Today I am honored to have a guest post on Financial Samurai. It covers what you need to know about your home insurance policy just in case your house burns down. Don’t think it can happen to you? Neither did I.
Today is some original content from fellow blogger and physician- Rogue Dad MD! While we have never met in person, we talk quite frequently over the WWW. This month we have been posting on each other’s site. I had a guest post on his earlier this week and now I am psyched to have some original content from him on my site.
We’ve struggled to teach our oldest son, Rogue One, the value of money. We’ve made attempts at allowances, discussed splitting cash gifts from family into personal/charity/savings, and simply put money away he has received into an online savings account.
While he understands money in a factual sense, he has not yet demonstrated a strong grasp of the effort required to earn money, nor the understanding of the time-value of money or the concept of frugality.
Given that he’s 8-years old, none of this is particularly surprising. His parents are educated professionals, and while he grew up as I went through training and my wife through grad school, he’s certainly never been or felt deprived in any way to the point where a lack of money significantly impacted his life.
When he’s made purchases with savings that have turned out to be duds (hello MiP and Chip the useless robots), he hasn’t really felt the opportunity cost of a bad purchase.
On a recent trip to Wal-Mart I decided to try a new tactic.
A Trip to Wally World for Unmentionables
I’ll admit, I prefer Costco. Wal-Mart, with all its corporate ugliness and worker maltreatment, DOES HAVE its place in modern shopping.
They’re making strides, but given their history of poor treatment of suppliers and workers (and many of their stores simply were painful because of the lighting and colors), I often avoid it.
Sometimes though you just need a bunch of random things all at once (think milk, a mop and legos), and sometimes you just want to avoid spending a ton of money.
It turns out that we don’t pay much attention to Rogue Ones clothing — he’s about to turn 9, and has been wearing size 6 underwear for awhile.
He’s thin, so I don’t think he’s been suffering in silence or damaging his body. As he’s never said anything to us, we really didn’t think about it. Until suddenly he mentioned that none of them fit. So we decided it was time for that most fun trip — underwear shopping.
Amazing, Neon, Sweat-Wicking Boxer-Briefs
We walked into the boys undergarment section and he almost ran to the neon boxer-briefs. Not only were they an awesome shade of yellow, they were “performance” and would wick away sweat! They were clearly the ideal purchase.
Keeping things nice and dry!
So we initially discussed utility — what benefit will he get from their sweat-wicking abilities? Was it something he was missing from his existing pairs? Was he going to run faster? Is he secretly Lebron James (who I said could justify them)?
We discussed the value of color — what is the benefit of neon underwear I asked him? Will you be showing it to other people? “No, he replied. Will the color matter if no one gets to see it, if you don’t even see it? “No,” again.
He began to understand the gimmicky aspects of purchases as we discussed how companies try to convince you to buy things you don’t really need.
Can’t Put a Price on Underwear
The fancy ones were over $6 for 3, so buying him a couple of weeks supply — we aren’t cleaning his underwear every week — would cost over $30. That may not seem like much when a single pair of these costs $29, but it seems ridiculous for an 8-year old.
So we turned it into a learning opportunity.
If it costs ~$6 for 3, or $4 for 5, we broke down the unit cost so he could see it was $2/pair for the fancy ones, and 80 cents/per for the generic ones. Demonstrating the fancy ones cost more than twice as much as the generic ones (which is mostly what he has now).
He’s old enough to do some of that basic math himself, but Wal-Mart helpfully puts not just the total cost of an item, but the unit price for many of them, to help with this.
A child still needs to understand the concept of unit cost — which Rogue One grasps — but it can help with the simple division needed to calculate on its own. We also practiced this for another exciting purchase — dental floss and mouthwash (encouraging oral hygiene is important and difficult at this age).
So I let him pick out the type of floss/mouthwash he wanted, but made him compare brand and generic names and calculate rough unit prices (looking at ounces of mouthwash and yards of floss). When he could see via the unit price Listerine cost 4x the price of generic (but identical) mouthwash, despite similar total prices, it seemed like a light bulb went off.
Experience vs. Objects
On the way out we discussed opportunity cost — in kids terms. We discussed what he would consider more valuable — his toy robots (which he had forgotten about and has even lost pieces), or a trip to the pizza place with video games with his friends.
The toys he can keep for months or years, or he could go to Incredible Pizza a few times with one of his close friends (it has a decent buffet and tons of video games).
If he had to use his own to pick between the robots or the outings with his friends, he would choose his friends. However since Mom and Dad aren’t going to subsidize all those outings (or toys), he could use his own money for them.
Except he can’t, because he has a couple hundred dollars of useless robots in his closet instead.
I am a big fan of this philosophy — not that I don’t buy objects, but I am frugal and calculating in my purchases. I’ve been a bit like that since childhood, but far more so as an adult.
Again, it felt like a light-bulb up went off with these discussions, but only time, and repeated lessons, will tell. You can go on The InterWebs and find all sorts of discussions on how to teach your child the value of money.
Children learn in so many different ways that there’s no single correct method. Personalities are different, circumstances are different, and learning styles are different. So I suggest just throwing things against the wall and seeing what sticks.
It turns out that I had forgotten a lesson — attention to detail. We accidentally bought him both small and extra-large underwear — neither were the correct size. So I had to make an extra trip to exchange it for the correct size. Lesson learned.
What are your thoughts on teaching children the value of money? Share below!
DDD here, my thoughts are limited as my son is only 2.5. Still I like this idea. The cost of each unit and determining what is most valuable to kids. It may take a very long while to figure it out, but if you are teaching them frequently then maybe it will stick. Isn’t that what parenting is anyway, a long steady stream of messaging.
Today I have a guest post over at Rogue Dad MD. I discuss what I will teach my son about medicine! We have been collaborating for the month of February. Today he posted some of my original content on his site…so go over here and read it.
Other medicine posts
If interested, here are other posts for I have written about practicing in medicine and things that are unique to our chosen field.
