Why You Should Not Live Like a Resident

Show Trancript

Jimmy Turner MD

So July is a transition period. I think about it like this, I said kind of like a new year, right? You make your new year’s resolutions. These are the things that I want to tack off.

Jimmy Turner MD

Download a free copy!

 

And unlike those things, you’re not going to stop doing them after three weeks. These are things that you need to make sure that you’re doing and that there is a timing element to it. I’ll give the qualifier just for Justin’s sake here.

Jimmy Turner MD

This is not specific advice for you. And just to make sure, particularly when it comes to student loan aspect of things, you make sure that you know what you’re doing. And that may mean educating yourself, learning a ton about it.

Jimmy Turner MD

It may mean getting a student loan consult from a source that you trust. Regardless, high level stuff that I see people screw up. And maybe the way that I can explain this, Justin, so that I don’t make your brain go crazy here is just to tell you anecdotes.

Jimmy Turner MD

So it’s not uncommon for me on Twitter at TPP underscore MD, if you want to find me there, that’s where I’m actually only play some active socially. And I can’t call it X. I’m never going to be able to call it X.

Jimmy Turner MD

I get this question all the time. People will be, okay, you know, I just finished my fourth year of medical school, or better yet, let’s start back before that. Hey, I’m a fourth year medical student.

Jimmy Turner MD

And somebody told me that, you know, I should file my taxes, but then I talked to my student loan people at my school. And they said that I didn’t need to do that. I cannot tell you how often that happens.

Jimmy Turner MD

And then I have to explain to people, I hear what they’re saying. But you have to think about this, right? When you’re a fourth year medical student, let’s just assume in the scenario that you have no income and that you’re not married, right?

Jimmy Turner MD

You’re documenting a $0 income. And when you start your payments, they’re going to be based on that $0 income, which makes your payments zero, by the way, because they’re based on, again, your income.

Jimmy Turner MD

And people will tell you, no, you don’t need to file your taxes. Well, come July, now you have the opportunity to consolidate if that’s appropriate for you, which means take all of your loans to make them into one loan.

Jimmy Turner MD

And assuming that that’s the right thing for you to do, what happens is you can now skip that six month grace period. Everybody enters a grace period when they finish training. And for six months, you’re not required to make payments.

Jimmy Turner MD

That sounds great. Unless your payments were going to be $0 and those $0 payments were going to count towards forgiveness. And now you have to make six extra payments on the back end for thousands of dollars each month.

Jimmy Turner MD

And so for the fourth year medical student who hits me up on Twitter and says, Hey, do I need to file my taxes? I’m single. I don’t make any money. And I explained to them, yes, you do, because that verifies your income and you can consolidate, skip the grace period, verify that income and have $0 payments.

Jimmy Turner MD

By the way, it’s July. And so if you’ve done the first step, now’s the time where you’d consider consolidating if that’s correct for you. And you’d be able to skip this grace period and get those really low or $0 payments.

Jimmy Turner MD

So something to put on your radar because this gets lost all of the time. And so it’s worth mentioning, I think.

Justin Harvey CFP

Yes. And then if you’re a little further along, this is a good time to revisit what payment plan you’re on. And to the extent that you know, if you are bound for a forgiveness track versus a full repayment track, forgiveness would be…

Justin Harvey CFP

PSLF is the most common public service loan forgiveness. This means you’re working for a qualifying 501c3, which is most academic institutions, and then any governmental or county or any type of employer there.

Justin Harvey CFP

In those cases, it is very important to begin to get those PSLF eligible credits, monthly payments as soon as possible, and also to make sure you’re on the right payment plan. Now, which payment plan is the right one is going to depend on a variety of factors, but only an income driven repayment plan, revised pay as you earn, which is now save, pay as you earn, IBR, ICR.

Justin Harvey CFP

Those are income driven payment plans, the payments of which will qualify for PSLF. And then if you’re on full repayment track, in most cases, it’s okay to be on an income driven plan. And if you’re on save, that’s great because you get the full interest rate subsidy, meaning if you pay $100 a month, but you’re supposed to owe…

Justin Harvey CFP

There’s $1 ,200 a month of interest that’s being accrued. Uncle Sam is going to pick up the 1 ,100 per month that you’re not paying. So it’s essentially taking your 7 .25% interest rate and taking it down to 0 .2% or something like that.

