Tag: saving money

How to impose financial literacy on your peers

I’m not much of a board game fanatic, but many of my friends and peers are. Perhaps this makes me an outlier, but group games seem to be a common hobby among my social group. There are subgroups among the board gamers too. You have those who go for the mainstream games like Settlers of Catan. Some of my friends like collaborative games like Pandemic, where everyone is playing to achieve a unified goal.

Others like strategic games with some element of chance. Fair enough.

Then you come across the super-intense board game fanatics who delve into games that no normal person would ever understand. Several months ago I was convinced to join in on a game called “Vast: the Crystal Caverns”, which was funded through Kickstarter and apparently very highly rated. Search for it online and you can be the judge.  I think I lost about two hours of my life in that game and still couldn’t really understand how it worked—this is coming from someone whose board game interest ended at Monopoly and Sorry!  Specialized games are just that; if you don’t fall into that targeted audience, you will be lost.

I came across a game the other day that would fit into that similar niche category.

Wi$e Money

Want to scare off your spendthrift friends? Bust out this game during get togethers!

That’s right. I’ve never heard of this game, but I’m not one in this demographic. Looks interesting. You might be able to scare off some of your party guests with this one.

Here’s a teaser question from the cover:

Q: “When you start a new job, what tax form must you fill out, and what does it do?”

I went to the company website and they also have high dollar games for companies. I guess that they aren’t a high volume business:

I guess if you have small number in your targeted audience, you can charge whatever you want for a board game.

Would you be interested in playing Wi$e Money? If so, we should do it at one of the financial blogger meet-ups!

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Back to the basics – Attending edition

It’s the beginning of a new academic year.  For those in the medical profession, that means advancement in your training or the beginning of a new job.  Either way, there is a change in your routine. Several of my colleagues who decided to choose a profession that requires an extra decade of training are now finally starting their first “real” jobs.  I feel bad for them, but perhaps they will earn it back in the long run.  I figure that now is a good time to go over some financial assessments that new graduations should consider.  Perhaps my friends will actually read this and take heed of some useful advice when they embark on their first jobs.

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Track all of your financial holdings.

You need to make sure that you are able to log onto all of your bank, retirement, and investment accounts. Update any mailing addresses if you recently moved. Open a Personal Capital account. Make sure you update any loan and mortgage accounts as well. I’ve recently become a big fan of electronic statements—it’ll cut down on what you have to move around if you’re still settling into a new home. Automate any bill payments too. I had compulsively reviewed my receipts prior to paying my bills, but realized that I have almost never found any discrepancies (other than a sushi restaurant adding an extra $10 tip!). Save yourself a few minutes each month by automating your bills. Once you get busier, you’ll find that it’s quite easy to forget to pay your bills.

 Decide whether to consolidate your retirement accounts.

If your prior employers offered matching contributions to your retirement, you probably already have at least one retirement account already. Chances are that your new employer probably will go through a different custodian. That might mean that you won’t be able to contribute more to your old accounts. Decide whether it is worth your time and energy to keep your accounts separate. Most custodians will be willing to accept roll-overs. I ended up keeping my 403b from fellowship open since I had good options on Fidelity, and I still had active accounts with them.

Make sure you have disability insurance.

As we get older and play our financial cards appropriately, disability insurance will matter less. However, it would be wise to buy disability insurance when you start out on your first job. You never know what might happen. The several thousand dollars a year in insurance premiums will be worth it if you are unlucky enough to become disabled early in your career.

Get yourself some life insurance if there’s anyone who will be dependent upon your income. That includes children or spouses. If your spouse earns more than you do and you don’t have any kids yet, perhaps you could delay for a little bit. Depends on how much income you will have starting out.

Don’t go crazy upgrading your lifestyle…yet.

That includes furniture, cars, and your home.  I kept my beaten-up desk from medical school for several years after I started my first job until some college student needed it.  Eventually you will want nicer stuff, but don’t upgrade all at once. Plenty of doctors who play their cards right will be able to buy boats and expensive cars (::cough::WCI), but they went through many years of abstinence before letting loose.

Many years of tape and water stains weathered down this particleboard desk top!

That’s it. Simple and nothing earth shattering. I know that most people starting out their first jobs will have limited brainpower and time to dedicate to this. It’s certainly helped me out over the years as I build upon my core knowledge and common sense.

How much should you leave to your heirs?

In the asset management world, there is always some discussion on how you can maximize what you leave behind to your heirs. We all want to make sure that Uncle Sam gets the minimum amount of your hard-earned wealth upon your demise. Fair enough.