Today is the third post from a fellow blogger and physician- Rogue Dad MD! While we have never met in person, we talk quite frequently over the WWW. He is wise beyond his years and he posts on medicine, family, finance, and religion. Go check out his website or keep reading and see what you think. This post was originally on his site back in April 2017. Come back Saturday for some more original content from him made just for this site!
My First Mistake
On a recent night, Rogue Two, our 3 year-old, wandered into our bedroom around 4am, waking me up, saying he was scared. As I did the previous few nights when he did this, I muttered a curse word to myself and picked him up to carry him back to his room. Upon lifting him, a wrinkle in the routine emerged – he was naked below the waist. At some point before he entered our room, his pajama pants and pull-up were removed.
A mystery had arisen. Yes, the game was afoot.
Rewind 10 Years
I am 3 months into intern year as a pediatric resident. I am taking call every 4th night on the inpatient pediatric hematology/oncology ward, working 30-hour shifts, covering a floor with 30+ patients by myself, routinely having 10-15 new patient admissions per call. At this point I was still considering a career in this heme-onc (how life changes).
At 6am, roughly 24 hours into my shift, I sat alone in the doctor work area, before any colleagues had arrived, checking results of morning labs for patients on the floor. A critical value popped on screen when reviewing one of my own patients. His magnesium level was dangerously high, and dramatically higher than the day before.
High magnesium levels (“hypermagnesemia”) can mild symptoms, ranging from mild GI upset, to severe issues such as respiratory failure. This patient was in a chronic, maintenance mode with his illness, and had no particular reason for this change. The nursing staff had not seen the result and the lab did not call to notify us directly. It could have been a spurious lab value, but my gut told me it was real, and I was fairly sure I knew why it may have happened.
Who Says Residents Don’t Exercise?
The root-cause analysis would have to wait, as I first had to check on the patient. I took off towards his room (running, really), worried he wouldn’t be breathing and no one would have noticed.
I burst into the room and flipped on the light. I promptly woke up his mother, who was always at his side (he was only about 5 years old). I also woke him up and received a dirty look – I already had the sense before that morning he didn’t like me, and bursting into his room early in the morning didn’t further endear me to him (a hospital is a terrible place to sleep in the best of circumstances). I stammered a small apology, found his nurse, had her disconnect his TPN (total parental nutrition – intravenous nutrition for those unable to take food in their GI tract), which I suspected to be the cause of his electrolyte abnormality.
I knew the TPN was the cause, because as soon as I saw the high Mg+ level I was sure I had written his TPN order incorrectly and caused the problem. The pharmacy made a new bag of TPN that was started up at night for our patients. Every order had to be written in the morning (all orders on paper), and even if the composition of the TPN was identical to the previous day, we had to write a new paper order.
Copy, Paste, Repeat — Easy Peasy!
In the section where I had to specify the concentrations of various electrolytes (sodium, potassium, magnesium, etc.), I had transposed a number from another row into the magnesium concentration area. This led to the patient’s TPN being created with a much higher concentration of magnesium then was appropriate. No one noticed my error. The pharmacy made the TPN as ordered, and the nurses started it up before bedtime, the way they always did.
It turns out his Mg+ level, though high, wasn’t high enough to cause him serious harm – he was fine, which is why he was able to give me such a dirty look. It was also plainly obvious that a similar mistake with a different number written down or a different electrolyte mistake could have had significant consequences. Had it been the TPN potassium or sodium concentrations I changed, the consequences could have been dire.
I disclosed the error to the entire team during morning rounds, flagellating myself for the error. They assured me it was a mistake anyone could have made, the patient came to no harm, and that was essentially the end of it. I did go back and tell the family directly about the error – the mother didn’t have much to say. The son gave me another annoyed look, but not much different than his baseline look at me.
As far as I know, no changes to the TPN ordering process resulted from my error. I don’t know if this happened to anyone else or if anyone was ever harmed from it. It’s been a decade since then – I know the culture of that hospital has changed. Not only would such an error be hard to commit there, but if one did, a huge effort would be made to prevent one from happening again.
Medicine still has a long way to go to improve our culture of safety and reduce medical errors – they are still a leading cause of patient injuries and death. Thankfully the culture of medicine is changing, though at times it seems like change the direction of an iceberg by pushing it by hand.
It’s not all bad — we’ve actually made great strides. The root cause analysis is now a common thing in hospitals. A systematic attempt to identify not just the final step that preceded a mistake, but an effort to discover all steps on a path that allowed the mistake to happen. Then changing the system to prevent that error or similar errors from occurring, ideally creating a system that does not even allow a person to make certain types of errors.
I am fortunate that my “first” mistake (I may have had some earlier ones I never knew about) did not cause serious harm – lives have been shattered and careers ruined over such things. There’s no whitewashing the fact that we are a service industry that was built on the idea that doctor know’s best. Mistakes were often considered a result of lack of effort, knowledge, or commitment, without thought given to systematic ways to prevent harm. The culture is slowly shifting, but the iceberg takes a long time to change directions.
Back to the Half-naked Toddler
Befuddled, I carried him back to his room, looked around, and could not find his pajama pants or pull-up. I asked him where they were — he claimed not to know. He did, however, kept telling me that he needed his book. I had no idea what book he meant.
He was not holding a book in our room, and there was no book on the way to his room. I told him there was no book, we were going to put a new pull-up on him, and he was going back to bed. He insisted there was a book, but finally told me it was in my bathroom. I told him he was mistaken, as he had not been in my bathroom. He continued to insist that’s where it the book was located.
I finally gave up arguing and went to my bedroom and into our mater bathroom. On the floor of our bathroom was a kid’s book, his pants, and his pull-up. Curious and befuddled, but too tired to care, I gave him all the items and tucked him back to bed. My wife appeared to have slept through the entire event, so I decided in the morning a root-cause analysis was in order.
