Money Meets Medicine Podcast

MMM 62: Pay Down Debt or Invest When Interest Rates are Low?

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The most common question I get is whether someone should “pay down their debt or invest”. It is a question as old as time. Does the answer change given the low interest rate environment we are now seeing? Should you focus on investing more now that interest rates are low? Or should you pound your debt while the getting is good?

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That’s exactly what we tackle in this episode on paying down your debt versus investing when interest rates are low!

Today You’ll Learn

  • The historically low interest rates we are now seeing.
  • How interest rates impact your decision to pay off debt (or not).
  • If you’d find more value in investing right now rather than paying off debt.
  • Why staying the course matters.
  • And more!

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Jimmy Turner: In unprecedented times where interest rates are at historical lows, does the age old debate of paying down debt versus investing change? That's exactly what we'll tackle in this episode. Keep listening to find out, Welcome to the money meets medicine podcast, where we talk all about the personal finance topics you wish you had learned in medical school. I'm your host for the physician philosopher, Jimmy Turner. And here is your cohost who's favorite character from captain planet was clearly Mati because he likes to act like a monkey Ryan,

Ryan Inman: By your powers combined. I am captain Planet.

Jimmy Turner: Yeah, that's right. Captain plan. I'm an at you. So under unprecedented times, you know, when you said that I was like, are we in a movie trailer? Yes. I wish he had a little deeper voice. And you're like one man, one as I think you were going with it without knowing actually where you were going with it still alone in the fall boy. All right, let's get going. So today we want to talk all about the low interest rate environment that we are in. And we want to talk about what you could be doing or maybe should be doing. When we're talking about interest rates, your debt payments, should you take on more debt? Should you pay off more debt? It's going to be really fun to kind of dive into this. We're pretty excited. But before we jump in, let's hear from today's sponsor, which is contract diagnostics and their affirm, a hundred percent dedicated to physician contract reviews.

Jimmy Turner: They provide a service that all physician families will need at least one time in their careers. Most likely a few additional times as well. I really liked this company. We refer a lot of business to them from all of our clients at physician well services. And they've helped over 10,000 physicians understand not only what they're signing, which is a really big deal, but what risks they are taking on for their family, all contracts are reviewed by an in-house attorney and presented in a simplified way back to you using custom documentation compensation data, which is also really helpful. And they work outside of normal business hours to make it easy for you. All the packages are a fixed flat fee, which is nice. What you get for right upfront and residents and fellows can even make interest free payments over time, which is super unique. So really big fan of John and his team over contract diagnostics, check them out at doctor podcast, network.com/contract diagnostics, or call (888) 574-5526. And like always the link is in the description of the show. All right, Jimmy. Well, we got how you want to handle this. I get asked this question all the time. Ever since I started this petition philosopher in November of 2017, and this has been one of the most common questions that I get. And I know that you get it too about paying down debt and or if someone should invest, like, they're like, Oh, I've this extra money.

Speaker 3: What should I do with it is basically their question. And I think that question is normally really interesting to dive into and we kind of go into personal finance is personal. And how much do you hate debt? How comfortable are you with debt and leveraging your debt? Because everybody I find is on a very different end of that spectrum and that conversation just by itself. I think it's fascinating. And it's really interesting seeing where people land on that continuum of being very comfortable with that too, like hating it like I do. I'm a big hater of debt for those of you who don't know, having a lot to do with going through bankruptcy as a kid that said right now, it's just a different angle because interest rates are so low and like on federal student loans, there's 0%. So we have people that have graduated, finished training and have federal debt at 0%. Mortgage rates are super low and everything else is the interest rates just were historical lows here. And so right now people are like, Oh, Hey, if my interest rate is really this low, is it still the same conversation? And so it brought up the idea to me like, Hey, like I think we should have this conversation on the show. Let's talk about paying off debt, leveraging debt when interest rates are as low as they are.

