Nate Reineke (00:13)
Hello, physician moms and dads. I'm Nate Renneke, Certified Financial Planner and Primary Advisor.
Chelsea Jones (00:19)
And I'm Chelsea Jones, also a certified financial planner and primary advisor here at Physician Family Financial Advisors.
Nate Reineke (00:27)
Chelsea, the holidays are upon us. I think this comes out on the day before Thanksgiving. So ⁓ I'm not a big Thanksgiving food person. I know, it's terrible. It's terrible. I think I finally convinced everybody in my house, which is terrible, because if people want it, then they should have it. I just can't, you know, I hope my grandmother isn't listening to this. I don't think she is.
Chelsea Jones (00:31)
Right.
Really?
Nate Reineke (00:56)
I don't even know she knows what podcasts are but she's not the greatest cook so I went to Thanksgiving dinners for so long and the food was so bad I mean the best food was the store-bought rolls by a mile it was terrible so but tell tell me what your favorite Thanksgiving food is so maybe I can you can put me on some game here
Chelsea Jones (01:11)
no.
I had the complete opposite experience of you growing up. love Thanksgiving. Everyone, my grandparents were very good cooks. My aunts and uncles are good cooks. The way we did Thanksgiving was ⁓ each of my mom's siblings, there's six of them total. Every household had a designated dish that they brought every year. My mom's was always sausage balls and deviled eggs. Yeah. And everyone would just come.
Nate Reineke (01:27)
Mm-hmm.
Mmm, those are good.
Chelsea Jones (01:48)
So was all homemade. My favorite though, my aunt, we're not listening, but if you are, she makes the best broccoli casserole. It's like a broccoli cheddar casserole. is so good. I look forward to it every year. And then just the nostalgia of the typical like turkey and gravy with dressing or stuffing, whatever you want to call it. It's so good. Takes me back.
Nate Reineke (02:13)
Yes. Yeah, mean,
each one of those dishes that you're describing sounds good. I think it was just I was scarred. I was scarred for some pretty bad food. OK, well, I thought we could do something fun today. We could talk about some things that we're thankful for. And in the spirit of this podcast, let's talk about money lessons we're thankful for. And I thought this was cool because
Chelsea Jones (02:24)
Yeah.
Nate Reineke (02:41)
Most of the money lessons came from the people at my Thanksgiving dinner table. So I'm going to give you give you ⁓ one that I learned from Thanksgiving table one I learned just in life. So ⁓ I remember I got my first job and out of college. And of course, like any good ⁓ newly employed, you know, 22 year old, first thing I wanted to do.
Chelsea Jones (02:47)
Mm-hmm.
Nate Reineke (03:10)
was go buy a car. Okay, so I had this, ⁓ I would always get, know, my graduation present for ⁓ high school was I got a discount on my mom's old Honda. That was my graduation present. So I had to sell whatever crappy car I had at the time and whatever I got from him, I had to give to my mom and the balance, which was, you know, I don't know, 2000 bucks. She just cleared the debt for me.
Chelsea Jones (03:12)
Mm-hmm.
This
Nate Reineke (03:35)
So I wanted a new car and I looking for it and my dad, who's a financial advisor, could not believe his ears. He said, you should never spend your money before you actually have it. And that is so true, right? Anytime I hear people all day long, doctors talking about, I'm going to get this raise, we're going to buy this house, whatever it is. It's like, you don't even have the money yet. And I know with houses, it's a little bit hard. But actually,
Chelsea Jones (04:00)
Mm-hmm.
Nate Reineke (04:03)
Let yourself enjoy that income a little bit and how and start build up some reserves before you go spend it What's one that you have? ⁓ Money lesson you're thankful for
Chelsea Jones (04:11)
Yeah. In the, yeah,
it's kind of, you kind of hinted at mine. It's pay yourself first. And this comes from a book that I read in college as part of a class. It was called The Richest Man in Babylon. It's an old book. It literally, I think it was,
I know, it's from the stone ages. It's so old. But, and the gist of the book is it has 10 lessons that you should learn, ⁓ to be financially sound. And I remember one, one of the 10 and it's pay yourself first. I think in the book it said you should pay yourself 10 % and then live off of 90. ⁓ but I like to just pay yourself first because it's so applicable with money.