I think too much emphasis goes into squirreling away your money into various protected vehicles.  Cash value insurances. <shudder> Trust funds. Step-up basis. Sure, these opportunities are worth knowing about, but the main question about all of this is who in this world should benefit from your financial prowess? And how much is enough?

Leaving religion aside, one has to realize that you can’t really take any of this to the grave. Anyone other than yourself will get your wealth. Most people are going to give it to their kids, grandkids, relatives, and charity. I’ve seen this in my closer friends. It’s an interesting phenomenon to see on the outside.

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Middle class inheritance.

I have a friend who lost her parents a few years ago. Her family was a quintessential middle class family. She worked as a manager in a local small business. No one in the family had professional degrees, but they all managed well. All of the siblings ended up splitting the savings accounts and the house. As I recall, each recipient received on the order of $100,000 total.

I would take a windfall over nothing on most days, but you realize that an amount like this isn’t going to allow anyone quit their day job. Taking all of this in cash all once would probably trigger a relatively sizable tax amount for the average American too.

I’d want to take back my loved one any day in this situation.

Upper class inheritance.

I have another distant colleague whose parents were in some shipping business. She is a general surgeon who doesn’t seem to practicing medicine anymore (I don’t know her that well, but she stopped after having kids).  Her husband was “in the finance industry”. Now, it was no surprise based on her lifestyle during medical school that she came from serious means. Nice clothing, furniture, apartment, and vacations. If I were in her shoes, I might not have even had the ambition to go into medical school, yet alone become a surgeon. When her mother passed, I recall that people spoke about “serious amounts of money” in the inheritance. Not sure what that means, but the people who spoke about it were all doctors, so I would assume that these amounts were big in my book too.

Thanks to Facebook, I now see vacation pictures from their family almost every other month. They have a nice home in the Bay Area that recently sold for nearly 8 figures.  I think that they are all happy.

How much money are you planning to leave on the table after you’re gone?

Windfalls and their impact on your lifestyle.

The easiest way to ruin any person’s self-initiative is to give them a crazy amount of money before they have established their careers. In this regard, it’s probably a good idea to set up a trust fund if you end up having significant wealth to leave behind.

Fortunately (or unfortunately) most of us will never have enough excess money to ruin someone’s life. But we should consider whether leaving an inheritance should be part of the investment equation. My strategy is as follows:

  1. Work hard and save as much as you can before you have dependents.
  2. Continue to work hard and instill work ethic into your dependents or mentees.
  3. If you are able to contribute to others’ well-being, do so. Invest in their education and work ethic.
  4. If you have excess after helping out your family and friends while you are still alive, consider the charities that you have left out.
  5. Leave behind what amount you feel is adequate after you’re gone.

That’s it. Simple and sweet. If you hustle enough in your working years to fall into the trust fund level, congratulations. You’ve gone above and beyond. Otherwise, there are more pressing matters to deal with in your lifetime.

(Photo courtesy of Flickr)

Should you encourage your kids to attend college?

College is an experience that most parents encourage their kids to consider. It is a means to advance in society, get a good job, and become financially stable.  Likewise, my parents fortunately emphasized college as a necessity in life—you need to get into a good college in order to succeed in life. Period.

But should college be an option for everyone?

As a physician, it would be hypocritical for me to even suggest that kids should consider bypassing college completely.  I certainly encourage students whom I mentor to get the best grades possible and challenge themselves in any way they can.  If college is a possibility, I encourage them to go for it.  The problem is that many people end up in careers that don’t necessarily require a college degree. You might have “wasted” several years of your life in college for naught.

College is not necessarily free.

The problem with implicitly mandating college is that someone has to pay for it.  You. Uncle Sam. Your parents or family. Everyone.

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It seems like most students become involved with student loans at some point in their lives.  I certainly was.  I am sick of hearing about student loans.  They’ve been a necessary burden for many of my colleagues, and some of my colleagues are still repaying their medical school loans from a decade ago.  College is no different.  Last I checked, tuition at Stanford University in 2016 was around $45,000 a year.  Room and board will tack on another $14,000.  Big numbers add up quickly.

I view colleges in the same light as I do with medical school.  There is a trade-off between cost and perceived quality.  Top-tier schools are difficult to become admitted into. Many of them are also expensive.  Many parents whose kids are admitted into a top-tier school will likely make sacrifices for their kids to attend.  Even if your daughter’s art history degree from Yale cost you $260,000 and delayed retirement, it might still be worth it to you.  Your kid will have gone to one of the top Ivy-league schools in the country.  A top college will likely have high cost, high prestige, and likely high quality education.

