a lot of criticism on that one. All right. We got the catch box here. Let’s have a question from the catch box.
Speaker 6:
Hi there. My question is for Josh. Is someone who can offer a fresh and different perspective coming from your career as someone who’s a nonmedical professional, What do you see as the blind spots for physicians when it comes to finance?
Josh Katzowitz:
For me, because it can be similar to what I was going through was that you don’t know what you don’t know. Like I said before, Julie was the one who was the one who was in charge of our finances. And really I didn’t get serious about it until the 2000s. It was like the New Year’s resolution for 2020. That was like, “I really need to figure out what the hell’s going on.” Not with our finances, but just in general, so I could at least support Julie and we can have rational conversations about what we’re doing.
It was a matter of not knowing what I don’t know. But then it was a matter of “Where do I find the information?” And she actually turned me on to the White Coat Investor. I didn’t know about the White Coat Investor until she had been following it for the last several years. And then she told me about it. And then I got a job here and then I gave her a job. So it all worked out great.
But I had to put a lot of research and time and listen to podcasts and reading books. We had always watched Suze Orman for many years when she was a resident. There is a little bit of that background. I know doctors, a lot of doctors are type A types. And there’s so much knowledge they have in their lives. But I guess it’s maybe being humble, too, about what you don’t know and really taking the time to learn what you don’t know. And always keep learning.
I’m lucky that my job that I get to learn about finance every single day. I’m forced to read his stuff, which most of the time is pretty good. I have to constantly learn. And so obviously, most people are not going to be doing it for eight hours a day or six hours a day or whatever it is. But just to have that mindset, I need to keep learning because there’s always more stuff to learn.
Dr. Jim Dahle:
All right, let’s toss the box. Who’s got a question? Let’s try to go down there. Can we get it there? It’s going to stand up for this. This is a good talk. Oh, that was perfect. The athleticism in this group is crazy.
Speaker 7:
Thank you. Jim, you have had Ramit Sethi on your show and he talks about My Rich Life. And I just wanted to know, we all start off as living like residents. And then we go down this rabbit hole where we think about every single dollar where it’s going. So, how do you transition from living like a resident to now working on living your rich life? And I wanted to see if every one of the panelists can give us an example of what they now consider their rich life as going from starting off on the White Coat Investor through the years and what that’s done to your daily life. Thank you.
Dr. Jim Dahle:
So, we’ll talk a little bit about splurge, you don’t worry about the money you spend on anymore. Maybe, Tyler, you want to start?
Dr. Tyler Scott:
Yeah. Travel for us, we set aside in our future expense bucket, $25,000 a year for travel, which is just a number that would be incomprehensible to me 15 years ago. And this year we’re going to Iceland for 10 days and Hawaii with the kids. And we’re here. We’re going to Lake Powell. And the fact that I can travel in the way I want, I just feel so, so rich. It’s tremendous.
Dr. Anthony Ellis:
Well, I could say before I really learned a lot more about investing, I just took my money and threw it in the 401(k) and put it in some mutual funds. And I didn’t have side gig and I didn’t have the knowledge that I needed to take advantage of all the tax advantage accounts. And since I changed my way of being with regard to that, got the side gig, flooded all those accounts. I think that you get to a point where you could actually, even if your portfolio made nothing, you can divide it by, say 25 and you can live on that money. That’s before Social Security. And that happens for most doctors and probably most of the WCI audience somewhere in there between 50 and 60 years old.
And now, like Tyler said, our most extravagant spending is on travel. To me, the rich life is not having to worry about money. If you have a year or two of expenses in a bucket, it’s not going to be very worrisome. And if you can travel wherever you want to go, then it just becomes trying to stay healthy enough to be able to do the things that you have on the bucket list, which is they brought that up many times during all these presentations, don’t put it off. Don’t put it off until you’re 70 or 80. Do it as soon as you can reasonably so that you don’t end up missing out on a lot of your bucket list.
Dr. Jim Dahle:
All right. Let’s stop that one here so we can make sure we get to another one. One of my big splurges now, my daughter gives me a hard time because I now have a diesel truck, which I really enjoy, by the way. And diesel costs a buck more than gasoline. Every time she’s like, “Ha ha, dad, my gas is cheaper” because she has an allowance now and has to buy her own gas. And I don’t care. I don’t care. All right. Let’s toss the box.
