Money Meets Medicine Podcast
MMM 64: How to Find Your Dream House
Most doctors spend time looking for their dream house at some point in their career. Whether it is fresh out of the gates of residency and fellowship or well into their career. So, how do you find your dream house?
And does a dream house even exist? That’s exactly what we discuss on this episode of Money Meets Medicine.
Today You’ll Learn
- Whether dream houses are fact or fiction.
- What is hedonic adaptation, and how does it impact your home buying?
- What do the studies have to say about whether buying a home actually makes you happier?
- And more!
Jimmy Turner 0:00
Many people spend hours upon hours looking for their dream house online before they ever buy their first attending physician home. Is your dream house a real thing? Or is it like the fountain of youth always calling your name but never to be found? Keep listening to find out.
Welcome to the money needs medicine podcast where we talk all about the personal finance topics you wish you would learn in medical school. RV host Jimmy Turner, founder of the physician philosopher, and here's your co host. Who has the fanciest he shed in all of San Diego. Right?
Ryan Inman 0:36
I mean, could you just call it a shed? Not a he shithouse the he said she said is weird and all these is not a she shed thanks for at least that, please. But hey, it's an office my friend. This thing is, you know, 10 feet by 12 feet. 10 feet tall. It's got door and a window. It's got its own like power. It's got a little AC unit. Come on, man. It's good.
Jimmy Turner 0:57
It's your dream. shed
Ryan Inman 0:58
my dream shed? Yes. Oh, that's a good one, Jimmy. All right. Well, I'm really excited for today's show. I think this is gonna be super fun. One of the biggest misconceptions that I see physicians have in personal finance is thinking that they need to find their dream home or their forever home. And I think that is actually the biggest myth out in personal finance. And Come on, man. It's good. It's my dream shed. Yes. Oh, that's a good one, Jimmy. All right. Well, I'm really excited for today's show. I think this is gonna be super fun. One of the biggest misconceptions that I see physicians have in personal finance is thinking that they need to find their dream home or their forever home. And I think that is actually the biggest myth out in personal finance. And I get it. Like, since you were little you've heard about owning a home, it's part of that American dream. You've been told to get the right house, have it in the right neighborhood with all the best schools, all the right schools. And that is an easy trap to fall into. But is it really true that you need to find your dream house to be happy? I mean, is everyone who buys their dream home actually find happiness? No. And in fact, I think you could be making a really bad financial decision because you think that you need to find that dream home. So in today's episode, we're going to discuss all the things you need to know about the myth of the dream home, and help you stay away from one of the most common mistakes that we see physicians make. But before we get into today's show, let's hear from our sponsor. And that is Michael Revis with Mr. Insurance. And Michael is a fantastic guy he sponsored the show many times before, and hopefully Jimmy Fingers crossed continue to sponsor our show, but Michael is a CFP, professional and insurance agent committed to helping physicians all across the country with their term life and disability insurance needs. He provides an objective a transparent and educational focus that aims to help physicians make prudent decisions and avoid over complicating things. He offers own AHC Disability Insurance which is really really important for residents fellows and attending physicians we love Michael a physician while services we love Michael on the money means not isn't Michael just does a great job. And I know that he's going to have your best interest at heart when it comes to disability insurance. So whatever your insurance needs are, I know Michael can help you. You can reach out to Michael a doctor podcast network.com slash Mr. Insurance. Or you can contact him by calling him at 800-817-4522. Jimmy, how should we start this Oh man, like the dream home talking about myths talking about all this stuff that you know could be good could be bad. Where should we launch this fun discussion?
Jimmy Turner 3:41
I can tell you my story, right. So we bought this house that we live in, in North Carolina about two and a half years ago. And I remember like vividly all through residency and fellowship. Basically, in the first two years that we were in attendance, we stayed in the same little starter homes like 1100 square foot house cost, like 120 grand because it's Winston Salem. So we're, you know, living in this house. And I'd venture to say that most nights, we would end up on Zillow, or some online app realtor.com. And we would look through houses to try to find the house that we were going to move into after we paid off our student loans. And the reason that we did that is because like everything else in life, everything in life is driven by your feelings. Like you basically have this idea that when you accomplish X, Y, or Z or you buy a, b, or c, you're going to be happy or content or whatever. And so this kind of comes from the motivational triad, the idea that everything that we do is is trying to either seek pleasure, avoid pain, and to do either of those things as efficiently as possible. And so we would always be looking at houses man, and we absolutely did it because we thought that buying that house was gonna make us happy. And so I think that is the phenomenon that happens in most people's minds when they're thinking about buying a home and like, Oh, this is gonna make me happier than my current situation. So I just want to start it from a place of compassion and say, I totally get it. I've been there, I've gone through the same thought process, I've had the same thing. We've had many, many friends go through the same process as well. So as we start the show, and we start to crush your dreams, I hope that you can know that we do have been through this.