The problem with an expensive degree is exacerbated if neither you nor your child gets anything out of it.  An art history degree from a no-name private college may still cost you $260,000 after all is done.  As a parent, you’ve go no bragging rights for your child. If your child doesn’t find a decent job, she is also stuck without a means to build her own financial future.  You don’t want colleges with high cost, low prestige, and low-quality education.  Everyone loses.

College does not guarantee a secure financial future.

A college diploma certainly doesn’t guarantee you a means to generate income, but your experiences in college can certainly create opportunities for you to acquire a job.  Fortunately for our society, the unemployment rate for college graduates over age 24 is lower than 5 percent (perhaps 2-3%).  By going to college in the U.S., you’ve putting yourself in a good position to become employed.  Not bad, but someone should compare income rate to the cost of obtaining the education. I suspect that it is lower than one would expect.  Sure, going to college may help you get a job but it still might not be enough to pay your bills.  Someone needs to solve that conundrum.

You’ve still got to play your cards right even if you go to a good college.

You life still isn’t set if you go to a good college even at a good price.  Not everyone is suited to learn in a classroom.  Not everyone will be able to take advantage of the social interactions in college.  Some kids who opt to live at home during college in order to same money may even miss out on some of the experiences they would have otherwise gleaned from living in a college campus.  There are many variables at stake. No one will be able to offer you or your child a clear strategy to win in school.  That’s what makes life so unpredictable.

Who should actually go to college?

If your kids want to enter professions that require college degrees, they don’t have much of a choice.  In actuality, if you attended professional school there is a strong likelihood that your kids will end up going to college.  Most parents who went to college will at least encourage their children to go to college.  Unfortunately, not every child whose parents went to college will actually benefit from a college degree.  That’s a fact.

Better to burn money on a less expensive education if you’ve really got to burn it.

The problem is that no reasonable parent would actually discourage her kids from attending college, no matter how poorly suited the kids are for the classroom. In these cases, you just have to cut your losses. Lay out the facts, offer options for your child, and what you would be able to contribute to their education. For instance, if your child got into NYU and has her mind set on attending (even though your parental instinct tells you that it’s a six-figure mistake), make it clear what you can contribute to their education.  Give them the freedom to make their life choices.  You might be pleasantly surprised.

What are your thoughts on college?

(Photo courtesy of Flickr)

Welcome FutureProofMD readers!

Hello everyone! I am grateful for FutureProofMD to feature one of our articles today discussing the prestige of medical schools, and whether they are worth the cost. As an overview, Smart Money MD is a physician-oriented financial and lifestyle website to help guide us through the complicated world of delayed gratification from medical training.  Once you become an attending, do you earn enough to power through any financial considerations? Or do you still have to watch what you spend?

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FPMD is smart to have started on his financial future early in his career!

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Head over to the beginning to go through our articles!

How many investment accounts are you willing to open?

Having too many open investment accounts was never a problem that I ever fathomed facing.  I don’t think that I have too many active accounts right now, but presumably the longer we remain investing, the more confusing accounts we will end up with.

Over time, I find myself signing up for accounts whenever custodians end up offering savings or cash back.  I think that I started my E-Trade account years ago when they offered $100 for signing up and a few discounted trades.  I opened a Fidelity account when my residency offered a 401k/403b plan.  I had another 401k custodian through an employer that lasted for a year.  When I finally became more educated on index funds, I opened a Vanguard account.  I went back to Fidelity when they offered some airline miles and marginally lower expense ratios.  I’ll probably open a Schwab investment account in the future since they now advertise expenses even lower than that of Vanguard and Fidelity.

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It’s also easy to rack up bank accounts. As a student, I opened quite a few bank accounts for minimal bonuses like a free mp3 player, $100, or free tickets.  Was it worth my time then? Absolutely.  I had a negative net worth with essentially no income.  I even had to shuffle around my money to make the minimum balance requirements.  It was worth spending my free time to get “free” stuff.  Is it worth it now? Probably not, unless the sign-up bonuses are huge.  I still have most of my old bank accounts open, but it’s relatively easy to manage since I have very little money in most of them.  I don’t receive any 1099 interest forms at the end of the year, so I don’t really have to track them during tax season.

Fixed income deposits like CD’s also result in accumulation of excess accounts.  Some banks require you to sign up for a savings account so that any interest accumulated can be deposited into an account outside of the CD.  Other banks allow you to keep open a CD by itself without ancillary accounts.  As you get older, you will inevitably open accounts, whether through the Treasury, banks, or even brokerage firms.