Janneke:
Hi, I’m Janneke. This week, so far, the wellness portions have been super important. This is to the psychiatrist and anybody who’s willing to be vulnerable on the panel. I think maybe just making it transparent and saying it outright that physicians in therapy going to a psychiatrist, how important that is and that actually is not negatively impacting us. I go to therapy. It changed my life and it actually made me able to deal with my finances because I think financial trauma is real.
And so, if we’re going to talk about wellness, I think instead of having a taboo and saying, “Let’s meditate and do these things”, a lot of things, things come down to, “Are you seeing a therapist? Are you seeing a psychiatrist? Are you really doing the work in order to be there for your families and deal with your finances?” This is to anybody on the panel who is willing to speak openly about that.
Dr. Jim Dahle:
Julie, I think it’s your field of expertise. Any comments on therapy for doctors?
Dr. Julie Alonso-Katzowitz:
I feel like I’ve seen a shift and hopefully Tony agrees since I graduated from residency in 2010, 2011, that I do feel like that’s more talked about and more accepted. I feel like some of the stigma has decreased at least. And I know a lot of friends and colleagues that do talk about being in therapy, the benefits of therapy.
And therapy does not have to be lifelong or long-term. You can go to therapy for a defined period of time. And once you meet your therapy goals or have the coping skills that you need, you can terminate successfully and use those things going forward. I think beyond therapy too, all the other wellness things are really important. Exercise, sleep, nutrition. Really those are the foundation, social engagement for health and wellness.
Dr. Jim Dahle:
Tony, anything to add to that?
Dr. Anthony Ellis:
Well, when my wife and I were not yet married, we were planning the marriage and we were dragging our feet a bit and not getting things done towards the marriage. The ceremony was coming up as sooner than it seemed and I asked her, I said, “Maybe we should go to some type of premarital counseling, go and talk to someone about why we’re dragging our feet a little bit.”
And we did. We went and it was an ACSW who was trained classically in therapy and we saw her partly because she had the best rate. You know those doctors. We paid her fee and I came to where I was thinking, if you don’t go into the therapy, come back out with some questions and some homework and maybe even a few tears, than you’re not getting your dollars worth. So, we went for about 20 sessions and we stopped dragging our feet and got married and we’ve been married 30 some years. So, I think it’s a good thing.
Dr. Jim Dahle:
Yeah, congratulations. I think there’s actually a lot of docs in therapy, so we don’t have to report it to the medical board or the hospital credentialing committee. We call it coaching. A lot of us get in coaching, a lot of us get in therapy and there’s a lot of overlap in all of that. In fact, when you talk to financial advisors, a lot of them will tell you 50% of what I’m doing is couples therapy because it really is, it’s just getting them all on the same page.
Dr. Julie Alonso-Katzowitz:
I want to be really quick. There are resources out there, like My County Medical Society offers free therapy by vetted therapists. They have five or six on their panel and it’s free and confidential. It’s all funded by donations by the physician, by the state medical association and the county medical association. So, those kinds of resources may be out there and they may be available, very confidential and at no cost as well.
Dr. Jim Dahle:
Very helpful. All right. Well, let’s give the columnists a big round of applause.
All right. As I mentioned at the top of the podcast, SoFi is helping medical professionals like us bank, borrow and invest to achieve financial wellness. Whether you’re a resident or close to retirement, SoFi offers medical professionals exclusive rates and services to help you get your money right. Visit their dedicated page to see all that SoFi has to offer at whitecoatinvestor.com/sofi.
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DISCLAIMER
The hosts of the White Coat Investor are not licensed accountants, attorneys, or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.
INTRODUCTION
This is the White Coat Investor podcast Milestones to Millionaire – Celebrating stories of success along the journey to financial freedom.
Dr. Jim Dahle:
This is Milestones to Millionaire podcast number 193 – Social Worker Becomes a Millionaire.
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Welcome back to the podcast. It’s been a week, but it’s been a lot longer than that since you’ve heard from me. In fact, this is the first podcast I’ve recorded since I fell. Six weeks to the day that we’re recording this, by the time you hear this, it’ll have been more, obviously.