The next day I informed my wife of the overnight events. As it turns out, she actually did wake up before I did. She heard a noise, listened for a couple minutes, thought momentarily it was coming from our room, but not seeing anything or being able to localize it, decided it came from outside.
The noise she heard, though she didn’t know it at the time, was our son. He had entered our room carrying a book, entered our bathroom, removed his pants and pull-up, peed in the toilet, left everything behind, then came to my bedside to tell me he was scared.
She had fallen asleep before he woke me up, and I had no idea he was had already been in our room before then. She did not know that he was the noise from our room until I filled in the rest of the story, and it made me realize I had not woken up as soon as he entered our room, the way I normally do (and thought I did this time). It turns out that our son, who normally enters a room like the Kool-Aid man, had finally learned how to enter the room quietly.
So what action plan was taken to prevent this from happening again? Well, chaining him to his bed and locking him in his room didn’t work (kidding! Do NOT call child protective services). We haven’t figured out a solution. Twice in the past week we discovered him at 1030pm asleep on the hallway floor outside his brother’s room. He’s just a wandering spirit that cannot be contained.
Despite having several years experience at both doctoring and parenting, I still have a great deal to learn. Unfortunately, there are probably more mistakes in my future, though hopefully not as many as in my past.
Today we have a guest post from Tom at FIREd Up Millennial. It is a great site. Tom is a fellow Southerner (I am from Tennessee afterall) and an engineer. He wants to become financially independent at 35 which is commendable. I am 37 and still likely 10 years away. He has some good content on his site like this post about thinking ahead in college. If I had advice like this to follow at 18, I would have been a lot smarter about how I was spending my cash. Anyway, I am glad he offered to write a post for Dads Dollars Debts today. So please check it out below and let me know what you think. We have no financial relationships.
My Methods for Picking Financial Products in 2018
It’s a new year, and that means it’s a great time to take stock in your financial health. Your financial needs change over time, and it’s important to make sure that you’re always using the best products for your personal situation. That might mean changing your accounts, investments, or even where you bank.
With so many choices, how are you supposed to know what to look for?
The good news is that there are ways to narrow your choices and ensure that you’re getting the best deal, and the best service for your money. Here’s a basic list of financial products, and some strategies to help you know what to look for.
Checking and Savings Accounts
Most people open their checking and savings accounts at a bank close to their home or work or choose an institution with a lot of branches and ATMs. Others like banks that offer a ton of services. While these might sound like great reasons to pick a bank, they’re actually not the best.
Those big-name banks with lots of branches and services also come with a lot of higher fees—and lower returns. You want the place where your money is sitting to be somewhere with low (or no) fees and higher interest rates on your money. If you have direct deposit for your paycheck and can’t remember the last time you went into a bank branch, look into online banks. They can offer accounts with no fees while still paying you better interest.
Editor’s note: There is no one size fits all for this either. I have a State Farm account (no physical branch) so that I could have all of my ATM fees paid back when I was living in Argentina. Recently I opened an Ally savings account to have the higher interest rate (1.25%) for my savings. I had to open up a Chase account after the Tubb’s Fire took our home to deposit the big insurance checks, and I have another bank account through SunTrust bank for our mortgage, though that has recently been paid off. So figure out what you need and go from there. I suspect some of these accounts will be closed soon.
Do you still have the low-limit, high-interest card you opened to help build your credit?
If so, it might be time to look for something better.
Before snagging the next offer that comes into your mailbox, do some thinking about what you plan to use your card for, and how that fits into your lifestyle. Do you spend a lot on gas and groceries? Travel for business or pleasure? Do you enjoy sporting events and concerts often? All of these questions will help you determine the kind of credit card you want.
You’ll want to look for a card with no annual fee that offers the type of rewards you’ll use often. Don’t get a travel credit card, for instance, if you never travel and spend most of your money on gas and groceries. If you only plan to use your card for emergencies, don’t bother getting a card that has tiered rewards based on your spending level.
Interest rates are also a huge factor here. If you are able to pay off your balance in full each month, you might be more interested in rewards or no annual fee. If you think you’ll be carrying a balance, no matter how small, you’ll need to pay close attention to how much that balance will cost you each month.
Other things that need to be considered include service fees for things like cash advances or foreign transactions. By law, every card’s terms, rates, conditions, and fees must be published and freely available for you to read, and it’s important that you take advantage of that to ensure you know exactly what you’re applying for—before you click Submit.
Editor’s note: I agree with this plan. I personally go for the travel credit cards, but to each their own. I do pay off my statement monthly and if you can’t do that, then you probably should be hesitant about getting new cards.
Personal and Auto Loans
When people need a personal or car loan, they often stop by the bank that already holds their checking account or just depend on the car dealership. This isn’t always the best thing to do. With the multitude of online lenders, you may get a much better rate from a company you haven’t even heard of yet.
Lenders with lots of branches and dealerships have the same problem as big banks—more fees and higher rates. You could end up paying for services you don’t need or use, and pay more over time based on higher interest.
Take a look at other institutions, including online lenders. You’ll want the loan with the lowest rate, with no origination fees or prepayment penalties.
Editor’s note: Also true, and 0% does not necessarily mean 0% at the auto dealer. Make sure you get the price of the car before you tell them what kind of financing you need.
Just like with loans, the online investment scene has exploded in the last few years. Gone are the days when only an investment banker knew enough to manage your investments. Now, anyone can manage their own money through tools designed to empower consumers.
When choosing where you’ll be putting your investment accounts, first decide how much you want to be involved with the day to day management. If you’re happiest just letting your money grow over time, consider a robo-advisor. Want more of a hands-on approach, look into brokers that encourage and empower you to handle your own money. Rather trust a human professional, you can go with a more traditional investment firm.
I still stick with an index fund through Vanguard or Fidelity, though some other companies have good options too. Personal Capital for instance.