Ryan Inman 5:16
No, I don't think we're gonna crush dreams, we're going to give you the real talk on real estate and what it's like to buy a house. So my wife and I, we've had several rentals, I want to say we've probably bought and sold close to 20 homes or about 20 homes now, whether it's been rental properties or a primary residence. And the first time we bought a house was actually in between residency and fellowship, we knew that we were coming down to San Diego, the market was absolutely depressed. Maybe in the number jockey that I am, I ran all the numbers crunched all this data. And we ended up buying a fantastic house and I viewed it as well, this beats renting, there's lots of appreciation that will likely to come the interest rate on a physician loan was 3.5%, which now everyone's like, that's it. But then that was like unheard of rates were like historic lows then. And I was like, would never moving. Or I'm never selling this place. Because of the rate and Taylor's going this is a fantastic home. And you know, she was more of the compassionate side. And I viewed it as a little bit differently. But as we have gone through our journey, owning a home has been fantastic. There's a lot of work, there's a lot of maintenance, it costs a lot of money, homes are lots of headache, but at the same time, it is a fantastic thing to be able to say that we have this house, we can call this home I have rented since high school every single year, until basically this last home that we moved to in Southern California here in San Diego, it has been I've always moved, I've always done so for me, I was like I'm done moving just from that I'm totally with you on the compassionate side of understanding, like I want to buy a house, I want to start my family or, you know, put down roots somewhere. And you can do that without it being this dream home or this forever home. And this misconception I think of I've got to pick the right home the first time because I don't want to move or I'm not going to move, I think is a really big fallacy it ends up causing people to overspend a lot more than they would because all this is going to be the biggest purchase of our life. And we're only going to do this one time absolutely is not the case. Even the banks who give you the loan, to buy set home, they price everything, knowing that in reality, everyone moves or sells or refinances within seven years. That's why they've front load all the interest even in an amortization schedule, like the majority of your payment, when you're making your payments on your mortgage are mostly interest in the beginning, the bank wants their money, they don't want to wait 30 years because they know you're not going to stay in the home 30 years. But we've all been told for our whole life, that the American dream is to buy a home and raise a family and to pick these schools and to do all this great stuff. And it is it's a fantastic thing. But the concept that we've now morph this into a forever home or our dream home, ends up not working out correctly, because you end up over improving homes, and spending a lot more money that you'll never get out, you'll end up buying a house that you really couldn't afford, then you're gonna feel house poor. And if the market has any downturn at all, you're underwater significantly. And for the average American, when they buy a home, it's not gonna be a multi million dollar house. But looking at hundreds of physician finances over the last decade, the average physician buying a house is a seven figure house. So we're talking even a lot more money. And part of this I think Jimmy comes into like a little be more debt immune, you know, coming out with such high student debt and working through all the different pieces like well just add it on will pay it over time. And in that piece.
Jimmy Turner 8:44
I also think that I want to go back to something you said about, you know, the dream house fallacy, right? I think it's an appropriate name for it. And there are all sorts of ways that you know, this isn't true, right? So for anybody that tried to buy a house, and then like you walked into the house, you're like, Oh, my gosh, this is the house. Like I can't imagine any other house ever making me happy ever. Right? And then you lose the bed. And the next house you walk into, you're like, this is the house, you do it so many times. And like, yeah, is are there houses that like you liked a little better than others, like, at the end of the day, you end up buying a house and you end up being happy. And you're glad that you moved into the house. And it's just this thing that you adapt to later. But even during the short process of like looking for homes, you're training yourself to know and understand that, like whatever you thought was your dream house, there is not just one house that is going to make you happy. And in fact, buying a house does buying a house make you happy. There's been studies on that right, which we're going to talk about today. But I think it's really interesting that it's so easy. And we talked about this last week at the very end of the podcast. But when we start using dopamine as the one thing that we're going to use to make our decisions when you walk into a house and you're like oh, this would make me so happy. It's like when you haven't eaten in like 16 hours and there's like this big meal right in front of like your favorite Like, you start salivating before, like you've even put anything in your mouth, like walking into a house, when you're looking for homes is the same exact process, you're like, I can already see our furniture in this thing. And like you've already committed to something with the pleasure side of your brain without thinking intentionally about it, probably at all. And convinced yourself that this is the one house that will make you happy, which ends up with all of those things that Ryan just mentioned, which are over bidding on a house, putting tons of money into a house, because it's your forever home and like doing a bunch of things financially, that honestly don't make a lot of sense. But you do them because you have convinced yourself that this is the only house or your forever house, or like we just put these modifiers on there that make it so you know, it's hyperbole, right? Like, it's just like the only one that can make you happy.