Thanks to everybody for all the kind words you’ve reached out to me. It’s just been really nice to feel everybody’s support and prayers and karma they’re sending my way. I really am very grateful.
I mentioned a few weeks ago when we told you there was going to be a few changes on the podcast for a while that we’re going to have an episode that talked about the fall and my rescue and everything since. That’s not today. That’s still coming up in a little while. It’s going to be really good though. It’s been really fun how many people are willing to participate and help us make that episode, but I think you’re really going to enjoy it. That’s not today though. Today is just a regular Milestones to Millionaire episode.
Before we get into today’s interview, I want to tell you a little bit about a name change. We have a partner that used to be called NewRetirement. They’re now called Boldin. You can get to their calculator, which some people call a retirement calculator. In reality, it’s a financial planning calculator. You can get there by going to whitecoatinvestor.com/boldin. If you just put ‘/bold’, we’ll have that get you there as well. Then that’s all you have to remember. You can also get there by going to our recommended tab and going down there and going down to retirement calculator or financial planning tool or whatever and you can check that out.
There’s lots of tools out there. We think this one is particularly good. We think it’s very helpful. It’s not particularly expensive and even has a free version that you can check out to see if you want to get the more premium version. It gives you a chance to evaluate your savings and investments and projected earnings to really take a full picture analysis of your situation and help you to develop a reliable financial plan and establish a clear path to life you want with those comprehensive planning tools that you just don’t see with most software out there.
You can upgrade to the Planner Plus is what they call their premium level. That’s only $120 a year. It’s still very inexpensive and very helpful for those of you out there who are DIY type people. I think you’ll enjoy the customizable scenarios and all the actionable insights that you get from it. You can really find out if you’re on track toward financial independence and get some personalized recommendations to improve your financial health. Obviously, this is the sort of thing if you were paying somebody to do this for you, a non-software solution, you’d be paying thousands but can get it for free to very cheap. Go into whitecoatinvestor.com/boldin.
All right, stick around after this interview. It’s a pretty great interview, number one, it’s one of my favorite people I’m interviewing. But stick around afterward. We’re going to talk about health insurance and early retirement. Let’s get into the interview.
INTERVIEW
Dr. Jim Dahle:
Cindy, welcome to the Milestones to Millionaire podcast.
Cindy:
Thanks. I’m happy to be here.
Dr. Jim Dahle:
Tell us what you do for a living and how far you are out of school.
Cindy:
Well, currently, I am the director of sales for the White Coat Investor. Previous to my 10 years that I’ve been working here, I was a social worker. I graduated with my MSW in 2011.
Dr. Jim Dahle:
2011 and you are married with children.
Cindy:
That is true. I have four kids ranging in age from 22 down to 14.
Dr. Jim Dahle:
All right. Tell us what your husband does for a living.
Cindy:
My husband is a filmmaker. He graduated with his master’s in fine arts in 2009.
Dr. Jim Dahle:
Okay. Tell us what milestone we’re going to be celebrating today.
Cindy:
We’re celebrating that we reached $1 million in net worth without our home equity last year.
Dr. Jim Dahle:
Awesome. A million dollars in investable assets. Congratulations.
Cindy:
Yeah, we’re pretty excited about it.
Dr. Jim Dahle:
A millionaire is this term out there in the world that is often even vilified. What were your thoughts on millionairehood as you approached and exceeded this milestone?
Cindy:
Well, you’re right. It’s always felt like this huge thing, but then when we became millionaires, we realized that it wasn’t that big of a thing. We don’t feel really wealthy and it doesn’t feel like enough money to really do anything with, but we were excited to be able to reach that milestone.
Dr. Jim Dahle:
Okay. What’s your range of household income been between leaving school and now?
Cindy:
We started tracking it specifically about eight years ago. Our range of income in the last eight years has been between $160,000 and $475,000 a year.
Dr. Jim Dahle:
Okay. Quite a range there. Some great years and some years that were still pretty good, but not incredible.
Cindy:
Yeah. I think if we went back all the way to when we first graduated from school, we’d get closer down to about $30,000 a year. It’s been a pretty wide range.