Jimmy Turner: Yeah. So this is the number one question that we get, and this is where a lot of people get stuck and I've done at least 12 to 15 different talks at residency programs throughout the country. Cause everything is virtual just last year alone. And I always include one slide at the very end and say, look, we made it 30 minutes or whatever it is into this conversation. And the last thing which is probably on all of your minds is this question here. And I break out basically 10 steps to walk through of how I would tackle paying off debt or invest. And we've talked about this on the show, but for those that maybe missed that episode, I want to quickly highlight what those would be. And then I think we should talk about, should you actually pay down the debt or maybe should you take on more debt?

Jimmy Turner: There's two arguments in two sides to this and there's pros and cons for both. The way that I look at this is that if you get a match from your employer in your 401k or your four Oh three B, you should definitely be putting money in contributing money, at least to the match. And then you should be trying to crush all of your high interest debt. And this is debatable what you consider high interest debt. I think anything that's 8% and over should go towards paying that debt. And some of you have brought up, maybe you're thinking like, what about the emergency savings? I know I always need one of those. Your emergency is that debt Jimmy. And I've chatted a ton about this, but when you have high interest debt, that is the absolute thing that you need to do. That is your emergency.

Jimmy Turner: Once that is extinguished. That's when I would say work on that emergency fund and we can talk a little bit about how much that is or what that is, but I think at least one month needs to be there. And I'm just going to go through these really quickly. Jimmy is, and then the next one is an HSA. If you have that, it's like a triple tax advantage account. We've done a whole show on it. Awesome. Do that. If you can put money into a Roth IRA directly do that. If you can't backdoor Roth, great option filling out the rest of 401k or your four Oh three B. If you still have money, then fill up more of your emergency fund. This is where I think at least three months is good. And then we're talking about paying off the debt. That's in the middle.

Jimmy Turner: I look at it as five to 8% is the sweet spot for this type of debt. And then if you've made it this far, congratulations, Pat yourself on the back, because it doesn't matter what you do next, whether it's a taxable account and saving for retirement through a taxable individual taxable or joint taxable account or paying off debt, that's less than 5%. Most of the time. It again, depends on what the debt is and how it works. But I think paying off debt is always a great option. No one's ever gone broke because they paid their debt off. So I think that is an excellent thing to do. But now we're set up to handle this show on, okay, Jimmy, we've made it through these eight, nine steps. Now we've got 5% debt, interest rates are near historic lows. Should we pay off that debt or not?

Speaker 3: Yeah. So I'll throw out one qualifier there in that. And this is because I know that we've had this conversation before and you were just like, this is why I love having this conversation by the way. Cause you and I don't agree, which is not that common, honestly, but you're a big math guy. You're like, Oh, crush things, avalanche like interest rates. Like they go in the order. And for me, because I'm a big believer in behavioral finance and psychology, I separate student loans out from those other interest rate categories. So I still have the same three interest rate categories, high, medium, and low. And in student loans, his own kind of thing. And the reason why is because I don't know any doctor that has student loans that doesn't think about them as some separate special kind of bond that they have these shackles around their ankles that are preventing them from making progress, weighs them down. And so I think that because I've always traditionally separated things with that one caveat like with student loans in particular for physicians, this conversation just so weird now because it used to be like, Oh, you're going to have interest rates that somewhere between three and 5%

Jimmy Turner: Or 7%, like my wife's federal.

Speaker 3: Yeah. 6.8 were mine, but now it's Oh, there's zero. So Jimmy, what do you think about your behavioral finance stuff now that your interest rates are zero? And I'm like, Oh, well

Jimmy Turner: I know what I think about it, all that money that you're saving. So you had to make a thousand dollar minimum payment that should be going to something that positively increases your net worth. That shouldn't be going to the next thing that you're going to buy the next purchase, whatever it is to Amazon, which is where most of us donate our paycheck to and heads up come October 1st. It is a very high probability that all that interest will kick in your payments will kick in and you're back to normal in terms of a student loan payment.