Ryan Inman 10:45
It's all emotion, though, right? I don't know about others, but I work with enough doctors, I'm married to a doctor, All my friends are doctors, like you guys are really good at justifying things and convincing yourself that that is it. I don't know anyone else. It's, I think a personality trait.
Jimmy Turner 10:59
I'm pretty good at convincing other people to it turns out,
Ryan Inman 11:01
absolutely. I mean, sometimes I get told him a noncompliant patient, it's still a convincing pitch that I should be doing something. But you guys are really, really good at this stuff. And so all of this is emotion. And I think that is perfectly fine. And I actually want you to be excited to get into a house and to have that experience and to walk into somewhere and go, I can picture my furniture here and this and that and to be truly pumped. Because if you're not, you're going to waste money. Right? If you're not excited about any purchase in life, don't buy in. So if you're going to buy a house, which I love the idea, it's not an investment, we can get into that whole thing. But you know, it's an emotional investment. But it's never going to be that dream forever home, look at the people who knock down houses and build a house. Right, and it's accustomed to them, everything is perfect. They're still not happy. Because then they look back and go, yeah, we showed a change that and I'd like to do this or Hey, the style, quote unquote, changes a decade from now and they want to add more renovation. They're always making improvements, tweaks changes, like that wasn't the forever home, and they designed the dang thing from the ground up, studs, nails, everything, everything they've designed and still not happy. The first house we actually bought Jimmy is in Carlsbad. And that was when the market was depressed. So I kind of was talking about before, that was through a home builder, but they were all standard homes, you get to pick the models and do whatever. But you get to design like little things like where your plugs are, and what kind of flooring you want. And all this, which is great. You get to customize. And I kept telling Taylor, I was like, Don't over customize, we're not going to be here that long. And she's going like Debbie Downer over here. What do you mean, I can be at home, like, Just trust me, like houses are something that you will buy and trade not as frequent as stocks. But this isn't a forever thing. Like, let's be excited, let's be practical. If anything, think about it for the next time that you turn around, and you're gonna rent this thing out and own it, you know, maybe do own it forever, but you ain't gonna live in it forever. And to think through all these decisions, sure enough, within two years we had already moved on. It was because our situation changed. It wasn't because we got over the house, our situation dramatically changed. The market appreciated like crazy, because I think you'd need to hold if you're going to buy a home owner for at least five years, otherwise, you're gonna lose the fees, our house appreciated 40%, it was unheard of just where we bought it to what it is. So the financial piece was fine. But also Taylor was high risk pregnancy, we were almost an hour away from the her physician and the hospital and all that stuff. So we had to move close, we ended up selling and renting a place really close because of all the stuff that ended up happening.
Jimmy Turner 13:36
Yeah, and I just want to go back because, you know, I know that we have a lot of students in residence that listen to this show, and we say it all the time. But in this context, it bears repeating that over 50% of doctors change jobs in the first five years, you know, there's better than a coin flips chance that whatever house you buy after you finish training, that you're going to change jobs and probably need to move and change houses too. And so we know just from that one variable, you have greater than 50% chance of having to move houses. And we know that they're the ones Ryan's mentioning, right with the health concerns with Taylor, there are an infinite number of other variables that can also lead to you moving, which is why the numbers are so high for you, the percentage of people that move in the first seven to 10 years have to buy a house,
Ryan Inman 14:19
I think is a really good point. And this is one of the reasons why I tell residents like just don't buy a house. It's just not worth it. Yes, you get to, you know, get in and make this thing your own and it might be the equivalent of renting are very similar from a financial standpoint. But so many things can go wrong, that you don't have the funds to recover from your AC goes out your roof ends up having leaks, whatever it is like you're on a resident salary, it's gonna be expensive to fix those things. And dramatically will alter if you're profitable or not in this house, unless you went to med school, you come back, you're doing training somewhere and you're from that area. You live there, your whole family's there and you're not moving great. You're like in the 2% of people that we're talking to right now. The other 98% you're gonna move on And go somewhere else, I don't even care if you're going to stay fellowship at the same institution, statistically, you're going to leave that institution and go somewhere else needing to sell your home with there's not even from a, hey, this is going to potentially put you underwater with all of the other costs that come with owning a home is inherently physicians, you already know, just by the design of your career, you're moving. And so if you don't think you're gonna be there for at least five years, I wouldn't even consider buying a home. In our case, we knew that this is where we were, we'd already lived down here at the time. I mean, several years already already done both my master's degrees at USD, like, we already knew that we were here, and we knew we were going to stay. And we knew that the pricing was depressed. But right now, especially 2021, as we're recording this, prices are sky high. This is not the time to say I will wing it, it'll be fine. It might not be you might be buying at a peak or near peak. And while we don't try to time the market, it's very different than when I was saying, We bought a home in between residency and fellowship, the market had already dropped 40% in that time period of the peak to when we bought literally had dropped 40%. Right now all these prices are at the upper end of the spectrum. But coming back to Jimmy, the concept of buying a home and the forever home. Most people when they buy a home, they are going to have things that they think they need to fix that they need to do. Oh, this hasn't been updated for however many years. And it's everyone's human nature, my whole family's in real estate.