Change can be scary—especially when it comes to your money. As your needs change, however, it’s important to do a financial inventory, and research the best products for your needs at the time. You’ll find yourself in a much better financial position because of it.
There you have it. A nice post by Tom FIRE – a new personal finance blogger hoping to retire comfortably by the age of 35.
Today is the second of three posts from a fellow blogger and physician- Rogue Dad MD! While we have never met in person, we talk quite frequently over the WWW. He is wise beyond his years and he posts on medicine, family, finance, and religion. Go check out his website or keep reading and see what you think. This post was originally on his site back in May 2017.
Love And Marriage (And Money)
As part of a bi-religious dual-race multi-cultural marriage, raising children while teaching them different parts of two different religions, perhaps it isn’t a surprise that my wife and I occasionally disagree.
What may be a surprise is that we don’t spend much time disagreeing about religion or race or culture. We do on occasion, but really not very much. You can only have so many debates about who had the better tan, Jesus or Muhammad (PBUH). I refuse to verify her claim that I’m missing out by only eating turkey bacon. There’s no way to settle whether the caliphs would’ve made better backup dancers to Justin Timberlake than the apostles.
No — we disagree about the same things everyone else disagrees about: not folding the laundry; leaving milk on top of the refrigerator; not crossing off enough things on The Honey-Do list. Okay, these are just the last 3 things I got reprimanded over.
Yes – we also occasionally disagree about money.
Wait, What? A Married Couple Disagreeing About Money??
Now, I don’t qualify as a personal finance blogger, and I’m not giving advice, just sharing my experiences. I’ve read many different financial blogs, and learned from a few (White Coat Investor chief among them).
Maybe it’s just me (and it really may just be me, because I’m really stubborn and argumentative), but most financial bloggers don’t ever seem to mention the potential for strife when figuring out your financial future with your spouse/significant other.
I bring this up in part because I spend some time teaching trainees at my institution about personal finance (with the same caveat – I am not an expert).
One of the points I give everyone, every time, is to try to be on the same page as your spouse/significant other, and not to hide money related issues or concerns. It’s a sure fire way to achieve the opposite of marital bliss.
However, getting on the same page isn’t easy. The discussions can be acrimonious. If you don’t discuss it in the proper context and with the proper attitude, it leads to hostility. Yes, you think you’re doing the right thing by suggesting your spouse buy the concentrated chai mix from Costco instead of going to Starbucks, however sometimes you forget that occasionally you just need someone to hand you a hot chai at the drive-thru window when you get up at the butt-crack of dawn to be at work by 6am for a 12-hour shift (this is purely a hypothetical. This didn’t actually happen).
I’m not a millennial – I just barely missed that cutoff. I have the impression couples several years younger than us spend more time discussing money before marriage than we did. Maybe that’s because of the recession, increased debt, and harder to achieve high-paying jobs (or maybe I just think that’s the case because of all the 25-30 year old people blogging about how they and their significant other are on a harmonious financial journey together).
So if you defined all monetary goals in advance of your marriage and you and your spouse are in the FIRE crowd (Financially Independent/Retire Early) at the age of 30 – congratulations! You are in rarified air. Go read Mr. Money Mustache.
If not, congratulations! You are like the rest of us, and you have to figure this out as you go. Keep reading this blog instead (but go read MMM also).
Rogue Mom (I have not received her approval for this nickname, but we’re going with it for now) and I have come a long way in our marriage. We’re coming up on 11 years this month, and I’m not as overbearing and obnoxious about money and spending as I used to be (note the qualifier).
What is one thing I’ve learned? You can’t simply deliver a message about the need to save money or spend less. You have to have understand the financial goals you want to achieve. You have to figure out how to communicate that goal, be able to articulate why that goal is important, and both sides need to be open to having a reflective discussion of what behaviors may help and some hinder achieving that goal.
Yes, learning to agree about money and finances is basically the equivalent of reading self-help books and going through marriage counseling.
Why? It’s important to remember — your significant other may not agree with your goals. It’s all fine and dandy to say you want to eat ramen every day so you can save 70% of your income and retire at 35 (and eat ramen until you die so you don’t have to go back to work as a lawyer) so you can pursue your dream of building blankets for caterpillars to use in their cocoons as they become butterflies. But if he/she doesn’t want to eat ramen for the next 50 years while you make really tiny quilts in the wilderness, you may have to modify your plans.
Actually, Rogue Mom would be fine eating ramen until we die, so maybe not a great example.
This brings me to budgets, the original point of this post when I thought of it (yes, I hit a detour in the writing process). I thought early in our marriage that we needed a budget. We were in good shape financially with minimal debt and both of us working full-time, and we combined our finances relatively early in our marriage.
We maxed out our Roth IRAs, she always ensured she received her max work 401k match, and we saved some cash. We were doing better than most (way better than most doctors at that stage). Yet we did not have any defined savings goals. FIRE was not in my vocabulary (it just entered my vocabulary last year).
I wanted a budget because I was nagged by a feeling that we were overspending, even though we always had plenty of money and we were saving. So somewhere along the way I used Mint.com to set up some budgets for groceries, restaurants, etc. When we were close a grocery limit, I would tell my wife. The response I received was generally akin to: we need to eat, so unless you don’t want food in the fridge, that budget isn’t very helpful. Keep moving.
You can see the flaw in my approach. I was setting numbers without having mutual agreement on why and how much, and I was causing myself anxiety and her stress by placing artificial limits on things that needed flexibility.
What’s The Objective?
The bigger problem? I had not defined my own long-term savings goals or purposes. So the budget was a way to constrain spending, thus making me feel better, without having articulated why we shouldn’t spend the money. I couldn’t articulate it to her because I never verbalized it to myself.
I’ve spent more time over the past few years thinking about what we’re saving for and why. I am now much better at sharing why I think that’s important. She doesn’t always agree (she isn’t shy about disagreeing), but we have a mutual understanding of what the other is aiming for, so we can at least adjust our targets together, even if one side isn’t ecstatic or in full agreement with the target.
