Nate Reineke (00:15)
Hello, physician moms and dads. I'm Nate Renike, certified financial planner and primary advisor.
(00:21)
And I'm Ben Utley, certified financial planner and service team leader here at Physician Family. Welcome to the show. Today we have more listener questions. Nate, what's the first question of the day?
Nate Reineke (00:33)
Yes. So I got a new one question, a new question, Ben. I've never been asked this question before. I'm just kidding. I get asked all the time. All right. A radiologist in Ohio asked, if I save my money into a 529, will it grow like my other investments? So I get this question in some form or another.
(00:42)
no, you have me.
Nate Reineke (00:59)
pretty often, which is like, it goes into this count, will it be different than if it's in this count? And the answer is always, they could grow exactly the same. Like they could be the same investment. It's just which account is it in. But with a 529, it probably shouldn't grow exactly the same, depending on the age of your child. So if you're investing for retirement and you have a 15 year old child, and you got
20 years of retirement or 10 years of retirement versus a few years until college, they shouldn't be growing at the same rate because you should be taking probably less risk in the 529. But if you wanted them to, you could invest in the exact same things in both and they wouldn't grow at the same exact rate.
(01:44)
You know, Nate, I got this question from the, stay at home mom's spouse of a, of an ENT who is practicing in Alaska. And she said, um, something to the effect of, uh, well, uh, well, my, my four or three is a four or three B a good investment or is a 401k a good investment. And he said, it's like, go to the grocery store and you know, you, you see two jars on the shelves. One of them has got mayonnaise in it and one of them has got peaches in it. And you, and you say, well, this jar tastes good.
Nate Reineke (01:50)
Mm-hmm.
(02:13)
Right? Well, if you like peaches and you're holding the peach jar, it will taste good. If you're holding the mayonnaise jar and you like mayonnaise, it will taste good, but it has to do with what's in the jar, not the jar itself or the shape of the jar. it's a newer investors often get confused between the tax wrapper, which could be an IRA Roth IRA, four or three B five to nine plan. So that's the account type or the tax wrapper and the thing that goes in it.
Nate Reineke (02:22)
Yes.
(02:39)
which could be a mutual fund, an ETF, a gold coin, real estate, could be pretty much anything that goes in there. The performance of the account is going to be dictated by the thing that goes into the account, aka the flavor, right? It's going to taste like peaches if it's got peaches in it. But when you take it out, it's going to pop like a seal top jar if it's got a seal on it. It's going to unscrew like a screw top jar if it's got a screw top on it. Same way, if it's a Roth IRA, you're not going to get taxed on the way out. 529 qualified higher education expenses.
Nate Reineke (02:50)
That's right.
(03:08)
not going to get taxed on the way out. But if you're taking money of a traditional IRA or taxable account, you're going to pay taxes. So there's two things here. There's the jar and the stuff in the jar. There's the tax wrapper and the investments, right? And never the twain shall mean. So common question to confuse what's in the jar with the jar.
Nate Reineke (03:19)
That's right.
That's good. That's good. Okay. Next question. A family physician in New York. Okay. They asked in addition to all my other savings and investing, I invest $7,500 a month in a taxable account. One, is there a downside to increasing this to 10,000 or $15,000 during the recent correction in the stock market since everything is quote on sale.
(03:56)
Yes.
Nate Reineke (03:57)
I would drop back down to my standard 7500 once the stock market comes back out of this correction and hopefully doesn't plunge into a bear market, although I'd keep doing it in a bear market. Two is doing the above a form of market timing. I know market timing is not a great thing to do, but it doesn't seem as bad as the above strategy. And I know all market timers always think this. I'd love your thoughts.
(04:24)
Nice. So this is from Rich. He's a frequent flyer of ours, a listener. So Rich, thank you so much for your question. You're giving us something to do today. So I replied to his email and I said, this is market timing adjacent. So he kind of got his answer already. But I want to go a little bit deeper here. He said that while things are quote unquote on sale and everything is, I think he said everything is expensive or everything is cheap. Okay.
Nate Reineke (04:27)
Yes.
Yes.
Thanks
Mm-hmm.
(04:54)
So we've had a correction in the US market. I think it's off like 10 % from its recent high, which had hit just like months ago, right? A few weeks ago. It seemed like it was never ago, right? I would argue that things are not cheap. I would argue that things are not on sale. It's like they were expensive and now they're just a little bit less expensive, right? And when you talk, yeah.