Jimmy Turner 16:27
My dad literally just sold his home and bought a new home. And the first thing he said out of his mouth was Hey, man, I just want to tell you like we just put an offer we got accepted on this new house. We're really excited. number two thing he said it hasn't been updated forever. So we're gutting the kitchen, remodeling the bathrooms and doing I'm like, how are you not happy haven't even moved in yet. Instantly was like, yeah, we're making changes, we're already doing stuff already putting money in. I love my dad, he's 70 are going to be 17 sorry, dad. And he likely will not move after this. He might actually have a forever home and his employee. But even before he was in to see if he liked it or not, was already ripping stuff up already tossing a whole boatload of money into this thing. And so if you're out there, and you're early in your career, the odds of you staying in that house odds you staying in the same city are probably pretty low. I was reading an article about this from the New York Times. And actually, I'll link to it on the show notes and get posted on the physician floss for free show. But I'll put it on this show. But there's this article that talks about happiness and buying a home. And it basically shows there's no difference in happiness. And at times, it's actually been shown to decrease your happiness when you when you buy a house or you're lower your quality of life at least. And I thought it was interesting after reading this whole article, when you get down to the person. It's like done a lot of research. And you know, as an expert in this, there is a doctor. And this is a quote, what matters for our happiness. Dr. Dunn said is what we do in the minutes and hours of our day. When shopping for a home she recommends asking yourself, how will this purchase change the way I spend my time next Tuesday. And I just thought that was like such an awesome thing. I'm like waiting for it to be like, you know, you really got to check the kitchen, or the back deck or you got to make sure it's near a park that's actually been shown to increase happiness houses being near a park. But I think it's fascinating that she's pointing out that what really matters are that minutes and hours of your day, and how you spend them.
Ryan Inman 18:21
Are you really surprised though, Jimmy, I ask you like, are you really surprised?
Jimmy Turner 18:24
Now I wasn't surprised. But I was surprised because I thought they were gonna say something else, not because of what the findings actually were. Because I know that for example, like other behavioral studies have shown that if you have a commute that's 45 minutes or longer, that substantially decreases your happiness satisfaction in life, that number could be 15 minutes. And
Ryan Inman 18:41
I'd be like, Ah,
Jimmy Turner 18:43
yeah, so your, your, your minutes and your hours and your day and how you spend them matter. And it turns out that when you buy a house, you're still gonna go to sleep in a bed, hopefully, you're still gonna eat food at a table, hopefully, you're still gonna, you know, have all the other things that a home is meant to do. Right. And in your new house, you're still gonna do all of those things. And so the fundamental actions of owning a home, in a lot of ways don't really impact how you spend your random Tuesday that she's pointing out to right. And I just love that this professor basically pointed to that as a way of thinking through this process, like how you spend your time, based on the home is infinitely more important than whether the home has a certain kind of sink or a backsplash or whether the vanity in the master bathroom is the appropriate kind to be used for your interest. I mean, that stuff just doesn't matter. And I also will echo your dad's statements right? We walked into our house, you know, which we got for basically one times what our salary is here in Winston and I'll be honest, I bought the home. There was like a list of seven things like we needed to buy dining room table because we had 1100 square foot house, there's no room for a dining room table. By the way, we needed to get the back porch and renovate that. And so like we had this list of things that we wanted to do and to find the moderation here. What we ended up doing is saying we'll do those things when we do this and so we paid off all of our debt before we even bought a dining room table. We had a house that looked very strange, you'd walk into the house and you turn to your left, and there's a dining room with no table for two years. And so we waited to buy that we just did the deck renovation two and a half years later. And we really kind of put things in order. And the reason why is because I knew that when we did those projects, those things in and of themselves, were not going to make us happier. And so it's fine to do them. There's nothing wrong with doing them, but doing them with the expectation that it's going to dramatically improve your quality of life, your happiness, that is a recipe for disappointment.