Speaker 3: Yeah. But I think that's a perfect and beautiful place to start. The show is by saying, look, if we're even having this conversation, you are already winning at personal finance, like the fact that you have extra money and you're thinking about paying down debt or investing with it, like you have made it, you're financially literate. You're heading in the right direction and asking the right questions. So the rest of the show like Ryan and I can beat each other up and give it to the black eyes. Cause we know that you guys like us doing that. But at the end of the day, if you're doing one or the other, even if it mathematically doesn't make sense or behaviorly, doesn't make sense, you're winning. Like you're doing something that is going to increase your net worth, whether that's investing or paying off debt regardless of the interest rate environment. So you made it that far kudos to you.

Jimmy Turner: We've worked with a lot of physicians that we work with. Well, over 200 physician households, that physician will services now. And when we talk about student debt, there are really two camps. Those that are debt immune. And they're like, whatever, just pile it on. Like I'm going to pay it back. Yeah. But I've got it. It's there. And what's more debt like, well, we got some behavioral things to work through. That's okay. Those people scare me. Everyone starts somewhere. So that's okay. That's where you're starting. And we're going to gradually working more towards the middle cause anything in extreme is bad. And on the flip side, I don't think it's healthy that if you say, I need to pay this debt, I'm going to pay this debt. Everything I do is going to pay this debt down. We have people that have not contributed to a 401k or four Oh three B have not ever done a backdoor Roth or just contributed to retirement accounts.

Jimmy Turner: They have an HSA account available, still haven't made any contributions, but you know what, they're plowing 120, 130, $150,000 into paying down their student loans, which is great, except for anything in extremes is bad. And there's a lot of things that you could have been doing while paying down the debt and honestly saving you some money that you wouldn't be paying uncle Sam. Cause you've been missing on some tax deferred. Goodness, if you will, that we would want to work through. But if we're going to come back to paying down debt and historic low rates, there are things that you need to do to set up in order to feel comfortable that then any extra payments would go to debt. I named off a bunch of them already rewind go right down that list. That is how I actually think about it. How we talk to all our clients about it, not specific investment or financial planning advice, but use that as a guide to think through it.

Jimmy Turner: But if you're at the bottom and you're saying I could pay down this debt or I could invest, I would say, what kind of debt is it right? If it's your mortgage and you've got a sub 3% interest rate and you've never opened a taxable account before, I'd probably open a taxable account and start investing regardless of what the market does, because remember you're not trying to time the market. You're just going to keep trying to put money in and over time, your dollar cost averaging in, and you'll be very wealthy 20, 30, 40 years from now. And very thankful you did that while still obviously making the minimums on your home, but I've taken it a step further. That does not mean it's correct at all. Jimmy does something completely different, but I don't own bonds. And I pay a little extra towards my house. Even though my rate is at 3.1, two, 5%. That is extremely low.

Speaker 3: I catch it by an eighth of a percent.

Jimmy Turner: Of course you do well. Welcome to jumbo loans in California, my friend. So it's just not possible to get that much lower without paying a ridiculous amount in points, which is just essentially prepaying interest to the bank because most people pay off their loans within seven years cause they're moving and they sell their homes. It's a whole, probably another story that we could get about. Don't think of everything as your dream home. But if you're sitting there with higher interest rate debt or you're sitting there with other debt and you are already putting money to a taxable account, it might make sense to pay off. Some of this debt might make sense to do that versus piling every penny that you have in no tax, I am huge into diversification. So the more that you can diversify your investments while still doing other things like paying down debt, it's a great thing to be able to.

Speaker 3: Yeah. And I'm a big fan of moderation too. And I'll say that my cashflow waterfall, while we teach people in NAF coaching experience in the courses that we have, it follows a very similar process. And at the end of the day, it's really such an interesting thing, particularly with student loans because of what you said earlier, it's a 0% right now, but we all know that October is coming. Although you and I, if we're being honest, we thought that January was coming right. Like where we thought that was gonna end. And then January the Heights were going to come and that didn't end up happening. And so now it got pushed back and now October is coming and is there a chance they could continue it after what? Of course there's a chance they can do anything. But right now we know that it ends beginning of October.