Justin Harvey CFP

It’s very advantageous for borrowers. So getting on that save plan, if it’s appropriate for your specific circumstances, has significant advantage for you. Yeah. And I…

Jimmy Turner MD

I think it’s really important to highlight that this stuff can become really complicated. Even the stuff you just mentioned, I understand it, Justin, and a lot of the listeners are probably lost and nuanced there.

Jimmy Turner MD

If you are in a situation where you are married and or your spouse has loans and or you live in a community property state, if you aren’t sure what those are, you can look it up. There’s a list of community property states.

Jimmy Turner MD

Those infinitely complicate your situation. It is something that makes it where getting a student loan consult becomes more important. As I’m looking this up, just for those of you that are curious which community property states there are, California, Arizona, Nevada, Louisiana, Idaho, New Mexico, Washington, Texas, and Wisconsin, those are the community property states.

Jimmy Turner MD

Those are situations where it makes it really complicated to figure out should I be in SAVE, should I be in the new income -based repayment program, which is different than income -driven repayment programs, the umbrella term for all these things.

Jimmy Turner MD

Let’s just suffice it to say that let this show be your reminder that July is a fantastic time to make sure that you are in the appropriate plan, that you’ve consolidated if that’s appropriate for you.

Jimmy Turner MD

In particular for interns, you consider doing that and looking in to see if it’s right for you because then you get to skip the grace period, get those $0 payments, which I promise on the back end of that you will be thankful that you did so.

Jimmy Turner MD

Justin, maybe on the debt side, another thing to consider is how to eliminate or eliminate and reduce the high interest debt that you have because we did a show recently from the Medscape Survey, which surprisingly showed that 25% of attending physicians have recurring credit card debt, which still to this day is mind -blowing to me, mind -blowing.

Jimmy Turner MD

I understand when residents have some credit card debt. I’m not justifying that by the way. I’m not giving you permission to go and rack up a bunch of credit card debt. I just understand that things are tight in residency and sometimes people have credit card debt and I’m not in the name and blame or shame game when it comes to credit cards.

Jimmy Turner MD

That said, they are high interest debts. They are a financial emergency. So if you can avoid them, great. If you can pay them down even better, if you have it, it is really important to take stock of what you owe, where you owe it, what the interest rates are and so often find that people don’t even have a list.

Jimmy Turner MD

They don’t even have an idea of what the interest rates are and the various debt obligations that they have and so that is another thing to consider. By the way, what would you define high interest debt as?

Jimmy Turner MD

I’m curious.

Justin Harvey CFP

I’ll probably double digits at this point. And this is for all of Dave Ramsey’s faults. And it’s fun to make fun of him in certain ways. This is the greatest service he has done to humanity, which is to help people focus on debt pay down and intentionality and frankly, intensity around debt pay down and creating the fancy financial words who would use or looking at your balance sheet, like all the assets and all the debts and specifically on the debt side.

Justin Harvey CFP

What are each of the line items that you have? Which credit cards are they? What are the balances and what are the interest rates associated with each of those debt line items? And then having a plan to begin to pay them off.

Justin Harvey CFP

Most credit cards are in the 15% to 30% range. So it’s very, very high. Anything where you’re carrying a balance, and I’ve had clients, Jimmy, that come to me and say, Hey, yeah, don’t worry about that credit card.

Justin Harvey CFP

I’m just carrying a balance just to help my credit score. It doesn’t help you. Don’t do that. It’s good to pay it off every month. It’s good to have access to credit, but carrying a balance every month is not something that’s going to enhance your credit score in a way that’s going to be helpful.

Justin Harvey CFP

So don’t carry a balance. Pay it down to zero every month. Do yourself a favor.

Jimmy Turner MD

Yeah, that’s actually an interesting thing that people don’t know that the emergency fund comes second because credit card debt is by definition, a financial emergency. When you have an industry of 25%, you’re not getting that rate anywhere else outside of a 401k match or a 403b match.

Jimmy Turner MD

And so an emergency fund is a great goal. So in $1 ,000 for those that are listening, that for me, I think that’s a four figure sum of money. Maybe it’s the first time in your life you’ve had $1 ,000 in your bank.