Ryan Inman 20:26
Yeah, I like it. So back to the journalistic thing that you put out the blog post here, he doesn't surprise me, that was said by someone. Obviously, that was a very logical thought out article, most blogs and posts are trashed, to be honest. And so we would have expected that turn, but something
Jimmy Turner 20:40
new york times kind of reputable, I mean, sometimes.
Ryan Inman 20:44
So no, they're all reputable at some point. But the interesting part is, yeah, the materialistic thing didn't make you happy, or likely won't make you happy. Just like when we looked up all the stats around how much money you should make, it was like, if you make more than like 90 or 95,000, or whatever that number ends up being, it doesn't incrementally increase your happiness more and more, because you've hit that kind of sweet spot, buying a home will likely make you happy. And you will envision all these great things. But buying the home, let's say that is $500,000 versus 1.2 million, and I'm using San Diego prices, by the way, you know, it's probably gonna be way cooler, of a house at 1.2 million is probably gonna have massive and all these bells and whistles, all these great things. But is it truly going to move the needle make you a lot happier than if you would have allocated those funds into a bunch of other things that also make you happy and savings goals for travel or other experiences that are now just consumed with the house. And I think that it comes back to everyone is different personal finances personal. You know, Jimmy, you're a car guy. I'm not it does not make sense for me to go and buy $100,000 car won financially, I think that would be kind of insane. But I'm not going to get that amount of enjoyment out of that car because I don't drive that much. And I don't care. It doesn't move the needle, I need a car to go from A to B, I don't need a car to go a to b and under two seconds and be some sports car Ryan,
Jimmy Turner 22:03
you could park your truck behind your house and walk on your tailgate and then over the truck to get to your shed. That's about how far away it is.
Ryan Inman 22:11
I mean, it's like 20 feet. Yes, I get it. But I mean, look, I had traditional jobs before launching physician services seven years ago now. And I didn't enjoy the commute. I didn't enjoy driving. I didn't enjoy anything about being in that truck at all. Which is why I ended up designing the firm to be able to work the way I wanted it and help the people who I wanted to help. It didn't move the needle. And if I only had a $40,000 truck or a $90,000 sports car. Yeah, I'm sure it'd been a little more fun, but it didn't move the needle. I'd rather taken that extra money and allocate it to other things. Part of the dream house piece that we're talking about isn't just even the act of buying the home. It's everything that goes with the home like Jimmy is talking about not having a dining room table like we were in that situation. For a long time we did this like crappy IKEA thing that we built and it was hilariously poorly built. I mean, it's IKEA you move at one time and things basically gonna crumble on its own anyway. But we had that for years and years and years. Even in this nice new home when we were between residency and fellowship. Our table was like an Ikea table. I mean, this is a brand new, beautiful home IKEA table. It didn't move the needle for us until it literally got destroyed by our dogs. After several times. Yeah, we moved a whole bunch of times. And then my dog bear, he figured out that he can chew the crap out of it. And there goes the table, we finally had to get a new table. But we were way long past the point of Does this make sense?
Jimmy Turner 23:33
I'm just not connecting the dots. So this is why you have a bear fun because he swallows stuff all the time. Oh, man, this dog
Ryan Inman 23:38
eats swallows, he chews things. It's part of your budget. This is absolutely part of my budget because he does dumb things. And then we have to do it. And unfortunately these he who's our puppy that we got last year during COVID. And we put the whole thing together prior to COVID. So that was interesting is worse is like way worse. So we have the bear fund. It's now the bear Daisy fund. And there is a lot more money in the bear Daisy fund because they do really dumb things.
Jimmy Turner 24:05
For the record. The bear Daisy fund is not like an American fund or Vanguard fund. This is a part of a budget.
Ryan Inman 24:09
It is part of my budget is a savings account. Please don't look up ticker symbols and put it something nothing. We never do investment advice anyway. pdf, but no, it's a savings account that I have that you know, a sinking fund that I've earmarked for our dogs example is at around the holidays, I guess people put popcorn on a string and lace it around a tree Taylor tells me so she was doing that with the kids. They walked outside and came back in Daisy to the entire six or eight foot string with needle attached and had to have surgery. That is my dogs.