Speaker 3: And if you're in this situation, really again, if you've got to that point, you're winning, but don't just assume that you have to do one or the other. I love the idea of moderation. Like you're getting at which splitting things and accomplishing multiple goals, which is why when you're going down, these step-by-step ladders, if you will, there's this idea that, Hey, you should be contributing to your tax advantage counts, and then also paying down debt and they go back and forth down that order as they come down this thing and they get to the bottom where we're talking about now. And it's because we recognize that either one of these is a good thing, but your tax advantage space is important. So don't leave it behind. Don't just jump in the Dave Ramsey camp of paying off all your debt at all costs and not investing in anything until you own everything in your house and the house too, before you start investing.

Speaker 3: And that's obviously not, not ideal and anything in those extremes, isn't good. But we have not only this low interest rate environment, but it's almost like a variable rate environment where we know the interest rates are going to go back to something else in October for federal student loans. And so for people that have the federal loans for the last, what, how long has it been run like a year and a half. Now that by the time October comes, that interest rates will have been at 0%, it'll be a full 18 months. Yeah. So I think that's really interesting because for me, when I think about that from like a behavioral standpoint, I'm like, Oh wow. So like right now I could get a jumpstart on these loans. They're going to start getting kicked in the teeth again at 7% in October. And I know I have to pay them off.

Speaker 3: They have to be gone at some point. Now, if you're in public service, loan, forgiveness, like you're in the best possible situation, like just keep making your minimum payments and keep looking forward to forgiveness. And this is just fantastic right now. But if you're planning on paying them off your debt to income ratio is really low. It's less than one. You're going to pay it back yourself and you have a, you'd have to pay for another seven years. You got a three-year residency. I think that's a really interesting situation to be in right now. Hey, I went to a family medicine, pediatrics emergency medicine residency, you know, someone's only three or four years. I know it's 0% right now, but it's going to be back up to 7% and I'm gonna have to refinance and hope rates are still low at that point. So should I be tackling this debt right now when it's 0% and I'm not paying additional interest to, or should I open a brokerage account? And I think that what you're saying is that moderation is a good thing, right? And Hey, why not do both? Why not take it and do a little bit with both? So you can do any of those three things, right? You can put it all towards your debt. You can invest it all, or you can split the difference and there's three options there, right?

Jimmy Turner: Yeah. So one of the things I want to mention really quick is the student debt and the concept of stimulus and fed rates and how all this kind of works together. I've seen so many people that are in our community or just online and other communities that have been really upset that there's a lot of people. I got stimulus money and they weren't the ones that got stimulus money. Okay. Now we paid off all my wife's still on a Taylor had about 180,000, 185,000. I'm like that and we've paid it all off. So we are in the camp of, we were diligent savers. We saved money in our investment accounts. We've paid off our debt. So we don't have the public service loan, forgiveness, and the low repayments and all that we're done, which is thankful. I'm very thankful that we're done with that. But for those that have federal student loans, we have clients that pay literally four or $5,000 a month in their interest because they have six, $700,000 of loans.

Jimmy Turner: But let's just say that your payment was $2,000 a month. And for 18 months you've paid zero. You actually received $36,000 of essentially stimulus because you didn't have to pay that money. You could have done whatever you want with it. That's probably why you feel a little more flushed from the bank because you had more money and you weren't traveling. So add those two together. It's savings rates have gone through the roof. And when you come back and say, okay, Hey, I've got this $36,000 that can go to literally anything. Hopefully it's been going to clean up all the other stuff that you maybe had, those that are not going for PSLF you still got that benefit. If you had federal loans, if you had private loans, you did not get that benefit. So you truly did not get stimulus or that kind of benefit.