Nate Reineke (05:03)
Mm-hmm.
This is like when you go into Nordstrom and they
say things are on sale and I'm like, it's on sale from a crazy price. That doesn't count.
(05:20)
Yes.
That's right. But this is more like Sotheby's or Tiffany's, right? Where things are on sale. They're like, they're three times as expensive as they to be and it's 10 % off. I'm like, that's not a sale. That's not cheap, right? And so I also take issue with the word things, okay? Real estate's not on sale. Home prices are still exorbitant, right? Interest rates are still sixes and sevens, which is not on sale or cheap. US stock market is things. That's not on sale.
Nate Reineke (05:26)
Yeah.
Yes.
(05:52)
It's near its high valuations, not only in terms of absolute price, but in terms of price to earnings ratio. It's at one of the three or four highest prices it's been in US history. I you what's on sale. Emerging markets, those are on sale. Very low PE ratio. International stocks, relatively on sale and have been for a long time. Been out of favor while we've been doing our technology thing over here in the States. All that stuff has been sitting there being relatively inexpensive.
Everything's not on sale, but some stuff is on sale and it's not the stuff that you think that it is, right? So I don't like it market timing. What I love is having a steady, eddy savings rate that's going to get you on track over the very long haul, plugging away, putting that in regardless of what the stock market does, because all of the studies show that it's not timing the market, it's time in the market that matters. And the thing that I really hate about this, Rich, the thing that scares the crap out of me about this is
When you start playing with this, a gateway drug for the bigger drug of actually timing the market. And that's when people get pummeled. So I wouldn't do this. If you got 10 grand to put away, put it away. If you only got 7,500, put 7,500 away. Put it away, diversify it, and wake up 20 years now with more money than you have today.
Nate Reineke (06:56)
Yeah.
right? Good. Okay, next question. Another family physician but out in Seattle, Washington.
(07:17)
Woohoo, Washington, hello.
Nate Reineke (07:19)
Yes, Seattle, Washington. got a tough housing question in Seattle.
(07:24)
You know what I love about
Seattle is they got hella coffee, coffee everywhere you go. It's coffee every corner. And something about chocolate, it's like these people have a proclivity for taking the beans of the rainforest and turning them into magic elixir. I love Seattle.
Nate Reineke (07:29)
Everywhere.
Nice. All right. They said, we want to upgrade our house, but have a really low interest rate on our current home. Our family and friends are saying they want to keep or that we should keep our current home as a rental, but we don't like the idea of becoming landlords. What should we do?
(07:58)
Mmm, housing good, landlord bad.
Nate Reineke (08:01)
Yeah, that's
right. Yeah. So it was interesting. I was right. This is a new family that we're serving and I was writing their plan with them. And every time I got off the phone, I have to say, I thought about this question. It's hard. I don't want to ignore the idea that it is hard to have a piece of real estate in Seattle, Washington, with a 2.5 % interest rate.
(08:18)
Mm-hmm.
Nate Reineke (08:29)
and just sell it without thinking about it. But I could not for the life of me come up with a great reason to keep it. I couldn't. I looked at their plan several times and I told them this. I said, I was driving in the car over the weekend and I was thinking about them and this question, because a lot of us are in the same boat. I'm in this boat. I have a really low interest rate. And I just thought writing their plan, if they do
What's in the plan, which they are totally able to do. They save for college, they save for retirement. They'll have plenty of money for retirement, plenty of money for college. They'll have the money to get into a new house. So what is the reason? What's the great reason to become a landlord? basically so they can die with a little bit.
(09:16)
Yeah. Yeah. And I have an analogy here. You know, you know what this is? This is that really awesome looking sweater that, your friend gave you from a gift and it came from a swank store and it's got a cool label on it. Everybody loves it. And it's just scratchy as all get out. You hate wearing it. Right. It's it's it's beautiful. It's a good thing. It's just not good for you. Right. And what do you do? You're a sweater. Because nobody wants to die looking great in that.
Nate Reineke (09:34)
Yeah, right.
(09:46)
uncomfortable sweater, right? I mean, same thing you just said, die with this, die with this a little bit more money because of having this house, right?
Nate Reineke (09:47)
That's right.
Yeah.
And for the, you know, there are people listening that they sit there and they think like, well, I'd rather have more money that that may be fine. if you want to be a landlord, but in today's market, they still would not break even, which was surprising to me. So we got this great interest rate. Everyone's celebrating this great interest rate. They'd be putting money into this house. And they said, I don't think we'd break even for years. I was like, my goodness.