Dr. Jim Dahle:
It’s interesting. As you get into, I call them doctor-like incomes, these multiple hundred thousand incomes. One of the big shocks people have, especially if they’ve lived on much, much lower incomes, is the tax bill. What do you think the first time you had paid the tax bill on multiple hundred thousand dollars worth of income?
Cindy:
Yeah. It’s a hard pill to swallow for sure. Our first goal and the reason why I started coming to work for the White Coat Investor was to pay off student loans from my husband’s graduate school. We actually postponed paying off those loans for a couple of years after we could have paid them off in order to invest more money into our retirement accounts so that we could lower that tax bill. We were all excited to pay off those student loans until we realized that it was going to be smarter for us to hold on to them a little bit longer and get our tax bill to be lower.
Dr. Jim Dahle:
Tell us about your investments. What do you invest in?
Cindy:
We currently are investing. We have a pretty boring portfolio. We invest in the Total Stock Market Index Fund, the Total Bond Market Index Fund, Total International Stock Market Index Fund, and the Vanguard Real Estate Index Fund. That’s it.
Dr. Jim Dahle:
That’s it. That’s all your investments. What accounts do you have that money invested in?
Cindy:
Looking at our net worth, we have about 7% in our HSA and 3% in a taxable account. We currently have 4% in a high-yield savings account. Then the rest is in our 401(k)s and Roth IRAs.
Dr. Jim Dahle:
It’s almost all in retirement accounts. What about debts? Tell us about any debts you might have now.
Cindy:
We currently just have our mortgage on our home that we’re living in. It’s the only debt that we have.
Dr. Jim Dahle:
It’s still worth more than the mortgage, I hope.
Cindy:
It is still worth more than the mortgage. We have about $400,000 in home equity there. We owe about $200,000 on that house.
Dr. Jim Dahle:
Do you calculate your savings rate ever? Have you ever calculated how much of your income you’ve saved over the last few years?
Cindy:
We do calculate our savings rate since we started looking more closely at our money in 2015. We started calculating that. It’s ranged between 28% to 55% of our income and averages around in the mid-30s.
Dr. Jim Dahle:
Mid-30s. Okay. Well, congratulations. That’s an impressive savings rate. As you’ve realized, you build wealth quickly when you’re saving that much money.
Cindy:
Yeah, for sure.
Dr. Jim Dahle:
What advice do you have for other people that want to be millionaires?
Cindy:
Well, when looking back at our journey of starting out very poor, coming out of graduate school, I think what we found really helpful was listening to Dave Ramsey. Before working for the White Coat Investor, I commuted into the office 45 minutes each way. I would listen to a Dave Ramsey episode each way. That certainly keeps you on track and keeps you fired up.
While we were working on paying off our student loans, we did the envelope system. We dealt only in cash. That’s how we budgeted to make sure that we had all the extra money that we wanted to to throw out those loans. That certainly has been a secret to success.
It’s been a little more challenging now that we have more money to stick well to a budget. We’re still working through the challenges of that now that there’s more income to spend to make sure that we’re still meeting our goals.
Dr. Jim Dahle:
What do you think is the biggest money disagreement you’ve had over the years?
Cindy:
Currently, it’s our grocery bill. It’s now living at our house as a husband and two teenage boys. We disagree a bit on how much to be spent on groceries.
Dr. Jim Dahle:
Who’s the one that thinks more should be spent?
Cindy:
Definitely the husband and the boys think more should be spent on groceries and better food. I’m much more frugal in that regard.
Dr. Jim Dahle:
Interesting.
Cindy:
Other than that, we’ve been pretty much on the same page. I’m definitely the one that manages the money and then is more interested in learning how to manage the money. He does let me make some of those decisions, but we both were pretty excited about getting out of debt and investing in a way that lowered our fees and made it simple for us, especially should he have to take it over that it’s pretty simple for him to take over.
Dr. Jim Dahle:
You’ve got two teenage boys at home. You’ve got two out of the house. What lessons do you feel like you’re teaching to your children about money?
Cindy:
Well, you know what? We had all four of our kids when we paid off our student loans. That was a big deal, one that we talked about a lot with our kids. They understood that we were living more frugally because we wanted to pay those off. When we did pay off our student loans in 2017, we celebrated with a big dinner at a hibachi restaurant here in town and then followed that up with a trip to Disneyland, which was amazing.