Jimmy Turner: Some of you actually did get stimulus just in the form of not having to pay your payments. But I want you guys to think of something we've mentioned this on the show before, but think about everyone likely the probability, Jimmy, you mentioned that in January, we're like, Hm, it might not extend. They might extend. Maybe it extends to April or whatever. It may, the probability was greater than 50%, but it wasn't 90 or a hundred percent that they would extend. I think we're at the point now, vaccines, rolling out economies coming up, feds seen inflation. They're not going to extend this. And I think the probability, if they did extend it is, is probably in the 10 to 20% range is what I would give this. So let's say that you had

Speaker 3: Your $180,000 in student loans. So the low interest rate environment, isn't really true for that. It's like a pseudo low interest rate environment for student loans because they are going to eventually go back up at some point. And if you have federal debt, that point at which it goes back up is above 6%. Right now we're talking about medium-sized debt pretty much, regardless of how you define it. So if you're in that situation, in like this interim period for the next few months, next six months, right? How do you think you would have viewed it back when you were in those shoes?

Jimmy Turner: So this is the point I was going to make was that if I had Taylor had federal student loans, 180 K and we knew we were not going for public service loan forgiveness. So I'm excluding those that are going for this. You have federal debt and you're like, you were going to refinance or that you could refinance. Everyone knows right now you're at 0% and zero payments. So it is not make any financial sense to go and refinance. And so all the refinance companies, but they're tripping over themselves, lowering rates to rock bottom pricing. And we've had literally five-year variable rates. We've seen it at 0.1, 4%, how they make money. I have no clue, but they've been doing that. We have lots of people. I got 0.4, 9.5, 5.75 just extremely low. Now I know not everyone can go to a five-year variable. And I know at some point those rates will tick up and I'll explain in a minute why they can't go up too fast.

Jimmy Turner: But if you think about everyone is going to want to refinance come October 1st, when the payments kick in and you're going six, seven, whatever percent those student loan rates that you're seeing right now are going to absolutely be gone. They're going to be probably double, triple, maybe even quadruple of what they are. And I'm talking two, three, 4% instantly overnight. They know it's coming. It'll probably happen a few weeks before. So you've got the gamble roll the dice, pretend you're in Vegas with your student debt. And it sounds scary. But hear me for a second. Tell me more. If you know that you need to refinance your debt and your gamble is does the government kick the can or not? If you firmly believe the government's going to kick the can and let you have it until the end of the year or next January of 2022 don't refinance.

Jimmy Turner: But if you think the government is going to come through and go, Hey guys, we gave you literally seven months more. We Telegraph this in the extent of, we didn't tell you anything else. It is Indian here, and we are Indian and there is going to be, it's like an horrible analogy. I apologize, but it's like yelling fire in a theater or bomb on an airplane. Okay. Everyone is going to run for the exit, trying to go refinance. And the rates are going to go sky high because now demand, which has been non-existent is going to spike like a hockey stick. The supply is going to remain fixed, or maybe increase a little bit, but it will not stick with demand. And they're going to raise that interest rate

Speaker 3: And to avoid timing that, to some extent, I like that. You're saying like, Hey, do it early, because you basically want to catch that before that phenomenon happens. And so whether it's four, six, eight weeks ahead of time, yeah. You're going to pay a slightly higher percent interest rate than zero. Cause by the way, everything's higher than zero, but at least you're not going to get stuck in that. Hey, I'm trying to refinance. And I can't because the process has taken too long and now interest rates are four or 5% because they can, and they know that your federal debt went back up to seven and yeah, there's going to be some capitalism in some markets. So the different companies are going to compete against each other to try to provide a competitive rates

Jimmy Turner: Normalize over time. But that initial spike when everyone and their mom in October and November wants to refinance, it's going to be super expensive. Now rates will normalize and come back down. And the reason I wanted to bring in the fed into this real quick is because last week, Jay Powell came out and said, Hey, look, we know the economy is highly uncertain right now. And into the next two to three years, we've seen their estimates between our governors, that they're basically saying we're going to keep rates where they're at super low rates. The market didn't believe that inflation, wasn't not coming. And so we saw a tick up in the tenured treasury that affects the mortgage market. And by proxy pretty much affects the student loan refinance market. Now, some people think that we're going to see massive inflation and rates are going to have to move up with it.