(10:08)
Yeah. Yeah.
Hmm.
Nate Reineke (10:22)
And so it just doesn't, doesn't seem to provide anything of value to these people. Cause at this point, a few extra hundred thousand dollars, you know, invested, I guess you could say the low interest rate that's not as valuable to them as it would be to move on to a better house and spend less time managing a property.
(10:45)
Yeah, it's not, you know, financial life, financial well-being is not all about money. It's about the things that money can bring or help you avoid. One of the things money helps us avoid is things that are pain. And being a landlord, I assure you, it is a pain. If you were supposed to be a landlord, you would know it. You'd be able to walk in your garage and look around and see your Makita tools and you see your, you know, your lathe and your drill press and your bandsaw and all that good stuff.
Nate Reineke (11:01)
Yes.
(11:13)
You know, you'd be jazzed about working on houses. If that's not you, you're not landlord material, especially not in Seattle where things are priced to live in, not rent out. That's a horrible market to be a landlord in. You want to be a landlord? Go to Missouri, go to Nebraska, go to one of those, those places where home prices are low and you can buy a whole house for the down payment you'd buy a home for in Seattle. Be intentional about it. Don't be accidental as a landlord.
Nate Reineke (11:39)
Yes.
(11:39)
That's like being an accidental parent, right? I some people do that and some of them are miserable. You want a planned entry into this world. I'm just on fire today, Nate. I don't know what it is.
Nate Reineke (11:40)
Yeah. Yeah, exactly. I know. Well, these are good questions and they're meaningful questions. It's, you know, it's easy for us to just say, don't do it. But I've seen people be accidental landlords and they hate it. They, I say, sell it. And then they go, I can't slow interest rate a year later. They're like, okay, Nate, we've been beat over the head 10 times by this house. How do we get out of it? I'm like, just sell it.
(11:59)
my
Nate Reineke (12:08)
It's okay, just sell it.
(12:08)
You know, there's a
saying in business, you'll make more money by saying no than you ever will with saying yes. Right. And running a family, running a practice, you know, raising kids. No is your favorite word because it makes things simpler. It keeps you on target on, on track, you know.
Nate Reineke (12:14)
Mm.
You
Yeah.
(12:27)
Love me some no.
Nate Reineke (12:28)
Okay,
all right, last question of the day is from a hospitalist in Texas. I know there are a lot of changes going on with student loans and PSLF right now, but have you seen any families you work with make progress recently?
(12:46)
Yeah. You want me to take it? So we agreed I would take this one. Okay. So this is, this story is what I like to call the dancing pediatrician. So one day I'm working at my desk. I get this call from a nice lady and she tells me she's a pediatrician. Okay. So we all know what that signals is signals people who work their butt off and they don't get paid what they should. Okay. Living in the Bay area. Okay. So that signals like really expensive stuff. Right.
Nate Reineke (12:46)
Lot of changes then.
yeah.
(13:14)
And she wants to buy a house and she has a big fat student loan, three or $400,000. And I'm like, no, no, absolutely not. And she's insistent on buying a house. said, look, this is not for you. You're in the deep end of the pool. If you insist on buying a house in the Bay area with all these student loans as a pediatrician, I will not work with you. And that was the end of the conversation, right? Cause I was like, I'm not going to try to do the impossible. So I get this text message a couple of weeks later. She says, I'm not going to buy a house.
Can I work with you now? And I picked up the phone and I called her and she became a client, right? And that's where this story began. somewhere along the way, she stumbled into Nate's camp because Nate is our student loan czar and Nate, I'll let you finish the story.
Nate Reineke (13:57)
Yeah. So, we were working with her together and this was, gosh, this was several years ago, five, six years ago. Yeah. Yeah. And so, we found out she worked at a place that did not qualify, for public service loan forgiveness. And we ran our student loans, Kaiser. Yeah. And, we, we run our student loan plan and we're like,
(14:05)
like five years ago. It was before COVID, which is forever ago.
Kaiser? It was Kaiser. Yeah.
Nate Reineke (14:25)
This is going to be very difficult to pay off several hundred thousand dollars of student loans without public service on forgiveness. And she's like, Kaiser doesn't qualify. the dancing part comes in is that she loves the dance studio that she's nearby in the Bay Area. And unfortunately, we had to give some bad news that she should probably move. And that was really, really difficult for her. But she moved out into the middle of nowhere, California to get this job. And while she was there, she
very, yes, yes. That was the, that was the kicker. And, while she was there throughout COVID, she, got a job that qualified. She, I believe got a raise. She bought a house. And as of last week, got all of her payments at Kaiser qualified because, if you know anything about student loans, you found out that in California, the
(14:55)
job that qualifies for PSLF, right? Yeah, because the one she had didn't. Yeah.