We abandoned the budget system years ago for a method that is better suited to our relationship and personalities. Early in our marriage we automated our savings and expenses, so as many things as possible are deducted without effort, including things like Roth IRA contributions or 529 contributions as well as things like the electricity bill.
I set up a spreadsheet that looks at our total income, subtract out the savings (retirement, college, etc.) and any fixed expenses (everything from internet to the lawn guy), and we have a number left over.
That number is our disposable income — roughly what we have to spend each month on every variable expense. That covers groceries to getaways. While some categories will be there every month (food), the amount for all of these categories can and will fluctuate. We periodically look to see what fixed expenses can be cut (bye-bye cable/satellite, hello antenna/Roku), and what variable expenses got out of hand in a given month (looking at you, Costco. Whoops — that’s on me.).
We charge everything possible to a single credit card (not always — future post on my mild version of credit card churning is planned) to make it easy to track spending (I’m very anti-debit cards due to fraud paranoia).
I still keep an eye on the spending, but instead I focus more on ensuring our total variable expenses for the month is under our monthly disposable income.
Automate Your Life — Skynet Approved
We automated our retirement and college savings to hit the goals we agreed on, so the major financial “stress” is ensuring that our variable expenses balance our disposable income over any few month time frame. This actually does require some effort depending on what’s going (high deductible health plans are painful early in the year), but we keep a small cash cushion in the checking account to avoid problems.
This setup works because of a few things:
• We’ve never had significant debt
• We both hate debt
• We never carry credit card balances
• We’re willing to forgo some traditional expensive “nice” things for the things that are more important (think less money spent on furniture so more is available for travel or kids or excursions)
• We have a steady income
• We don’t always buy the cheapest of everything (Cinnamon Frosted Pop Tarts have no generic equivalent), but we are cost-conscious
• I have some flexibility to work extra at times to help offset big expenses (i.e. I can work an extra shift if we plan an expensive vacation)
This setup obviously will not work for everyone, and it doesn’t work 100% of the time for us (but it works way better than my budget). My 3 loyal readers may think this is a terrible idea. J. Money at BudgetsAreSexy may think we’re out of our mind (I haven’t read much of his writing yet, but going off the website name I am guessing he likes budgets).
We’re also near what I hope is the end of a transition period that has necessitated re-evaluation of some of our goals. Hopefully in a few months I can share what I’ve learned from that transition, but the above is a reasonable summation of where we were before that transition hit.
But that is what happened. With the Tubb’s Fire in October, my family found themselves without a home, without a wardrobe, without all of the toys we once had. This is devastating but also quite liberating.
Now we are 3 months out and slowly rebuilding our life. We are finding a sense of stability and reimagining our future. We are living intentionally.
What does it mean to live intentionally.
I think it is different for each person. For some it may be curating the perfect home. The perfect decor for your living room.
For others it may be a focus on their career. Trying to climb up the corporate ladder or the political sphere.
For some it may be a life closer to God, their religion, or other higher calling.
Still for others it is retiring early and living your days as you see fit. These are the FIRE types who are doing amazing things. Traveling the world, volunteering in their community, and raising their children as co-parents to mention a few.
For us, as for most individuals interested in minimalism, it is simplifying our lives. Determining how we can decrease the number of things we have to do. We don’t aim for this goal because we are lazy. No! We do it to focus on the thing most important to us, our son and each other.
By simplifying life, we will have less chores to do, less bills to pay, less clothes to wash.
We will focus more on each other and our son. Do some self care which has been sorely missing in our lives for the last year. Work out more, including stretch. Travel more (though work can limit this some). Hike more.
Part of this experiment was not purchasing a TV after the fire. We went for 3 months with no television. It was nice. We talked more, and man did we have a lot to talk about while planning post fire. We went to bed earlier. Overall we felt better. Our new rental has a TV, so we will need to be diligent about not watching it every night. So far we have watched an hour or so most nights.
For me, I am enjoying not having a lawn to care for and a home to maintain. My prior home was 3200 square foot and quite burdensome. We now live in a 1800 square foot home and other than simple things like changing air filters and light bulbs I have no home care duties. This is huge. Before I spent time planning my orchard, mowing my yard, thinking and rethinking how I would like to renovate my home. Now I have none of these thoughts. They are things of the past and it is liberating.
My next goal is to finish up plans for debris removal, rebuilding plans, and overall finalizing some insurance items and old home items. This has been a 3 month long time drain. An important one, but still a time and energy drain.
From spending many nights itemizing all of our possessions for the insurance company. Yes room for room even down to the Q tips. To deciding on an architect and interviewing multiple builders to even determining if rebuilding is good for our finances and our soul, we have been fully engrossed in this process. Luckily we are at the end of it. Insurance has come through on some payments and there are some negotiations to be had. This part of our simplification will soon be done. Hopefully by the end of January if all goes as planned, but maybe even a bit into February.
Then comes repurchasing of stuff. This is the big one. How do you accumulate stuff in life while wanting to maintain a small footprint. While not following a deliberate plan, I am basically ensuring that everything I purchase has more than a one off use. (Actually since I wrote this, plans have changed. I joined the Happy Philosopher in not buying anything this year.)
My clothes thus far consist of 8 dress shirts for work, some slacks and khakis (also for work), socks, a pair of brown shoes, workout sneakers, and casual sneakers. I own 1 winter coat and no suit yet (soon to be purchased). 2 pairs of belts, 2 workout shorts, 2 pairs of pajamas, and 1 swimsuit. There are also the 4 short sleeved casual shirts and an assortment of t-shirts. Man now that I write this, it seems like a lot.
Outside of clothes, other things are easily kept to a minimum. A printer, laptop, some printer paper. This is what I am doing. My wife has to figure out what she wants and is nesting to some degree. Our kitchen has the household gadgets she wants but not too much. Our son has toys and books, but has already donated some gifts provided to him. When you look around we really don’t have that much, particularly in comparison to most families, but it still feels like a lot of stuff.