Jimmy Turner: I don't really know if I buy that whole thesis. Maybe we see some inflation and they told us, Hey, inflation's coming, but it's transitory. It's going to go up. When the economy opens back up, people start spending and then it's going to subside back down. Maybe it will. Maybe it won't. But what I know is that if the fed lets rates go up by 1%, the government will end up owing $280 billion more, not in total interest, more interest on their debt with a 1% rise in interest rates, they will end up paying almost 50% more to service the debt than they did in all of 2020. They're not going to let the rate go up because they can't afford to let the rate go up. So they said, Hey, we're going to continue purchasing assets. The fed purchases $120 billion a month currently. And that was a ceiling in the way that he phrased it.

Jimmy Turner: I believe that's now a floor because he said at least 120 billion. And what they're probably going to do is they're probably going to come out in the market and going to buy down. You go out on the yield curve and buy down rates. So I don't think that we're going to see a massive spike in rates, but I think again, it's going to be to use their language transitory. It's going to be this, everyone rushes to refinance their debt. And then if the rates are going to spike and then the rates are going to come back down. So either your gamble is do you go, you know, let's call it six, eight weeks early when you know that no one's thinking of it yet. And the companies haven't started pricing in what they know is already coming. Or do you wait six, 10, 12 months down the road. When the rates come back down and then refinance. And that's part of what you have to think about with your student debt.

Speaker 3: You do is you do it early, and then you watch what happens to everyone else. And then you go tell everyone else to listen to money meets medicine, because we just saved you lots and lots of it.

Jimmy Turner: Or you roll the dice. I'm just kidding. And it backfired greatly. Then you pretend that Jimmy did all of this and it wasn't Ryan talking about any interest rate stuff. It wasn't Ryan's idea. But Hey,

Speaker 3: This brings up a second interesting thing, which I really want to talk about because I can't tell the number of people that are like, Hey, Jimmy, like I got this great deal on a car. I got 0% interest. And so for five years, and we all know, by the way, if you don't know, is your percent of straight on vehicles is not really 0%. Like the money they're making is hidden somewhere else. But regardless, people are like, Oh, it's 0%. There's no reason for me to pay things off early. And so they start just leveraging debt. And for me as the behavioral side of just becoming numb to your debt, that kind of thinking worries me a bit, but I also recognize that you can also lever or leverage debt in order to make more money. And I know that is a concept that is wildly popular in real estate, for example. And I don't want to ignore that side of things, but it is an interesting phenomenon when people start saying, Oh, if it's 0%, I can make money somewhere else. So why don't I just own this debt and use my money elsewhere to really grow and build wealth. And it does worry me at what point they become so numb to it. There's so I loved it.

Jimmy Turner: It's great. Well, let's unpack that for a second because the assets that they're putting debt on is what really matters, right? Technically a car is a depreciating asset, but it still is an asset. Okay. Putting debt on something that to lose value, doesn't seem very smart. Okay. Putting debt on something, they over time will appreciate whether it moves just with inflation. Like most real estate does, or it moves in excess of inflation. But if you're putting debt on something that will earn money and appreciate over time, that seems like a better use of debt. So in real estate, you're hoping to buy this property, whether you're buying a single family, multifamily, industrial building, I don't care what it is. You're buying it. You're doing your underwriting. You're doing your due diligence going, yes. I think this will one be able to service the debt to pay me money on top of the debt for taking on the risk of buying this.