We spent five days in Disneyland. Anything the kids wanted to buy, we bought it for them. Their eyes were huge. They couldn’t imagine that we were actually buying all those Mickey Mouse pretzels and the churros and whatever they wanted, we bought it for them. They were all old enough to remember this experience.
That was really special. We told them that we’re doing all we can to get you through your undergrad without any student loan debt. They’ve seen the pain that student loan debt can have when you’re starting out with your family. I think they’re learning that lesson well. We have two kids in college now and we talk a lot about limiting your expenses and being able to get through that without any debt.
They’re learning that lesson and they’ve watched us budget pretty rigorously. We talk about money a lot in our house and making sure that we spend it on things that we value. I’m hoping those are lessons that they’re taking away.
Dr. Jim Dahle:
Very cool. I think a lot of listeners are probably taking those lessons away as well because they are valuable lessons. Anything else you’d add that you think would be useful for somebody else that wants to do what you’ve done? Maybe they’re not a doctor. Maybe they have some other profession. Maybe they’re a social worker like you but still want to be financially successful. What tips do you have for them?
Cindy:
My husband and I were just discussing this the other night. His business has been a little bit slow this year. We’re talking about where we can cut back on our budget and make sure that we’re being wise. We both said, “You know what? It’s just easier when you have more income.”
Spending more time figuring out how you increase your income is well worth it. It does make everything else easier if you can just bring in a little more income. The less income you have, the bigger difference it makes to increase that even a little bit, which makes it easier for someone like a social worker that’s not making a lot of money.
The other advice I would give is just to be really intentional. Had I not come to work for the white coat investor and we were still living off a social worker filmmaker income, we could have still had this success. It wouldn’t obviously have come as early as it did, but just being intentional with how you’re budgeting and making sure you’re spending what money you have in a way that brings you the most joy.
Dr. Jim Dahle:
Well, thank you for coming on the podcast and sharing your story. Perhaps more importantly, thank you for spending the last 10 years with this here at the White Coat Investor. You’ve been an integral part of our success and we’re very grateful.
Cindy:
Thank you. It’s been a joy. It’s been fun to watch the company grow and be able to make a difference in so many people’s lives. I’m happy to be a part of it.
Dr. Jim Dahle:
All right. That was a fun interview, wasn’t it? We’ve occasionally done something like this with somebody near and dear to our hearts. Cindy obviously is. She was the first WCI employee. And yes, her background was social work. Obviously, that’s not what she’s doing right now. She doesn’t work quite full-time for us, never has actually, but it’s been pretty wild to see what people can do no matter what their profession, no matter what their background or training, when they actually pay attention to their finances and stick with it for the long term.
They’ve been very successful. We’re very proud of them and hope that lesson can be used by doctors and non-doctors alike to provide a little bit of inspiration that you too can be a millionaire. You too can be financially successful. You too can increase your income, increase your savings rate, and really make a difference in your financial life and that of your children, if any.
FINANCE 101: HEALTH INSURANCE AND EARLY RETIREMENT
All right. I promised you at the beginning we’re going to talk about health insurance and early retirement. The first question I have anytime we talk about this is, what’s so freaking special about health insurance? Nothing, right? There’s all this stuff you got to buy in early retirement. You got to have a place to live. You got to have food to eat. You may want to do some traveling.
I ask you, what’s so special about health insurance? But everybody gets all out of whack about health insurance because they’re like, “Oh, I can’t retire. I won’t have any health insurance.” Well, that might be true. You might not have enough money to retire unless somebody gives you health insurance. But the truth is, it’s just like any other expense. You go figure out how much it costs and you determine if you have enough money to retire, including paying for that expense, or you don’t, in which case you got to keep working. I’m sorry. That’s the way it works.
So it’s really not that different from your groceries and your housing and your gasoline and your cell phone bill. Yes, it’s expensive. Don’t get me wrong. This is part of the issue is people get sticker shock when they find out what health insurance actually costs. And part of the issue is we screwed up. I think this actually started in around World War II, but I think it may have been an additional effect in the 60s or 70s. 70s most likely.