Still we are conscious of our purchases and accumulation of things and will likely not accumulate too much. The last 3 months was a massive accumulation time frame, but this too shall pass.
Going forward I hope to follow the basic investing strategy of Keep It Simple Stupid, but expand it to my life in general. We will move past a 3 fund portfolio and live a 3 pronged life- Family, Fitness, and Finances.
Family– I will continue to make time for my son and wife first and foremost, then my brother, parents, and in-laws. Keeping my own predilections and biases out of our relationships, I will focus on the time together and quality of that time.
Fitness– It is time for self care. To follow my 3 pronged approach to fitness: Cardio, Strength, and Flexibility. Most are good at the first two and terrible with stretching. Before moving to Cali I was quite flexible, but have reverted back to stiff, aching, middle aged man.
Finances– We are on the high speed train this year. I am taking some insurance money and slowly deploying it in the stock market. I paid off all of our loans except for my mortgage and a 0% car loan. One of those will be gone soon too. I am front loading my 401k contributions and taking advantage of a after-tax account through work. And of course, work falls under finances. Having a stable job, particularly after a natural disaster where many lost their jobs over night, is a blessing. I am grateful for my work. It pays well. I help people. I have good co-workers. While I may many things I want to do with my time, I also appreciate that I can be a physician part of that time.
So what about you? What are you doing to live intentionally and what does that mean to you?
Today and this month I am going to post some thoughts from a fellow blogger and physician- Rogue Dad MD! While we have never met in person, we talk quite frequently over the WWW. He is wise beyond his years and he posts on medicine, family, finance, and religion. Go check out his website or keep reading and see what you think. This post was originally on his site back in December 2017.
The Financial Folly of the U.S. Healthcare System
I write this, aware that as a physician, I am at least at times partially complicit in the financial folly that is the U.S. healthcare system. The one which ostensibly Congress is “improving,” but which is in fact doing very little, if anything to address the myriad issues with our healthcare system (and to the extent it is addressing it those issues, it is making them worse).
Healthcare and transferancy
Southwest Airlines likes to advertise they have “transfarency” — stating you know what you are paying/getting from them when you pay your airline fare. There are no surprise fees.
Healthcare has adopted the exact opposite approach, through an arbitrary and evolutionary system that is essentially Frankenstein, cobbled together with spare parts and ideas. Healthcare pricing is opaque as vantablack (I don’t have time to think of a clever play on that word).
Several years ago, Rogue Two was diagnosed with pyloric stenosis — an obstruction of the stomach outlet muscle that prevented food from passing from the stomach to the intestine. The events leading to that diagnosis is its own story, however to make the diagnosis required an ultrasound.
The ultrasound tech who looked at his stomach muscle must have been extra thorough, because they also obtained some pictures of his kidneys (and maybe other organs). The radiologist noted that there was trace hydronephrosis on one side — the kidney was slightly dilated, but not an urgent or emergent issue. It had no bearing on his stomach issue, and had never caused a problem. My wife’s prenatal ultrasound did not show any problems with his kidneys.
However the radiologist recommended a follow-up ultrasound in a year to make sure it resolved. Rogue Two had no problems in that year — no infections, no unexplained fevers, no concern from his physician (or us) that his kidneys had issues.
My wife and I forgot about it, but our pediatrician remembered the recommendation — so we went to our children’s hospital to have the ultrasound performed.
Rogue Two, over a year old, was not a fan of the non-invasive/painless test — I had to hold him down screaming for 10 minutes while the ultrasound tech obtained the images.
The ultrasound was normal.
Opacity in Pricing — A Healthcare Special
We were (and still are) on a high deductible health plan, so while there was an insurance negotiated discount, we had to pay the full cost of the facility fee for the ultrasound and the radiologist fee for reviewing the ultrasound, as we had not reached our deductible yet.
The “charge” for the US was $907. The insurance “adjustment” was $204.98, leaving a balance of $702.02 ($25 of which paid via copay at time of service).
Of note, since our hospital offers a 25% discount to those with NO insurance, had I not used my insurance plan at all, the cost would have been $680.25. So we were charged more by filing an insurance claim than had we not used my insurance. This was November, and as we didn’t meet the deductible, I may have actually saved money by not using insurance before the new year arrived.
The radiologist bill (from the university, not the hospital) for interpreting the US was $126, which was adjusted down to $88.77 by insurance (still not meeting deductible), a separate fee from the charge for obtaining the images.
I decided to compare the cost to two other places in town that provide pediatric care.
Place #1 — charge for the same US is $929, however they give an immediate 40% discount for those w/o insurance, bringing the cost to $557.40. However if that is paid in full immediately, they decrease it another 25%, meaning that someone without insurance who pays in full would pay $418.05 for the same test.
Place #2 — charges $890 and gives a 35% discount for those without insurance, making the total $578.50.
None of these numbers include the physician bill, though they likely would have been lower as well.
How do I have this info available?
When I received the bill, I was ticked off. I called these competing hospitals to obtain the pricing, and then sent a lengthy email to the president of our hospital detailing my concerns regarding the cost of the ultrasound. I found that old email and copied/pasted the information into this blog post (with some edits for anonymity).
Let me tell you — obtaining this information is not easy, and I am someone who knows the language and business of healthcare quite well.
I had a pleasant email exchange and in-person meeting with our hospital president, though I learned nothing new from the exchange. I’m well aware of why costs are so outrageous.
While I could provide a list of reasons (price discrimination based on insurance type, location, academic affiliations, etc), ultimately this is the system we have because it’s the system we deserve. After decades of making small tweaks that only reinforce that this is how the system should be, it is the system it is supposed to be.
We have many people arguing that Obamacare is an affront to capitalism, forced socialism, etc. and needs to be fully repealed so we can go back to what we had. The system we have, which is not that different from what we had before Obamacare, is poorly designed and not well thought out. It’s not the system anyone would design from scratch (neither the GOP nor the Democrats would build the current system if given the chance).