Jimmy Turner: And three we'll hope to appreciate over time, because of all the different things in real estate, which can boil down to three words, location, right? That's real estate's game. There is location, but if you already own the piece of real estate, and this is where I think you could take on additional debt and actually not get into trouble and it might be smart. It just, again, depends on your situation. So I'll just use me as an example, because it's easy to talk about what I'm doing or make fun of myself. But we've had a piece of property that we bought in 2014. My cousin lives in it, it's in Las Vegas and we had bought this. We put 30% down. I've never raised the rates on him. We like helping him. We like him in there. He takes care of the house. It's a great scenario for everyone.

Jimmy Turner: That piece of real estate has pretty much doubled in value since we bought it, which is pretty insane, but where we bought it in Vegas and how was the bottoming? And we'd just been part of it is we got lucky. The other part is my whole family's from there and does real estate. So we knew what to be buying, but I was able to go refinance that loan that we had on that property. And my rate was at 4.75 for that property was a really good rate on an investment property because investment properties are a lot more expensive from an interest rate standpoint than it is for a primary home. We were able to refinance that to 3.25%. During this last past few months as rates cratered, I was able to actually not only refinance, but I was able to do a cash out refinance.

Jimmy Turner: So I was able to take not only the money that I had in the deal originally, but I was able to actually take even more money out of it. Keep the payment literally almost the same and was able to refinance the debt. That was a no brainer to essentially take on a little more debt in order to basically pull the money out. And I can redeploy it elsewhere, whether it's in real estate, maybe we had other debt we don't, but maybe we did. I could have paid that off. It could go into buying stocks and bonds. It could go anywhere. It could go to my bank account and just sit there and pretty much lose money. Great. I could do anything, but that was an instance where taking on debt made sense in a low interest rate environment, going and bidding up an asset. Now that I didn't own all real estate has been going through the roof.

Jimmy Turner: I know in our area like the real estate market is up almost 20% in the last 60 days. I am not going to go take on debt to go buy an inflated piece of property because it won't pencil. It won't make sense. So I think taking on debt in a low interest rate could work. I don't think it's absolutely going to be on something that's depreciating like a car. And I would be very careful on buying new real estate right now. But if you already own it, I would say it is almost an absolute that it's going to make sense to go refinance those rates. And if you can pull money out and keep your payments near the same, it's almost a no-brainer at this point.

Speaker 3: I really like about this discussion is that even though interest rates are at historical lows, you'll notice that the concepts that Ryan and I are teaching right now, aren't that different than what we would normally teach you guys, right? Which is be reasonable. Stay in moderation, consider multiple things that are both good to be good options. Like there's not a right and wrong here. And when I coach clients, I have spent a ton of time getting them out of this framework that they're like, just scared to death of doing the wrong thing. They're afraid of failure. They're afraid of doing it wrong and reframing that in a sense of, Hey, by the way, both of these are reasonable things to do. Why don't you just pick which one you want to do? And when you can get to the point where you see them as both reasonable options, then you can really just make a decision based on what you want and get to that personal finances, personal space and do what's best for you.

Speaker 3: And I think that even in these historically low interest rate times our speech, our talk, our ideas or concepts around this, aren't fundamentally different because you shouldn't just change plans because everything's always going to be different. There's always gonna be something new, low interest rates right now. It could be something completely different six months from now, 12 months from now, but the concepts remain the same. And at the end of the day, you're going to have to realize or determine, are you a person that isn't a big fan of debt? Or are you someone that likes taken on a little more risk? And then those principles based on your personal financial preferences to the current situation, but this doesn't mean that you should just go change everything because interest rates are all of a sudden low and do something entirely different than what you would normally do. Where Ryan saying is that he, it sounds like Ryan, like you took that kind of rational thought process and applied it to the situation. But that rational thought process is the same one that you would normally always use. And you realized, Hey, like I got family living in this thing right there. Pretty sure renter, I can refinance this thing, take some cash out and get a low interest rate three and a quarter on a property that is an investment property. That's just a no brainer, right?