Jimmy Turner MD

God forbid something happens. That’s obviously going to transition. So if you’re just becoming an attending, now we’re talking about having three to six months of living expenses. If you can do that in training, even better, that’s great.

Jimmy Turner MD

I wasn’t able to do that. I don’t think that I could have saved three months of living expenses, to be honest with you, when I was in training. And so I don’t want to force that on other people, but maybe I’m being naive.

Justin Harvey CFP

Yeah, I mean, personal finances during training are so circumstantially dependent if you’re in a hot castle building area, if you’re married versus not, if you have a roommate or you don’t, if you have to buy a car because of, you know, where your site of service is, where you’re working, it’s basically just like, try to white knuckle your way to its ending hood and then figure it out.

Justin Harvey CFP

It’s kind of what I tell people.

Jimmy Turner MD

Yeah. Yeah, no, absolutely. And so when you’re thinking about your emergency fund, you know, things that we’ve talked about in the past that need to figure into this number, right, include how much it would cost to sell your house, right, you need to have enough cash around or equity in your house to be able to move.

Jimmy Turner MD

You need to think about malpractice insurance, potentially, you know, three to six months of living expenses, getting to six months living expenses may actually cover all of that, you know, three months plus all of those other things.

Jimmy Turner MD

But try to figure out, God forbid, if you lost your job and you had to move, what would that cost you? And it doesn’t need to be sitting in like just a regular old checking account at your bank, it can be in other locations where it’s not doing nothing for you.

Jimmy Turner MD

Figuring out what it would cost you if you lost your job today, and you needed to move to a different state. I think that that’s a decent exercise to help you figure out the ballpark, just a generalization of, you know, how much money are we talking here?

Justin Harvey CFP

Yeah. Once you start talking about med -mail premiums, that’s kind of a whole another beast. So it’s a good opportunity to say like reach your employment agreement and make sure that you understand the terms of sever.

Justin Harvey CFP

You might be paying some money back or some other thing. If you’ve got a signing bonus, you sign up for a hundred grand of a signing bonus, you got to stick around three years for that to be fully realized.

Justin Harvey CFP

That can be a real zap that people aren’t expecting. So.

Jimmy Turner MD

Yeah, I don’t think people realize until I started giving lectures on this stuff, I didn’t realize how much malpractice insurance costs, depending on the state and a specialty you have, it can be a massive number to cover what’s called your tail to cover your your risk after you leave your prior employer.

Jimmy Turner MD

It is not a small number, like particularly if you’re an OBGYN who lives in like Florida or New York.

Justin Harvey CFP

Yeah, it’s another it’s a mortgage

Jimmy Turner MD

it is huge. And it blew my mind. And so, you know, it behooves you, should you get another job to review your contract and make sure that someone’s covering your tail, which ideally would be your employer as something to have in those conversations.

Jimmy Turner MD

But Justin, so one of the things that I have, I just have to hammer home, and I know I talk about this a lot on the show, but disability insurance, there is a 60 to 90 day window after you finish training, where you still have access to the guaranteed standard issue policy, which is only available while you’re in training and for about two months after.

Jimmy Turner MD

So as the show comes out, you have about four weeks if you just finished training to still have access to the GSI. Now, why would you need a guaranteed policy? Well, if you have type 1 diabetes, or you have, you know, multiple surgical procedures, or, you know, you have a host of psychiatric illnesses that you currently are dealing with, there’s a wide variety of reasons why you might need a guaranteed policy,

Jimmy Turner MD

which doesn’t look into your medical history. Now, if you have a very clean medical history, you don’t need the GSI. But it’s nicer to go ahead and apply for disability insurance when you have the option so that we can let you know, hey, actually, the GSI is the best route for you.

Jimmy Turner MD

And thank God you contacted us because, by the way, if you did it in September, you would no longer have access to it. So July, you have to not swing and miss on this one. This is something you have to take care of, because the thing that you should have gotten may go away if you put this on the back burner for three months.

Jimmy Turner MD

Totally.

Justin Harvey CFP

Totally. I think all insurance is important. There’s a number of policies that are really important that I would insist on for clients of mine. As much as I don’t like to say one is more than the other, disability insurance is the most important for a 32 -year -old attending.