What happened in World War II is they put wage controls on employers so they couldn’t pay people more than a certain amount. And of course, employers wanted to attract the best talent they can get. So they started offering lots of cool benefits, including health insurance. And since that time in the United States, health insurance has been kind of married to your employer. And there’s all kinds of bad effects from this happening. It’s really a kind of historical tragedy, actually.
But the main one that we’re talking about today is that you just don’t know what health insurance costs because your employer has been paying 80% or 90% or 100% of the premiums for you for the last 10 or 20 or 30 years. We do that here at the White Coat Investor for our employees as well. I think our deal is we pay 80% of the premiums. And so people may not quite realize what it costs. But health insurance is expensive, folks. If you have to buy it, it costs a lot of money.
Now, I’ve been buying health insurance on the open market for the last 14 or 15 years. I’ve been self-employed in that time period. And guess what? You can just buy this like anything else, like any other kind of insurance. You can just go to a health insurance broker in your area and buy health insurance. That’s all you have to Google. Google your hometown, health insurance broker. And there’s probably a half dozen people ready to help you tomorrow with your health insurance.
Our broker happens to be a neighbor, somebody we’ve been working with for many years. And we were just buying individual policies for a while. And then when the White Coat Investor started having employees, we went to the same health insurance broker and they helped us buy a group policy for us and all of our employees. And it’s not that complicated.
For us and our four kids, Katie and I and our four kids, our health insurance is like $1,200, $1,300 a month, something like that. Now, we’re actually in a pretty cheap state though. Utah, for whatever reason, has pretty low health insurance rates. I’ve talked to lots of couples in their 50s that buy health insurance on the open market in their state and it’s like $2,500.
But my point is, if you’re a high earner and you’re not going to get any Affordable Care Act subsidies or anything, you don’t have to go to your Affordable Care Act exchange in your state to buy health insurance. You can just go to a health insurance broker and buy it on the open market. And it’s not complicated. It’s pretty easy. You can compare everything out there and choose how much you want to spend on it. And what kind of premiums you want to pay versus how high your deductible and max out-of-pocket is. It’s just not that complicated. You can go buy it. So that’s the first main point I want to make with this.
Bear in mind that right now it’s illegal to exclude pre-existing conditions when you buy health insurance. This wasn’t the case a few years ago. It used to be a few years ago, it was really hard to do that. And this is one of the best things that came out of the Affordable Care Act. Even if you had something simple, you had one urinary tract infection years ago, you might not be able to get health insurance. Well, now that’s kind of gone away. And that’s one of the really great things that came out of the Patient Protection Affordable Care Act. So, kudos to the Obama administration for that particular move, if nothing else. You may not like anything else about the Affordable Care Act, but that was a good change. And it’s pretty hard to argue it was not.
Okay. Here’s the deal. A lot of people are like, “Well, I just need something to get me to Medicare age.” Well, you can get Medicare when you turn 65. And make sure you apply for it when you’re 65. That can be a mistake to not do that. But bear in mind, Medicare isn’t free. A lot of people think it’s free. It’s not. So keep this in mind. Not only have you been paying taxes for years and years and years to get Medicare, so it’s not free in that respect, and people will continue paying taxes for you to have Medicare going forward, but it’s not free.
What you’re thinking about what you get at 65 that you qualify for is Medicare Part A. That just covers the cost of hospitalization. It doesn’t cover doctor visits. It doesn’t cover medications. Almost surely the health insurance you had up until this point and the health insurance you want does cover doctor visits and does cover medications.
So, what do Medicare people do about this? Well, they buy Medicare Part B, which covers physician services and outpatient hospital services, and they buy Medicare Part D. Last time I looked at the premiums and they go up a little bit each year, but the premiums for Part B vary from $145 to $492. Double that if you’re married. That’s monthly.
What does that sound like? That sounds like health insurance, right? Medicare Part B is not free. You got to pay for it. If you want to see doctors and not just be hospitalized, you got to have Part B. And Part D is quite a bit cheaper. Last time I looked this up and it’s been a few years, the average monthly premium was like $33. Range is probably going to be anywhere this year, $15 to $100 or so is what you pay for Medicare Part D.