I have about twenty accounts of some sort under my name, including one from Macy’s that I opened while in college.  It is too much that I can’t handle? Not yet, but it is becoming more difficult to track, especially when I get occasional mailings from banks that I have no recollection working with (yes, that is also a factor from age)!

It all of this worth it in the end? I still think so.  I squeak out some marginal earnings that I otherwise would not have, and over my working career, I will likely squeeze out a few extra bucks.  Once my CD’s start maturing, and these banks no longer offer great deals for renewing fixed income vehicles, I’ll start transferring out my funds and shutting them down.  I still keep track of my accounts through Personal Capital, which does require some maintenance (I hate the login failures).

Do you have a threshold for the number of open accounts to deal with?

(Photo courtesy of Flickr)

How much of your lifestyle contains used items?

We all know that we can save a bit of money by buying used items. The prospects of preowned material wealth is good for the environment and is good for your wallet. However, it’s not for everyone. Up until I finished college, I wasn’t truly aware that you could actually buy anything used other than informally through your friends. Call me a lucky kid, but my parents never bought me anything used. Then again, America is the land of incredible wealth and cheap items. A new top at Walmart, whether you believe in foreign labor, was less than $10. Why would anyone ever spring for second-hand clothing for $5 if you could have a new one for marginally more?

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As I’ve gotten more savvy with money, it’s slowly dawned on me that second-hand doesn’t necessarily connote being “cheap”. Buying used is actually cool.

Used car = financially smart.

Aside from your home, the vehicle we drive is considered a big ticket item. Sure, if you’re like Mr. Money Mustache and bike everywhere for transportation, you might not ever need a car. But a car is pretty much necessary for most people who commute to work.

Cars can be expensive. The sticker price of a 2017 AMG SL63 (Surgeon Moe’s weekend car), is close to $150,000! However, a four-year old 2013 AMG SL63 can be had for about $65,000!


You might also like: How to burn through a $1 million salary


That’s right. After 4 years, this monstrosity is worth less than half its original value! Most cars lose significant value after 4 years regardless of mileage and wear. You can save quite a bit of money by buying a used car, even if you buy a certified preowned vehicle from the dealer.

Conversely if you sell your new car after 4 years, you will have lost quite a bit of money.

Used furniture, can it be a good idea? 

I first purchased used furniture when I was a medical student. Most of it was second hand IKEA furniture. Some of it was actually stylish. Boy, was that furniture cheap. I remember buying a desk for $20 that would have retailed for $150. Were there mites and bedbugs? Not that I could recall. After I graduated, I sold that desk for $20 (I probably could have sold it for more, but you gotta pass along the good karma).

I have since moved on from second-hand furniture, but have wondered whether it is a venue that I should reconsider in the form of estate sales. I once had a coworker who stated that she bought a $10,000 dining set for “only” $1000. Sounds like she got a great deal, if the dining set is worth that much to her. I haven’t actually seen her dining table, but I sometimes wonder if one would derive as much happiness in buying a “new” dining table at a furniture store for $1000. Who knows.

Miscellaneous items in the used market

There are various items that I’ve seen in the used markets that are simply expensive when purchased new. Sporting equipment like golf clubs, hockey gear, ski gear, and scuba gear are some of the items that come to mind. These are items that I actually don’t feel cheap by buying used. Scuba gear is EXPENSIVE. Most of the time this gear is hardly used. More importantly, you might not use it frequently either. I have a coworker who owns her own snowboard, but only hits the slopes once or twice a year. Someone eventually buying her snowboarding gear would get a great deal on equipment that is rarely used.

Who wants to buy a used watch pitcher? J/k, but not really…

Used clothing = bad idea? 

This is a topic that I have mixed feelings about. Justin at Rootofgood purchases used clothing for the family, which is a practical idea for kids who will outgrow their clothing within a few years anyway. Our markets are filled with used clothing. The last time I made a Goodwill drop-off, I was shocked to see department store-sized aisles of used clothing for sale. Some of the used clothing was practically free (<$2), which some of it was overpriced ($19.99 for a Banana Republic top).

I’d imagine that you can get huge savings on used clothing, but is it worth your time to sift through the mix to find something that suits you while saving a few dollars? Would you ever buy used shoes? What about socks? What should one’s threshold even be?

Should an early retiree doctor with $5 million in the bank buy a used shirt for $5 or just spring $15 for a new one?

What is your threshold for buying used items?