Nate Reineke (15:23)
They basically made Kaiser payments qualify. During COVID, they made that happen. She got all those, came back to her. That's right. And then all of her current payments counted and she got, think, $360,000 forgiven. Now she has a paid off house. She's got money in the bank and we can, it feels like, finally get started. And all of this is because California is expensive.
(15:27)
Yeah. So all that came back to her. She got credit for all those at that time. Yeah.
Nate Reineke (15:52)
pediatricians don't make enough and they are saddled with these student loans from the beginning and it took her several years. But I mean, she is set up to retire now. Like she just saving normally for retirement. She set up to have a house. She set herself up over, it took five years and it took a ton of paperwork and a ton of time and energy, but PSLF is still working at the moment and
(16:20)
Yeah. And,
know, there are a lot of times in our journey with her that it looked like PSLF wasn't going to work out, but you know, during COVID, so she didn't have a house before COVID. COVID came along, the Biden administration suspended student loan payments. They paid those student loans on people's behalf. It's still counted toward PSLF. And she did the smart thing, rather than just spending that money that she was making student loan payments with, she saved it. And she saved enough to put like a 5 % down payment on a home.
Nate Reineke (16:22)
it.
Mm-hmm.
(16:49)
And so she squeaked into an entry level home. So she did get on the escalator of, you know, and of course, since then that, that market has recovered. Right. So that's been a big deal for her. And didn't you do something that helped her get a little bit more student loan money? It's like six figures.
Nate Reineke (16:49)
Mm-hmm.
Yes.
Yes.
Yeah, you know,
this is not something that I'm accustomed to, but she knew about a program in California that would give forgiveness to, not really forgiveness, pay you back for the payments that you've been making. So she's, you know, she still made a bunch of payments during PSLF time. And so she got six figures in cash because she worked in the middle of nowhere and they were giving out help to people, to doctors who are willing to work in those
in those low income areas. And so, yeah, it was such a great success story. and she, I'm so proud of her because I know that this is just not a parali. I mean, think about someone, they spent all their time being a pediatrician and all their time thinking about dancing and their dogs. Do they want to be turning in the absurd amount of paperwork required to get all this done? No, but it changed her life to do it. And
(18:02)
Yeah. Yeah.
Nate Reineke (18:05)
I was just there to sort of keep track of what was going on and make sure that if something big happened, I'd be there to kind of make sure the pieces didn't hit the floor. And she did most of this by just following some advice.
(18:18)
think you're underselling it a little bit because we
talked about moving to some nowhere California. That was, that was like a year. Yeah, she's the one to move, but man, it was, it was tough to get her to see that. And ultimately she did, you know, cause the math wasn't going to work out.
Nate Reineke (18:23)
Yeah, but she still had to move.
Yeah,
of course, of course we were telling her what needed to happen, but I see how much she had to do. She had to take action on all those things. And I'm just, I was really proud of that. Yeah. Yes. But she just got a new dog. Yeah. She just got a new dog. So now there's two.
(18:44)
It was huge, had to uproot the dog, right? Even fur babies have feelings.
So the moral of story here is that public service loan forgiveness is still alive and you should keep believing in it until somebody comes along and stops it dead. Right. So I would keep keep moving toward that. So she had a story that had some some incredible turns, but ultimately she wound up with a happy ending.
Nate Reineke (19:13)
with you.
(19:13)
Which
brings us to the end of the show, folks. So if you want to have a happy ending, which is to say you want to have a regret-free retirement, the kind of retirement that you can look back on your life and say, hey, I paid attention. I bought the things that money can't buy. I'm happy about how it went with my life, with my family, what I did for my patients, what I did with my spouse, what I did with my health. If you want that kind of regret-free retirement, we are your guys. We'll walk with you hand in hand to get that done. All you gotta do is go to physicianfamily dot com.
get started and take our little quiz if you qualify and we can chat and see how we can help you. All of our prices are fully disclosed there. They're super reasonable. If that's not for you, then you can take our retirement quiz. It's physicianfamily.com forward slash quiz. And until next time, remember you're not just making a living, you're making a life.