Overtesting in Healthcare
Going back — not only did the price of the ultrasound bother me, it’s possible our son may not have needed the ultrasound at all. The original finding from when he was an infant was something found incidentally.
The purpose of the test was to look at his pylorus — that was the only reason. The kidneys are not necessarily something they should have looked at, so one could argue we should never have known.
That’s a mixed bag — sometimes you find cancer by accident and are glad you did, and sometimes you find an incidentaloma and waste time and money and hurt the patient by chasing down things that are inconsequential. This was most likely an innocuous finding.
I tell residents I work with all the time — if you are going to order a test, be prepared to handle the results. Don’t go looking for a problem if you can’t handle the results. Sometimes we evaluate things with blood tests or xrays or ultrasounds just because we can, often because we think the results will reassure us.
Then we obtain a test result that is not normal, incur cost and inflict anxiety and stress, and end up doing nothing anyway.
Playing the Game — The Good Ole Boy System
The reason for this post is not this ultrasound from three years ago. It came back to me today after I learned Rogue Three likely needs ear tubes because of many recent/recurrent ear infections. The reason for this flashback hopefully will become clear.
We’ve already met our deductible for the year so are in the phase of the year where healthcare costs are subsidized — as a family using a HDHP, that’s a big deal.
The difference between surgery this month and next month is potentially thousands of dollars out of our pocket. Surgery this month is 80% or more covered by insurance. Surgery next month means we have to meet our deductible again before insurance pays anything.
Having been through this before, the 5-minutes it takes for an experienced ENT to insert the tubes will easily generate a few thousand dollars in bills. The doctors are the cheapest part — an ENT surgeon and anesthesiologist won’t charge a thousand dollars. The hospital will charge much more than that for use the OR, the cost of the anesthesia medication, the post-op room, the post-op Tylenol, etc.
Our hospital is not atypical — this is how it is everywhere.
Well, the ENT clinic couldn’t fit us in until January — after all, it’s mid-December and the holidays are close. This condition is not life-threatening — he does not need it right away.
No, if it’s going to happen, I want it to happen this month so we can save thousands of dollars (potentially — if we hit our deductible next year for other reasons it wouldn’t matter, but I can’t predict 2018).
Again, another ridiculous part of our system — the amount billed by the hospital/doctor does not change because of the New Year, but the cost to the consumer changes completely. It is not a capitalistic effect — supporters of the current system who decry socialism should remember that.
The supply of the surgery is not changing, the demand is not changing, the cost to the provider to do the surgery is not changing, the amount billed by the provider is not changing.
The only thing is changing is a new year means the deductible starts over. So it behooves me to use a TON of healthcare now, and avoid healthcare use when possible until I am forced to because of other things.
So I leveraged the good ole boy system (as my wife said) and contacted the ENT directly to see if they could squeeze us in this month to assess officially for the need for the surgery, and perform it this month if officially indicated.
Thankfully we have access to a wonderful and responsive ENT who should be able to accommodate us.
While I recognize I’m fortunate to have the ability to make that connection, it bothers me that I need to do so. I do not like asking a professional colleague to inconvenience themselves in this way, and especially not because of financial reasons.
I was honest with the surgeon about my motivation when contacting them, because it’s fair for them to know, and because I wanted them to have an out to say “no” by just telling us they were not available if really was going to be a pain to fit us in or didn’t appreciate my motive.
However similar to the tax bill and charitable donations I discussed last week, this is the system we designed and the behavior we are encouraging. This is not gaming the system — this is the system.
To My Physician Colleagues
Remember the downstream consequences of what we do.
A “painless” test can cause distress in unforeseen ways.
An innocuous diagnosis can reverberate in ways we never consider.
We’re human and we’re going to falter.
Keep your patients and your colleagues in mind at every step — it’s really the only option.
With that in mind, remember that perfect and pure motivations within an imperfect system can still cause harm, and we need to know the system well enough to make it work for us and our patients.
Alright, so 20 days have gone by since I announced, along with the Happy Philosopher, that I will buy nothing. There are some caveats, like I will not be accounting for food or what my wife buys. She does the shopping for groceries, kitchen stuff, and our son’s stuff. She, however, is not buying me stuff…not stuff I directly I want.
So how has it gone to buy nothing?
January 10th– Ordered a nose hair clipper from Amazon. Gotta keep looking sharp for the misses. Plus, grooming should be a part of adult living.
January 11th– Both a retainer from the orthodontist. I figure medical expenses are allowed. I also received a free t-shirt from them. That brings my tally of t-shirts to 8…two of which are pre fire, and 6 are post-fire. That picture of the t-shirt up top was pulled out of a bin in the garage the day before the fire. I washed it and happened to where it the night of the fire. It was prized before and even more so now…there are 6 other folks out there with it and they know the significance of it.
January 12th – 24th – Surprisingly I bought nothing but food over this time. I did get a free t-shirt from my brother…so that is 2 free t-shirts this month.
January 25th – I purchased a microphone for an upcoming podcast I will be doing. This was a replacement to a fire item I lost, but a purchase none the less. I also ended up buying a hanger for a picture frame and ant baits. Yup, our home is invested with ants. Finally, a yoga mat. I am getting my groove back. I started yoga (something new for me, but hopefully that will get me in shape). So that one I consider a fail, but at least it was for my health.
January 26th – A yoga mat. I started yoga this past week. It is a 6 AM class and I figure it will allow me to exercise and still maintain my time for my son. I would rather be doing kung fu, but those classes are from 5:30 to 6:30 PM, prime kid time. Let’s hope it sticks.
The rest of the month – Nothing. I spent 2 days looking for a blue suit as I no longer own one. I am going on a business meeting to DC in 2 weeks and realized I should have one. After looking for 2 days, I found nothing of quality and so abandoned the idea for now. Instead I will be wearing dress pants, a shirt, tie, and sweater for my meeting. I think it will be professional enough…I will buy a suit soon but would rather get a high quality one then just the first thing I see on the rack.