There are also monthly co-pays. It varies by prescription or coinsurance. So, keep that in mind. And then there’s Medicare Part C or Medicare Advantage as well. You may want. My point is, Medicare is not free. You’re buying health insurance between early retirement and when you get to Medicare. And even once you get on Medicare, you’re going to be paying something for your health insurance. So better get used to it is my point. Health insurance is expensive stuff. A lot of people think it should be like their cell phone bill. In reality, it’s more like at least your grocery bill, if not your mortgage. It’s expensive stuff.
Okay. So what are your options between when you retire at 58 or whatever, and when you actually qualify to go on Medicare at 65? Well, the first one is to go bare. I don’t recommend this. I don’t think this is a very good option. I’m somebody who’s used a heck of a lot of medical services this year. After I fell in the Tetons, I think I hit my max out of pocket before I even got to the hospital. And those of you who work in the hospital and taking care of trauma patients, you know that in about the first 10 minutes after arrival, we spend about $20,000 between labs and CT scans and so forth. So, if I hadn’t hit it before I got to the hospital, I certainly hit my max out of pocket in the emergency department. And of course, I’ve had at least one surgery since then. It might be two by the time you hear this. I’m not sure when it’s going to run. And I’ve spent four days in an ICU. It’s not cheap.
I just got my bill this week from the ICU. Remember, I wasn’t intubated. I think the only IV medication I was getting was morphine. My ICU bill was $113,000. I think insurance knocked it down to $51,000, which is one great thing about insurance. If nothing else, they’ve negotiated better prices for you. But that’s not the sort of thing most of us have money sitting around our back pocket to pay. So, don’t go bare, buy health insurance of some kind.
Okay, that’s option two. And the option my family’s chosen is to just go out and buy health insurance. You can go buy it from a health insurance broker. It works great. It’s not cheap but once you get over the sticker shock, it’s really not that complicated. Go do this.
There’s another option. You can COBRA your employer’s health insurance. And COBRA is cool. COBRA is very nice, especially for short time periods bridging gaps. Because the really cool thing about COBRA is that you can enact it somewhat retroactively. You don’t have to buy it until you need it, at least for these really short time gaps. If you’re just out of health insurance for two or three months, you can kind of sit there and go, “Do I actually have any healthcare expenses?” And if you don’t, you don’t pay for COBRA. If you do, well, you do pay for COBRA.
So, what is COBRA? COBRA is paying what your employer was paying for your health insurance. Instead of you paying 20% of the premium, you’re now paying 100% of the premium. When you tell people I’m on COBRA, the first thing they say is, “Oh, I hear that’s really expensive.” Well, it’s not really expensive. It’s just the price of health insurance. That’s what it is.
That’s one option. And you can drag that out for a long, long time. You retire at 62, you could COBRA your employer’s health insurance for three years if you wanted to. So that is one option. Chances are pretty good you can get a better deal if you go to a health insurance broker, especially if you qualify for ACA subsidies.
So let’s talk about this. Here’s another option is getting the taxpayer to pay for you or to pay for part of your health insurance. And the truth is the vast majority of early retirees are going to qualify to have the government at least help them. And there’s lots of government programs out there that can assist you with your health insurance needs. Most of them are based primarily on taxable income. They don’t ask why your taxable income is low. They don’t care if it’s low because you’re disabled or because you’re lazy or because you’re caring for an ill family member or because you’re living off capital gains and Roth IRA withdrawals. They don’t care.
Early retiree millionaires usually qualify for these programs like Medicaid. You can even qualify for Medicaid. You might be surprised. The rules change by state and oftentimes a lot of your assets might not be assets as far as Medicaid is concerned, especially if you do some fancy Medicaid planning. That’s probably not going to work for most White Coat Investor early retirees, but many of them will qualify for an Affordable Care Act or Obamacare subsidy and should look into that.
Now, if you want that, you got to buy your health insurance through the exchange. And that can be quite a bit more of a pain than it is just going through a health insurance broker. But you may be surprised by how big of a subsidy you qualify for. Just looking at when I wrote an article about this a few years ago, it’s four times the federal poverty level. You get something until you’re four times the federal poverty level. In the year I wrote this post, that was $135,000 in taxable income for a family of six. Even for a family of one, it was like $49,000.