Justin Harvey CFP

Because if you’re planning on a 30 -year career in medicine and you’re making, I’ll just pick a number, half a million bucks for round number’s sake, half a million times 30 is $15 million of wages. If you’re thinking about all the assets you have, you’ve got a car, you’ve got that $8 ,000 in your checking account, that’s your emergency fund, and you’ve got your ability to earn $15 million, which of those is most valuable?

Justin Harvey CFP

It’s the latter that I just mentioned. Getting a long -term disability policy at the outset that is robust, own occupation, I like seeing a cost of living adjustment rider on those benefits. Get it locked in, and then you’re going to be able to increase it once you move to attending hood.

Justin Harvey CFP

It’s a no -brainer. It’s part of the blocking and tackling, the basics. Make sure you do this if possible, assuming you’re still insurable, and or if you have access to this GSI, it’s very, very important for your financial security.

Jimmy Turner MD

Yeah, and if you’re not sure if a GSI exists where you’re in training, just email me jimmy at moneymeetsmedicine .com. We’ve got a whole host of resources to look into. There’s four or five different places we have to look, and some of them are harder to find than others, and the list is constantly changing, which is why I don’t put it online because it would be inaccurate next week.

Jimmy Turner MD

So it’s a constant ever -evolving area. The other thing to mention is that a lot of people when they’re in training, they’re like, ah, I can’t fit disability insurance in my budget. I’m just going to tell you a little trade secret here that a lot of agents, when they put numbers in front of you, put one set of numbers from one company or maybe a few different companies, and they say, okay, this is the $5 ,000 benefit,

Jimmy Turner MD

and these are all the prices, and they don’t tell you that you don’t have to take $5 ,000, that you can actually take less, which lowers the amount that you pay each month. There are options to make things more affordable for you while you’re in training, but not getting it can be a catastrophic mistake.

Jimmy Turner MD

And I can tell you that because I made mistakes with disability insurance and I really wish I hadn’t. On the same front, if you just finished training and your income just went from $60 ,000 to $600 ,000, this is the time of the year that you need to look into increasing your benefit for your disability insurance because now you’re not covering $60 ,000 a year.

Jimmy Turner MD

You’re covering your take -home, whatever after -tax number that is for your $600 ,000 year annual income. So you need to make sure that you increase your coverage to reflect that after you’ve proven that your contract has gone up and you can now afford the monthly payments that are going to be commensurate with increasing that coverage.

Jimmy Turner MD

But don’t forget, and Justin, have you ever had anybody? I know that I’ve heard horror stories. I hear all the horror stories about disability insurance because people are like, they feel comfortable reaching out to me because they know I screwed it up.

Jimmy Turner MD

They’re like, hey, Jimmy, let me tell you about how I screwed it up. And so one of the ways that people do this is that they don’t realize that the policy that they have, for some policies, there’s a timeframe in which you have the opportunity to increase your coverage and that if you don’t, it goes away.

Jimmy Turner MD

Now not all policies are like that. Every company and every policy is a little different in terms of how that’s structured, depending on when you bought it. But suffice it to say, you need to increase your coverage and you at least need to have considered the option and had a conversation with your insurance agent because there’s a chance that if you don’t make a decision, it may go away and you might not be able to do it later.

Jimmy Turner MD

And now you’re covering your $60 ,000 resident salary when you’re making 600 grand. That’s not going to be enough. So please don’t sit on this. If someone’s approaching you, is your insurance agent, they’re sending you communication about, hey, this is the time of the year to consider increasing this.

Jimmy Turner MD

You’re now in your three -year window where you can do such and such. Don’t ignore that email. I know you’re a doctor, you’re busy, I am, and you ignore your emails at work like I do sometimes. Maybe I shouldn’t have said that on air.

Jimmy Turner MD

But don’t do that. This is the one email. Please don’t ignore that email because you’re going to regret it later.

Justin Harvey CFP

Yeah. And it is difficult to separate signal from noise in your inbox. And especially when you’re like the financial stuff, you’re getting cold emails from people you don’t really want to talk to. But you need to…

Justin Harvey CFP

And there are certain policies from certain carriers that you need to take at least a portion of what they offer you. My rule of thumb is like always take all of it until you’re financially independent and do whatever you want.

Justin Harvey CFP

But between now and then having a robust insurance plan, knowing that if anything goes wrong, if you get hurt, if you get killed, if your house burns down, God forbid, those are all terrible circumstances.