Stupid thing I almost bought.
Stupid things I thought of buying but didn’t.
A circus elephant lamp. Yup, I liked it and it was even further reduced in price. My wife wisely reminded me we do not need a lamp, particularly that lamp.
Useful things I could have bought but didn’t.
A level. Turns out my phone has one built in.
A measuring tape. I used string instead. See below.
Things my wife bought that I may have
A measuring tape. As mentioned above, I did not want to buy one, but she is buying a rug and wanted to measure the floor…so now we have a measuring tape.
What I learned
Surprisingly, it seems like I no longer crave a lot of stuff. This was not something that happened this month, but a habit I have been cultivating for a few years. It feels good to not want stuff.
I do still spend on food, coffee, and booze. This is my biggest purchase, but is expected. The goal of this year is not to spend less per say (though I suspect that is a by product of not buying stuff), but to see if I can get by with what I have.
Minimalists approved? Maybe chic minimalist.
My wife did buy a bunch of stuff this month. Mainly clothes for her and my son (We are going to Tahoe next month!) and furnishings for the house. I do get a benefit from the furnishings, but it is not something I would necessarily purchase myself. I am no longer the perfectly curated apartment in “Fight Club”.
But I am also not ready for this….
My wife says I am an extreme minimalist…I guess time will tell. For now I am just being more aware. It will be interesting to see where this goes month to month. The only expense I see coming up is my suit, but who knows.
What are your thoughts on this experiment? Stupid? Interesting? Pointless? All three? Let me know.
There have been a lot of tutorials on backdoor Roth IRA’s through Fidelity. Both Physician on Fire and White Coat Investor have one. While I have used Vanguard in the past for my backdoor Roth’s, this year I transferred my account to Fidelity to streamline my accounts.
What is Roth IRA?
This is another way to place money in a tax-advantaged account. What do I mean by tax-advantaged? Basically money that goes into a Roth is taxed when you place the money into the account and earnings grow tax free. So when you withdraw money in 10 to 20 years, you will not pay additional taxes.
This is different than a traditional account (both IRA or 401k’s) which grow tax free until you withdraw the money. Then taxes are due on earnings.
A Roth IRA (and a traditional IRA) are both funded with after-tax dollars. This is different than a traditional 401K which provides a reduction in your adjusted gross income. So using a IRA is only for the benefits of having your money/investment grow tax free and not for any immediate tax benefit.
Why do a backdoor Roth IRA?
The reason to do a backdoor Roth IRA (as opposed to just funding it through the front door) is because there are income limitations for contributing.
For 2018, you have to make less than $189,000 if you are married filing jointly to contribute the full $5,500. From $189,000 to $198,999 the amount begins to be phased out. Above $199,000 you have to use a backdoor conversion.
If you are single, the income limit is $120,000 to be able to contribute the full amount and it is phased out up to $134,999. Above $135,000 you have to do a backdoor conversion
If you are making less than $120,000 (single) or $189,000 (married filing jointly) then you can contribute to a Roth IRA with no use of the backdoor. If you make more, as most physicians do, then keep reading.
How to contribute to a backdoor Roth IRA through Fidelity.
First things first
The only real trick to this backdoor IRA is that you cannot have any any tax deferred IRA accounts with money in them. The balances have to be $0.00. That includes traditional IRA, SEP IRA, and Simple IRA. You can have your traditional 401(k) and 403(b) accounts still.
If you do have money in your tax deferred IRAs then you need to find somewhere to move them. You will get hit with taxes on moving or converting these monies, but it may be worth it to you. For those with no money in traditional IRA’s, it becomes less of an issue. White Coat Investor writes a good summary of how you can move funds out of prior IRAs here (check out step 1).
Now for the contributions
I opened up a traditional IRA first through Fidelity and funded it with $5,500 from my bank account. I placed that money into a money market account as a placeholder that does not earn much interest. That way when I converted it to a Roth I would not owe taxes on the interest earned.
I learned this lesson in my first year of doing this where I placed the money in a index fund and earned some profits before converting it. I was left paying the small amount of taxes on the conversion, but it was still annoying.
Step by step
First open up a traditional IRA
1) To fund with cash from your bank account. $5,500 if you want to maximize the contribution. Once the cash is available in Fidelity, use it to fund a a Money Market.
2) Next open up a Roth IRA. Leave this unfunded.
3) Now you get to wait a day or two. There is some concern for the Step Transaction Doctrine. There has been a lot written about this, though most people would argue waiting a few days is sufficient. Michael Kitces at Nerd’s Eye View also has a nice article about it. So read up but I do not worry to much about the IRS coming after me on this issue.
Another caveat is that with Fidelity it seems that you have to wait 5 business days. At least that is what I had to do. This is not the case with Vanguard where they will let you purchase shares right away.
Ready to fund the Roth IRA
4) Go to the upper left side of your screen and click on Accounts & Trade. Under that go to the “Transfer funds” tab (see below).
Transfer funds from the traditional to Roth IRA
5) Now you should see a screen like the one below. It is a small screen in the upper left corner of the screen. You will want to transfer from you Traditional IRA to the Roth IRA.
7) After you agree to transfer funds, Fidelity will tell you this is a taxable event. You will be allowed to withhold federal taxes now. However, since you will have $0 in gains, there is no need to hold taxes. You will have $0 taxes on this. Instead elect to not have federal taxes withheld.
6) The next screen asks you to verify the transfer. Easy peasy. Just click on the button in the bottom.
7) Once you have verified the conversion you will need to agree to transferring the entire account. I would also opt to leave the account open (the traditional IRA account) so that you can fund it in the future.
8) Finally you have to agree to the conversion. After this you will receive a confirmation screen and email. You are done. The backdoor IRA is converted.