Jimmy Turner: Yeah. But my situation, I think is very different than others. I wanted to give the other side of this, of what, if you were to go by in appreciating or what you would hope to be an appreciating asset in a hot market. It might not be the best thing you have to go and find the deals, but deals are hard to find. It's not always a good thing to take on more debt to buy those assets. If those assets are inflated, if you don't believe me, check out what everyone did in 2007, in 2006, in 2005, when they were buying houses like crazy and then prices cratered 66%, that is a huge issue. And so if we're looking at the market and everyone's clawing over the Hills to get more assets and fighting and having to write notes and doing all cash offers, and that's a really nice sellers market, it probably means you're overpaying or you're going to compete with a lot of people to find a decent deal.

Jimmy Turner: And you might not want to over lever at that point. That's my disclaimer. If you will, like every situation is different, personal finances, personal, but I want to make sure that you understand that not all debt is bad and that you could take advantage of low interest rates. And we give general rules and everyone else on the internet gives general rules and helpful tips and hints and tricks and whatever. Here's the deal. You shouldn't listen to any of us because no one knows your situation. Like I'll make this into a disclaimer and make it fun. But no one knows your situation. We don't know you from anyone else. And you don't technically know us from anyone else. And we want to make sure that you understand personal finance. This is Jimmy has nerded out a ton on this stuff. He didn't go to school, but he basically did.

Jimmy Turner: Cause he taught himself all of this stuff over many years, I went to school because I'm a money nerd for this. We are we're money nerds. It sounds like it's a badge that we're happy to, where most people are like, you really are a nerd for that. But that doesn't mean that we're always right. It doesn't mean that we know what's coming because if we did, I promise you this. I can't make any promises, but I promise you this. If I knew what was coming, I would be as wealthy as Warren buffet and I'd own an Island and I would be kicking back and I wouldn't be podcasting. Even though I love podcasting. I wouldn't be doing that because I'd have so much money. I already knew what was coming and my crystal ball worked. It doesn't work that way. I'm not gonna lie.

Speaker 3: I'd probably still podcast. There's not a lot of things I did.

Jimmy Turner: I probably would too. But it would be not as high quality because I absolutely would be podcasting from the ocean. I'd be sitting on the beach. You'd hear a wave. I'm like, sorry that a wave. Yeah. That guy's surfing and gal. Yeah. I was running by and kids screaming. We're on the beach. We're hanging out. Enjoy the podcast. That's all it is. It sounds great. In fact, I think we should do that. Jamie. Let's do it. All right. Before we end, we want to make sure that you hear from our sponsor one more time. And that's this podcast was brought to you by contract diagnostics. They're a company that specialized in contract reviews. Specialization is something that I think we can all appreciate here. So when you and your family, you have contract needs highly recommend you give them a call. They're going to help you understand the contract.

Jimmy Turner: Make sure it lines up with your interests and protect the assets that you covet most, which is your time and your family. So find them at Dr. Podcast network.com/contract diagnostics or call (888) 574-5522. All right, everyone. Thank you so much for being here, Jimmy. And I greatly appreciate you guys being here. Please make sure to tell at least one other physician, family that we exist so we can help them understand personal finance. If we can't help them understand personal finance, at least they can come for the cheesy dad jokes and me making fun of Jimmy, but there's a lot to make fun of with our powers to bind, but with our powers combined, Oh really, really I'll make fun of Jimmy, but all right, I already gave my disclaimer. I'm good, but we need the cutest little disagreement on the internet to give it one more time. That way we can put some money in a Roth IRA. All right, everyone have a great week and we will see you next Wednesday.

Speaker 4: Take care. My dad, Dr. Jimmy Turner is a practicing anesthesiologist. Mr. Ayman is a fee only financial planner. You should know that this show is not personalized financial advice free. In fact, the show is only for your general education and interesting purposes. So keep listening to learn how to become a fleet yourself, angel girl, or go find a great fee, only financial planner, like Mr. And to create a personalized financial plan for you.

TPP

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