Justin Harvey CFP

It’s one less thing to worry about, to know that you had the best insurance that you could have had. And so just take the max, especially with long -term disability to just make sure that you’re protected.

Jimmy Turner MD

I guess it’s a good point to add. I didn’t think about this before the show, but we do a quarterly net worth update to keep a picture on where we are. And actually, someone recently asked me, they’re like, hey, Jimmy, you know how I used to publish your net worth updates and publish them on the blog?

Jimmy Turner MD

And back when it was really cute and I didn’t have as many assets, we actually just broke seven figures in our investment assets for retirement, which is a big deal. I mentioned that because if you’re doing your quarterly or annual net worth updates, now may be the time to consider whether you need that term life or you need that disability insurance coverage.

Jimmy Turner MD

If you’re an older listener listening to the show, maybe doing that every three months, you have a snapshot of where you are, maybe that number is getting big enough where you can actually drop the disability insurance or drop the term coverage because you are now financially independent and no longer would need that and save yourself the amount of money it’s costing you each month to protect those things that you can now protect yourself.

Jimmy Turner MD

So I just throw that out there because I’m a big fan of doing quarterly net worth updates. So if you don’t have a financial advisor that’s keeping on track with those things, it’s literally like an old school Excel spreadsheet and it’s just cool.

Jimmy Turner MD

I’ve done it every quarter for the last seven years. I can see where I was and where I’ve come to and yeah, it produces some encouragement there to keep going.

Justin Harvey CFP

I feel the same way, Jimmy. I do these for my clients. And it’s one of those like, oh, what we’re doing is working kind of moments. And it’s probably one of my favorite things that we do. So yeah.

Jimmy Turner MD

Yeah, all about it. So whether you’re doing it yourself or you got an advisor helping you do that, I think it’s a big deal. So Justin, let’s say that somebody is just starting on this journey. Someone just recommended the Money Meets Medicine podcast, which thank you for doing that.

Jimmy Turner MD

It really goes a long way. We have people reach out all the time and that you’ve shared the show with. It’s really helping a lot of people, but they want to start their financial journey in terms of forming a financial education.

Jimmy Turner MD

What do you point people to? What are the sort of things they can look into?

Justin Harvey CFP

Yeah, so I added this to the list as get educated. This is a good time to do this, mostly because you kept saying that you’re answering everyone’s questions on Twitter and X. And it’s great to crowdsource financial advice from X, but it’s even better to not need to do that.

Justin Harvey CFP

And I love Twitter and Reddit. And I go to Reddit all the time. So there’s some real gold nuggets there that you can excavate if you know what you’re looking for, but it’s better to not need to. And when we’re talking about the basics of financial planning and your financial wellness, it’s much better to not have to crowdsource.

Justin Harvey CFP

So how do I do a backdoor auth IRA? And that’s kind of a low stakes question. There are more important questions that getting personalized input is helpful. So Jimmy, I know you’ve got a great book. You offer it for free.

Justin Harvey CFP

That’s an incredible resource to the listeners of this audience. The podcast is an incredible resource. There’s some other books. I think we can list a few in the show notes for folks that are interested.

Justin Harvey CFP

But the main thing here is take an opportunity as you’re at this inflection point. Frankly, it’s probably most applicable for graduating residents or fellows. When you’re just transitioning to full -time clinical, I’m just trying to get good at being a doctor.

Justin Harvey CFP

Do the basics, but you don’t need to take this opportunity to get all up to speed. But before you transition to Attendinghood, understand the basics. Understand how to identify a good advisor, the basics of investing, the basics of debt management and cashflow, the basics of wealth building, the basics of insurance, so that when you’re making these important decisions, you can have some paradigm in which you can make important decisions.

Justin Harvey CFP

Sometimes in conjunction with a professional, sometimes not. The second item I have on this list is get a mentor. It’s true clinically. You want to surround yourself with a couple of docs that you can bounce questions off of.

Justin Harvey CFP

I see my wife or doing this with some of her co -residents from training or other friends that I go to the happy hour with my wife and all their doctor friends, and they’re all talking about clinical stuff.

Justin Harvey CFP

In the same way, they don’t need to be physicians. Just people you respect who seem like their lives are in order, they don’t seem stressed about money. Hopefully, they have a healthy -looking life in terms of their fitness and their relationships and maybe their marriage or family if they have those things.