Jimmy Turner 24:38
Ryan Inman 24:39
yeah, that was a fun like 1518 $100 bill, but I'd already put money into that account knowing that my dogs are idiots, and that we have to do that and that's part of having a plan and putting those things together. But back to the house. The issue isn't just buying the house. It's everything that goes along with it the more expensive house then you know, well. I've got to have the Your dining room table, I can't have an Ikea table and this $1.5 million house, we got to do that, Oh, look, we bought this really nice house that's now 4000 square feet. And we've been living in 1500 Square Feet during all of our training, we don't have the furniture. So now you got to have a furniture budget, and most physicians will just go on and just buy the furniture to shove in these rooms. And then not only do you feel house poor, you just spent all your money on furnishing said house. And now you have no investments. Now you truly have no extra savings, no extra money. And that's where we see people get in trouble the most, for the record
Jimmy Turner 25:35
rise, not making this up. This is called the De Niro effect, it's got
Ryan Inman 25:38
a name, I'm absolutely not making this up. Because we've also seen it literally hundreds of times, and we're working through and as we're stopping people from potentially making these mistakes, we're actually setting up and organizing sinking funds for these certain things. So like, I've got one for my dogs, because I know they're dumb and gonna do dumb things and cost me lots of money, but I love them. When we look at housing and you're trying to figure out how to buy a house, this isn't just, I'm gonna use easy numbers $100,000 home and I need 20% down. So I need to save $20,000 it's I need to save 20,000 for the down payment. But I also need to save a certain amount of money to have repairs or maintenance a certain amount of money, that's going to be there to you know, make updates and changes, we got to fix electrical or paint the house, whatever. And then I've got to also save money to actually buy furniture and, you know, whatever, it's all I now have this really cool den, well, we need a TV for the den, don't we there's another $1,000 maybe you weren't playing with it just dominoes all the way down the chain. And it all stems from I know that we've been told by this house, and this is gonna bring you happiness and everything in our house. It is a very big emotional investment. But it's all the dominoes behind it that most people don't think through. If you don't have a plan, and you haven't thought through those things, it ends up costing you a whole lot more money and ends up sinking you financially for many, many years, when you can't afford to be sunk any further than you currently are. Right? You got to be really, really careful. And human behavior tells us, hey, you've sacrificed so much to get to where you're at. And that you should be able to go do some really cool things. And you can do some really cool things with the money you're now earning. But you can't do everything. And so you've got to think through what is going to bring you the most happiness, and does that million dollar house bring you a lot more happiness, then the $400,000 house that does that $100,000 Sports Car bring you so much more happiness than the $30,000 truck. Those are the comparisons and the things you got to think through. And then with the house, it's also going one more step further. And understanding all the pieces that go into the house that you aren't thinking of that you need to think of that are going to add to the amount of savings you need to have, you have to know yourself, right, Jimmy knew himself, he knew that if he bought a house, they weren't gonna go off and buy a dining room table and blow up the deck and do all these other things until they had other pieces. And they're very diligent and thought through again, having a plan in order to do that, are you that type of person, if not, have someone either help you or truly think of everything, write it all down, and actually stick to it. Like, you've got to otherwise you're gonna absolutely crush your finances.
Jimmy Turner 28:23
And just go back to the trap doctor from last episode, right? Like, there are lots of reasons the doctors feel trapped, your lifestyle that you've chosen and created should not be one of them. That is something that is 100% under your control. And like, it's really sad when I see people they're like, yeah, you know, I've got $400,000 in student loans, and I have a million dollar home. And you know, my wife is a doctor, and she has a Tesla, and I've got a Tesla too. And it's just sad to me, because like there are things that are outside of your control your personal finances, at least part of them, most of them, a lot of them. That's not the case. And so don't make a bad situation worse, by making decisions to find happiness that don't produce happiness. That's not what happens. We have hedonic adaptation. There's fancy words describe all these things, because they're very real,
Ryan Inman 29:07
and don't shove your head in the sand and be an ostrich and say like, well, it'll figure it out someday, like someday we'll never come if you're already at that point, it won't come you will not dramatically just wake up one day and go, you know what, I should probably cut my spending in half. That sounds good. Let's do that. Let's sell the cars let's downgrade the house.
Jimmy Turner 29:24
That's like the people that say like, just won't happen. I go into practice. And then after a few years, I'm gonna come back to fellowship. Now, has anyone ever done that? Of course, there are people that have done that, but the vast majority of people they go from making $50,000 to two or $300,000 or more, you don't go back to fellowship and make $57,000 you know, and so the same way like you're not going to spend a bunch of money get used to that lifestyle and wake up some day and be like, ah, today's the day I go cut my spending in half. So
Ryan Inman 29:49
if that's you and you have been an ostrich or whatever, like please reach out to us and physician while services about a third of our clients are exactly that and we walk through all of these things to make it not pain. Follow it all. And to actually put together a plan that works and get you out of feeling stuck, this is a really big deal. And please do not put that off and just say like, I'll figure it out next week, next month, next year, whatever it is like it won't come, unless you have a plan already put together. And you look at it, and you say, I can actually implement this on my own, and I'm not going to be harmed ourselves any longer, then great. You don't need a planner, you don't need any help just actually put the plan in place, and realize that this is really important stuff. But if you're almost at the stage where you're like, I kind of know I shouldn't do this. Don't do it. Think through it, walk through all these different things.