Remember, that’s not everything you can spend because you can spend basis from your taxable account. You can spend Roth IRA withdrawals. They don’t count toward that. And so, there’s a lot of money that you can spend that doesn’t count toward that taxable income and still get a pretty substantial Obamacare subsidy.
Another approach you can take is to get a job. Maybe this isn’t retirement anymore. The retirement police are going to stop by and tell you you’re no longer retired, but you can get a job that provides health insurance. Sometimes people leave a high stress job that’s killing them. Maybe they’re a doctor, maybe they’re a lawyer, whatever. And they get kind of an encore job. Maybe you’re a rafting guide now or something. I don’t know. It doesn’t pay you much, but it does provide health insurance. Well, there you go. There’s your health insurance covered.
Another option is a health sharing organization or a health sharing ministry. These are often Christian and may require you to agree in some way with the Christian faith, but often that’s pretty minimal. You might be surprised how little of that there is with most of these. These ministries have some similarities to health insurance, but there’s also substantial differences. But many early retirees have found them to be unacceptable and even a great deal compared to what they were doing before.
Now, the premiums are often called something else, like shares, but they’re often half as much as what your health insurance premiums would be. There’s a huge savings there. And then basically what you do is you go out and you’re paying cash for your health insurance. And then you turn these expenses into the health sharing ministry to be shared with other people in the ministry.
And so, what you have to keep in mind with these though, is they’re not health insurance. And there are some healthcare costs that you might think are pretty routine that are not covered by these health sharing ministries. You have to read the fine print of what’s covered and what’s not covered, and be okay with what’s not covered. It’s a really important aspect.
The other thing that happens is these ministries tend to self-select a healthier population. Because what happens if you actually develop something expensive, you come down with MS or something that’s going to need expensive drugs, is you tend to, at least by the end of the year, go to the Affordable Care Act exchange and get on an Obamacare policy with or without a subsidy. Because they can’t exclude you now for pre-existing conditions. And so, this works while you’re healthy. It may not work while you’re not so healthy.
The Trump administration passed a regulation that allowed you to buy a bare bones health insurance plan for up to one year. Those plans often excluded medications and maternity and some mental health expenses and had high deductibles, but did have low premiums. So, you can talk to your health insurance broker about whether anything like that is available.
By the time you hear this, we’re almost to the election. If it’s not available right now, it might be soon if President Trump wins the re-election. So it generally only works for a short period of time, but might help you bridge the gap to Medicare.
Another option, at least for fairly elective stuff, is that you can go to a foreign country and just pay cash. You might be surprised how much cheaper it is to go to Mexico and get some of your care done, or go to Thailand and get some of your care done. But it is an option that some people have taken, at least to help supplement some of the things that they were dealing with in this country with their health care expenses. And maybe you’ll even want to move. Maybe you’ll go live in Costa Rica or something for retirement, or less expensively Guatemala, and realize that, “Boy, just paying full price at the hospital is very cheap there.” And it might not be the exact same health care you’re getting here, but the price is going to be right, I’ll tell you that.
But anyway, my point is that if you have enough assets that you can retire, you have enough to retire, you shouldn’t feel like you can’t because you need health insurance. You might need to work one more year until you have enough money that you can pay for health insurance out of that nest egg you’ve saved up.
But this shouldn’t be something that keeps you from retiring. If you’re 58 and want to retire, but feel like you can’t because you don’t have health insurance, you need to look into all your options, because there’s a lot of options out there that likely one of them is going to work just fine for you and help you to have some sort of health insurance coverage between now and when you get on to the Medicare rolls. I hope that’s helpful to you.
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I hope you’ve enjoyed this episode. You can come on these episodes. We’d love to have you on these episodes, and you can sign up whitecoatinvestor.com/milestones to apply. And what we want to do is we want to celebrate what you’ve accomplished and use your accomplishment to inspire others to do the same.
We’re out of time. Thanks for what you do. Keep your head up, shoulders back. You’ve got this, and we’re here to help. We’ll see you next time on the Milestones to Millionaire podcast.
DISCLAIMER
The hosts of the White Coat Investor are not licensed accountants, attorneys, or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.
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