Justin Harvey CFP

Just be honest with them about you’re trying to have a life that looks like theirs, and money is inextricably intertwined with a lot of these things. Have somebody help to show you the way.

Jimmy Turner MD

You know, I will actually mention a book because speaking of Twitter and crowdsourcing, I actually came across a post by Jonathan Clements, and he is the author of How to Think About Money and also runs a site called Humble Dollar, where he’s written for quite a long time.

Jimmy Turner MD

And Jonathan is someone I’m a big fan of. And he shared on Twitter recently and on Humble Dollar that he was recently diagnosed with cancer, which seemed quite terminal in nature. He doesn’t expect to live a lot longer.

Jimmy Turner MD

And his book, How to Think About Money, is a book that I’ve bought several of my residents in the past. It’s a great book by someone that is someone I’ve looked up to in the personal finance space. I don’t know Jonathan personally, in terms of…

Jimmy Turner MD

I don’t have a cell phone number. I can’t call him right now, but wonderful author, wonderful thought leader in the psychology of money space for me personally. And so check that one out. It’s a really short, simple read.

Jimmy Turner MD

And actually, I could probably reach a copy of it if I could stand up and do that at the moment, but I got a microphone in front of my face. That’s a good book to start with too. Great book in my opinion, in my estimation.

Jimmy Turner MD

Speaking of becoming an attending, I view this as like the biblical children do childish things and adults do adult things. When you adult, you should probably do adulting as a verb. And one of the ways that you can adult as a verb is to actually get a financial plan.

Jimmy Turner MD

And you can DIY this and learn everything and create a plan for yourself. That’s one way to do it. You can get a financial advisor to do it. You need to start thinking about everything. All those things you put on the back burner when you’re in training, like estate planning, like getting a will and trust or having an investment policy statement about what you’re going to do with your investments and what you’re trying to head to and which investments are you going to hold and what’s your asset allocation,

Jimmy Turner MD

where are you going to locate those items and all of the other pieces that are involved in that retirement planning, what age do you want to be financially independent by, your overall goals, what is your why, go through the kinder questions.

Jimmy Turner MD

Great resource, by the way, three kinder questions. You can look it up and I’ll link to it on the show notes as well. But all that to say, you need to go through these things and check off these boxes because they’re really, really important.

Jimmy Turner MD

And they’re likely things that you’ve put on the back burner while you’re in training because you’re getting destroyed and rightfully so. And I didn’t tackle these things when I was in training either, to be honest with you.

Jimmy Turner MD

I got term life insurance. I got one thing. I got my term life insurance after I really screwed up disability insurance, but make sure that you are creating a financial plan. I really recommend it because far too many people in my experience aren’t intentional with their personal finances.

Jimmy Turner MD

And then 15 years later, they reach out and they’re like, Hey, Jimmy, I’ve got a question about X, Y, and Z. They still don’t even know how much money they need to be able to retire. It’s just like basic stuff.

Jimmy Turner MD

You got to have the foundation in place.

Justin Harvey CFP

Yeah. And it’s kind of thing that it’s just like compounding and like the sooner you start investing, the better off it is. The sooner you do some of these basics, the sooner that protection, the sooner that strategy, the sooner the good fruits that are born from these things will begin in your life.

Justin Harvey CFP

And a lot of them, you know, to be fully transparent, it does take some emotional energy. I mean, I can’t tell you the number of like estate plans that I’m trying to get done right now for clients that I started the process two years ago.

Justin Harvey CFP

And to have two spouses sit down for long enough to soberly consider their death, think about what they want to happen. Who do they want to raise their kids? And where do they want all their stuff to go?

Justin Harvey CFP

And under what circumstances are we going to pull the plug? You know, if they’re incapacitated, like those are admittedly not easy questions. And sometimes if we can’t decide on a guardian, like they’ll just sort of kick it down, kick the can.

Justin Harvey CFP

And we’re going to like leave it to the courts and leave it to your family, your surviving heirs to like fight over it if you don’t do these things. But the nice thing is, once you get it done, you cannot think about it for the next, you know, three to five to seven years, depending on how things change in your life.

Justin Harvey CFP

And you’ll have a really good safety net in place. But there is some starting friction, like be prepared for that. But if you can just get over the hump, get the stuff done, then you can rest easy for a while.