Jimmy Turner 30:39
Hopefully this is helpful. Have a conversation with someone else.
Ryan Inman 30:41
Yeah, run by anyone. I don't care if they're licensed, or I just talk to someone and say like, Hey, I'm thinking about the Am I crazy? Should I actually be thinking about this? And as you say it out loud, you're gonna realize, Hmm, I probably shouldn't do this, this probably doesn't make sense. Before we end we've got a quick question from a listener. They're anonymous, which is totally fine. You can email us and do that. And it says a Jimmy Ryan love the podcast and currently binge listening to them. I apologize. I'm so sorry. My spouse tracks our finances very carefully. But he likes to track the overall net worth, I find it impossible to determine our monthly savings rate from is extremely complicated spreadsheet within a spreadsheet system. Needless to say, I've created my own spreadsheet for Dummies. That's what they put here to track monthly income and spending. I have a couple of questions. I'm not going to read the whole thing. But one of the ones that was interesting was should five Tony nines be categorized as an expense or savings. And question on regarding sinking funds. My husband's philosophy is that any spare money should be invested as quickly as possible, instead of keeping them in a savings or sinking fund. He'd rather sell stocks when needed. And then they're asking about timeframe and all sorts of things. Jimmy, do you want me to tackle this one first? Or do you want to go?
Jimmy Turner 31:49
Yeah, no, I'll just say that the 529 contributions being categorized as an expense or savings? I think that that question is so interesting, because I've personally actually gone back and forth on this one. And so that said, I consider my 529 contributions, I actually do it with both I do my projections with and without my 529 a part of the reason why is because like the 529 technically, like even though it's in someone else's name, it can be you know, moved to anyone else, I theoretically could take a penalty on that and take the money out. So like, I guess it's still mine until my kid uses it or my grandkid, or whoever uses it. And so to some extent, like it is really my savings. But in the future, it's going to be an expense, it's like I don't want to depend on that money. That is not being earmarked for me. So I kind of hedge on this one. And I actually do calculations with with it being both part of my you know, annual savings rate and also as a potential expense in the future knowing that that money should go away, depending on what my kids do, the more and more that interest rates continue to skyrocket on college, the less and less I think that my kids are going to go to college, I don't know that I'm going to be like, hey, you have to go to college, when it's $8 billion a year to do. So I don't know that I'm going to do that when they can probably get a job and you know, go into a skill or trade that doesn't require college and make good money and be financially independent much sooner, if they want to play up to them.
Ryan Inman 33:03
So I like the concept of the 529 as you're walking through it, but in reality, it is an expense. Yeah, I know. And it doesn't sit on your net worth statement either. So my kids, I'm just gonna use say they had $10,000 each into both their 529 my net worth should not include that $20,000 as my own net worth, I gave that money or maybe relatives give them that money to pay for their college. That is not my money. It is now theirs, I have now given that to them for college. So I don't include in the net worth, I include as an expense, because if I didn't plan ahead, let's say irresponsible is a horrible word. But let's just say I was, and I'm going to pay for it out of cash. When they turn 1819, whatever it is they go to college, that's absolutely going to be an expense at that point. Why is an expense now because you're planning ahead. And I don't anticipate stealing from my kids. I gave them this money earmarked for college, if they don't go, and they're going to do other great things with their life totally fine. I mean, we'll have that conversation when we get there. But that's totally fine. If they don't use it. It's not like I'm going to take it away from them. That can be used on other things. But I have a strong inkling that my kids are probably going to go to some sort of schooling after high school. And so that money is theirs. It's not savings. To me, it's an expense. And it doesn't even sit on my net worth. I still track it. Absolutely. But in my net worth column, I have a column right next to that, and it's tracking it but it doesn't get updated in there to answer the other parts of this question I want to dig into really quick husband's philosophy is that any spare money should be invested quickly. When you're at the highest tax brackets, the idea of turning around investing everything to turn around and then sell it and pay capital gains on that whether it's short or long term. And Biden's tax plan is going to I think absolutely decimate long term capital gains rates for those that make over 400,000. When he sees the tax bill, he'll probably never want to do that again, but any short term money, my view is that if you need the money within 12 months, don't invest it. Just actually track it. It's hard enough for people to track the money much less than invest the money than to sell it and figure out what to sell and move it and do all these things. I don't care how complicated of a spreadsheet how much they're looking at it, I wouldn't invest money that's within 12 months of being used, I just wouldn't anything outside of 12 months, maybe you can make the argument that you should keep it there. But personally, and I wouldn't recommend that to any of our clients. And the third thing that I want to tackle on your question, was talking about the