Jimmy Turner MD

There is definitely some startup energy required for that stuff, particularly the estate planning, but it’s so important. I didn’t even realize when we went through it that, and this sounds so dumb now, I’m sure everyone else in the world understood this before they did this process, but I did.

Jimmy Turner MD

The executor of your estate and the guardian of your children, for example, do not have to be the same people. That was interesting to me because I was like, you know what? I don’t know, and as I’m thinking through this process, and I’m not saying I feel differently now, but at the time I was like, I wonder if the people that I would want to take care of my children are the same people that I would want to manage the finances for my estate and for my children because they may not be the same people.

Jimmy Turner MD

Kristen knows, and I shared this before the show with you, Justin, if I die, if it’s just me, I’m just the sole dying person in our relationship. The breadwinner is gone. My wife is a public school educator.

Jimmy Turner MD

She should be paid a lot more, but things are the way that they are. If I died, she’s to call you to help us with our finances and help us sort that out in the aftermath of Jimmy’s untimely demise. She knows that, but at the same time, there are going to be people that are actually in charge of all of the things.

Jimmy Turner MD

They get to execute those documents, who gets what, how it goes down, and then also who gets to charge your children. But that’s if both of us die. It’s not really going to come into effect if it’s just one of us.

Jimmy Turner MD

So there are so many scenarios. What if one of you dies? What if both of you dies? What happens to your children? Who executes your estate? Who’s in charge of the finances? Is there going to be an irrevocable, as you say it, trust or not?

Jimmy Turner MD

All of that has to be thought through. It does take some activation energy. There is definitely some friction there, but these are not questions you want to have no answer.

Justin Harvey CFP

Yes. And, you know, we’ve talked about this in the past. Everyone has a will. If you don’t have a will, then there’s the state intestacy rules that will govern what happens to your stuff. Guardianship is a whole separate thing.

Justin Harvey CFP

And that’s a question of courts and families and stuff like that. But you’re way better off to just have something that is predetermined by you in the way that you want, rather than saying, what is the law in the state of Maryland, according to, you know, if I die without a will on file.

Justin Harvey CFP

This is particularly true if you, like you have a long -term partner that you’re not married to, or you have like a blended family, or you have other things like state intestacy rules are not designed to handle your specific, like your special needs kid, or to make sure your mom is cared for, even though it’s, you know, it’s just not intuitive.

Justin Harvey CFP

Definitely, definitely take the steps necessary, especially as you’re making these big financial transitions. It’s a good opportunity to reflect and get that done.

Jimmy Turner MD

100%. And Justin, I like this note that you put on the end of this, which is to celebrate and make sure that you are recognizing all the accomplishments you’ve had, particularly if you’re finishing residency or fellowship.

Jimmy Turner MD

And the rule that I’ve always given people for this is the 10% rule, which as we made this transition, it was really hard, right? How much money do you spend towards just the celebration? Buying something that you’ve wanted to buy for as long as you’ve been in training and just haven’t been able to afford it.

Jimmy Turner MD

And so for me, I took the difference between my take -home pay as a resident and my take -home pay as an attending. And I took 10% of that number and I spent it every month and still do. And it’s become gradually the 25% and like the 50% number.

Jimmy Turner MD

For me to start out, that was like a thousand bucks a month, the difference between my take -home pay as a resident and my take -home pay as an attending. And honestly, I bought a nationally aspirated V8 manual transmission sedan that was financed.

Jimmy Turner MD

I financed that thing and the part of the $1 ,000 per month went towards my car. Financially, I don’t know anybody that would justify that purchase or that decision, right? I decided I was going to take 10% and do that.

Jimmy Turner MD

And the other 90%, we paid off $200 ,000 in student loans in 19 months. So no one could look at my life and say, you’re not accomplishing your financial goals, but I really hate when people put you in a box.

Jimmy Turner MD

You can always celebrate in this way, which involves none of these bad financial decisions. I mean, I don’t know, but you absolutely, whether it’s 10% or 5% or whatever number you come up with, you deserve to celebrate.

Justin Harvey CFP

Yeah, my rule of thumb is just do something that’s a one -time event and not a recurring payment. So Jimmy, your test, your purchase would not have met my test, but… I failed. That’s okay. Because I do have some clients that are financially, to be honest, they’re strained in some ways and they have a car and I’m like, oh, we can sell the car.