complicated spreadsheet within a spreadsheet system, US Excel or Google Sheet nerds, we are known to do that we apologize that not everyone is as crazy as we are. We do like our spreadsheets, so don't make fun of us too much. But the idea that you created a spreadsheet for dummies is super cool, he should have probably created that for you, we are with you, I should say not for you. But with you. That way you both are talking and speaking the same thing. If he likes spreadsheets within spreadsheets, his stuff should automatically be able to be updated and make it really simple for you. And every month when you're having your money dates. That's the stuff that you can be kind of referencing and talking about and saying, hey, this doesn't really work for me, I can't really track what we're doing. This makes me feel confused, or overwhelmed, or whatever emotions you're feeling. And having that discussion and going back and forth. Like it shouldn't be, oh, he's got his system, I've got my system, that is a recipe for disaster. It should be he can track it one way, and you can track it one way, but you're working together to track it together in as the numbers come in your spreadsheet, if you want to have it more simplistic should auto kind of update with his spreadsheet within a spreadsheet, or however he wants to track it. But I'd also maybe want to hint here and Jimmy maybe you can chime in a little bit more when I see people that are creating really complex stuff. And they're not on the same page necessarily with their spouse, and they want to put every penny possible into the markets and to save all this stuff. That is I think leaning on one extreme that we've kind of seen, right anything extremes is bad. But you know, this type of characteristic personality trait that this person likely portrays. Maybe you could talk just briefly before we wrap up on like, why that mentality might be damaging or not beneficial.
Jimmy Turner 37:07
I would say that the most common topic that I coach people on in the health coaching experience is on people that came from my financial independence community and then journeyed in and you know, they made an investment in themselves. And a lot of our conversations revolve around the fact that they're trying to save as much money as they possibly can to get to financial independence, because it's become such an important thing to them. So they want to stuff as much money as they can into savings and invest it in the market to get to that number so much quicker. What that usually results in is them being miserable today, they don't enjoy their journey. They don't enjoy what's going on right now. They're just focused on the goal and trying to get to the goal. And they think that someday when they have that number, they get to that number, or that goal, the financial independence that they're going to be happy. And we talk through it and they realize, Oh, I actually if I delayed doing that, and I didn't save every penny that I possibly could and track every penny that I make, I might actually be able to enjoy what I'm doing right now a lot more, even if it does prolong things by a year or two or three. And after we have that conversation, I'd say the vast majority of people are like, Oh my gosh, I can't believe I've been doing this to myself, you know, because of this situation that they've kind of been painting in their head about, you know, having to get to that goal. And like that being the end all be
Ryan Inman 38:16
all that weight gets lifted. And it's kind of like oh, it's really is a much rosier outlook. And I think part of the mentality is what accelerates people who feel trapped. You know, in our last show, talking about who feels trapped, the other can be said of the person that's, you know, the ostrich shoving their head in the sand going off, figure out all my problems in another day. That probably also makes you feel very trapped. And then being aware. It's nice. Before we end though, we've got to talk about our ad. So our sponsor for today's show was Michael relevant with Mr. Insurance, and he's there to help physicians nationwide with their term life and disability insurance needs. We know Michael, we love Michael, I know he'll do a good job. I know he's got your best interests at heart. So if you need any type of insurance, product, disability or term insurance, I highly recommend you reach out to Michael, we know that he'd be happy to help you with whatever your needs are. You can find Michael by going to Dr. podcast network.com slash Mr. Insurance, or contact him at 800-817-4522. Before we end, it's time for that important disclaimer as well. But thank you so much for being here. We really appreciate all of you please share the show, subscribe to the show. You're down here at the very end of the show. I know you probably already subscribed, but help us get the message out to more physicians. You know, it takes 10 seconds, copy the link of the show, send it in a text and say you got to check out the show. Hopefully we can help them understand personal finance changed their life around the way they look at money. I think it'd be what good friend should do right Jimmy?
Jimmy Turner 39:41
That's exactly right. Sharing is caring as we tell our kids. I love it. Alright, let's hear the disclaimer and
Ryan Inman 39:46
then we're out so you
Jimmy Turner 39:47
take care guys.
Jimmy's daughter 39:53
I dad Dr. Jimmy Turner is a practicing anesthesiologist Mr. Edmund is a fee only financial planner. You should know that this show is not personalized financial advice. In fact, this shows only for your general education and entertainment purposes. So keep listening to learn how to become a yourself financial guru. Or go find a great fee only financial planner like Mr and meant to create a personalized financial plan for you
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