Justin Harvey CFP

The car makes me happy or not yet to sell the car. So to your point of personal finance being personal, I’m a big believer in celebration and in recognizing achievement, especially, man, when you put years of your life and hours of each day on the line to achieve a very worthy goal of being trained to be able to help people in the most valuable and intimate way in medicine, that is worth celebrating.

Justin Harvey CFP

And buy the nicest bottle of whiskey you’ve ever drank, go to the nicest restaurant you’ve ever been to, but think twice before you start the Country Club membership or the luxury vehicle. I mean, do what you want to.

Justin Harvey CFP

But this is one thing to just consider.

Jimmy Turner MD

Yeah, no, I think I think anchoring yourself down in a in a monthly payment is genuinely an unwise thing to do. Do you regret it? Do you regret doing that? No. 100% no.

Justin Harvey CFP

So that’s the ultimate test. And that’s why my rule is really only a starting point. Because I know lots of people who would say the same thing. And the ultimate test is like, is this something I’m going to regret?

Justin Harvey CFP

And if you can do that and say I didn’t regret it, that means that the rule is not universal. So that’s good to recognize here too.

Jimmy Turner MD

Just to be clear, that definitely doesn’t qualify for every car purchase I’ve ever had. Listeners of the show that have been here for a while know that I also, at one point, I bought a Porsche Boxster.

Jimmy Turner MD

It has two seats in it, by the way. I have three children. That’s four of us. And by the way, that math doesn’t math. And so, Chris would be like, Hey, can you go pick up the kids? And I’d be like, Yeah, if I put them in my trunk, no, I can’t pick up the kids.

Jimmy Turner MD

I have two seats. There are three children. And so, that was a purchase that I regretted. And it wasn’t even like a financial thing. It was just, I was never going to use the car. It just wasn’t going to happen.

Jimmy Turner MD

But yeah, I’m a car guy. And so, for those of you listening, including the listener of the show from last week, who’s a big car person, it’s okay. You don’t have to hide and just be scared of the financial community, just beating you, browbeating you with all these things.

Jimmy Turner MD

It’s okay. You can be a car person. It’s all right. You just can’t be a car person and a mansion person and a private school person and all those things. Country Club, when you finish training, your celebration can’t be your entire paycheck towards all these things that don’t build wealth.

Justin Harvey CFP

or just be okay working until you’re 87 years old. And I can’t tell you that that’s the wrong answer. And if you understand the trade -offs, then it’s your life.

Jimmy Turner MD

I would suggest you thinking of your 87 -year -old person and what they would have to say when you make those decisions. But I do. I agree. If you want to work for the rest of your life and spend every dime that you make and not save a dollar, that’s…

Jimmy Turner MD

You do you, boo. You do you. All right, everybody. So as you listen to this show, make sure you’re checking off these boxes, right? If you need financial advisory help, of course, Justin can help you.

Jimmy Turner MD

If you need disability insurance, student loan help, happy to do that, moneymeetsmedicine .com. Regardless of where you get your help, please make sure you’re checking off these boxes. That ultimately is what the two of us care about.

Jimmy Turner MD

We want to make sure that you are taking care of the things that you need to take care of to keep your financial house in order. Everybody, thanks for tagging along. Thanks for sharing the show with everybody and for rating it on iTunes, Spotify, wherever you might listen.

Jimmy Turner MD

We appreciate you being a part of the Money Meets Medicine community. Don’t hesitate to reach out, jimmy, at moneymeetsmedicine .com. If you have questions, things you want us to discuss on the show, we will see you next week.

Jimmy Turner MD

Cheers. Justin Harvey is a certified financial planner at APM Wealth where he helps anesthesiologists and pain medicine physicians. Dr. Jimmy Turner is a practicing academic anesthesiologist at Wake Forest in North Carolina and he’s also a licensed insurance agent.

Jimmy Turner MD

However, either Justin or Jimmy are your financial planner, investment advisor, or insurance agent. This show is expressly for general education and entertainment purposes only. Nothing should be considered financial advice.

Jimmy Turner MD

All views expressed are solely the views of the guests on the show and do not represent the views or opinions of their employer.