Nate Reineke (04:34)
Yeah.
Mm-hmm.
Mm-hmm.
Chelsea Jones (05:01)
and with everything else in life. ⁓ setting aside an emergency fund is paying yourself first. This future you is gonna be really thankful that it's there when an emergency happens. Billing up an HSA is a pay yourself first, maxing out your 401k. And I, this has paid so many dividends in my personal life and just being prepared. ⁓
Nate Reineke (05:18)
Mm-hmm.
Mm-hmm.
Yeah, think that a lot of times we get lost in sort of the technical aspects of money. But some of these just ⁓ timeless examples and money lessons that we are taught from old books, old people, whatever it is, ⁓ they're really like the meat and potatoes of how to be financially secure.
Chelsea Jones (05:29)
And then...
Mm-hmm.
It really is. And this is, it's so widely applicable. It's even like a non-money example is if you're trying to be healthy and you need to get up early to work out, yourself first by setting out your clothes that you need, put your shoes right there, set an alarm. So that way when the time comes, all you have to do is get up, your clothes are right there, walk out the door. Like just set yourself up for success.
Nate Reineke (06:12)
Mm-hmm.
Mm-hmm. That's right.
Chelsea Jones (06:22)
in little ways and it'll pay dividends.
Nate Reineke (06:26)
Yeah, good. OK, I have another one. I experienced this early on in my marriage. Nobody actually ever told me this. This is, I guess, a saying maybe I'll teach my kids. But I would say no material item is worth having money fights over. So.
My, lot of my families from California, they have a culture of having nice cars. And when me and my wife, Brittany, you know, started to get into our careers and make a little bit of money, we kind of still drove crappy cars. And to this day, we kind of drive crappy cars, like I have a nice car, but it was like really nice back in 2015 when it was made. So
You know, but we'd go to California and we'd see these people. We're still a little bit younger, but we'd go to California. We'd see all these nice cars around us. And we knew what all these people did for work. Like, what? Like, where'd you get the scratch for that? And ⁓ every time we would go, we'd look at each other and be like, what do we do? Like, why don't we get a nice car? Why don't we get a bigger house? Whatever it is. And one time I looked at Brittany and I said, but we have never had a money fight.
ever once. And so like we can go do all this stuff, but the pressure of buying material things just so you can go home and fight with your spouse about money is not worth it. You know, so every time we think about doing something like that, because you and I as financial advisors are not immune to material possessions, ⁓ you know, I just look at her and say, we, you know, we still don't fight about money. Let's keep that going.
Chelsea Jones (07:48)
Mm-hmm.
Nate Reineke (08:16)
Let's pay cash. Let's buy a few years older. Let's not upgrade in house before we're really ready. And that has paid ⁓ so much. That has put so much happiness into our lives and just calm into our lives. ⁓ And I think it's something that the younger generation needs to hear because the older generation had this down pat. Our grandparents weren't worried about.
Chelsea Jones (08:17)
you know.
Nate Reineke (08:46)
driving around, at least in my neighborhood, weren't worried about driving around in the nicest cars and having the absolute nicest house. They had a few nice things and they saved their money and they definitely paid themselves first.
Chelsea Jones (08:49)
Mm-hmm.
Yeah. Excellent. I've, I got one more and this one, it really comes down to being responsible with your money allows you certain, I guess privileges because, and in my, my case, it can buy you time. So one thing that I've learned is that my time is really valuable. I never really thought of my time is valuable in the past.
Nate Reineke (09:00)
Got one more for us?
Chelsea Jones (09:27)
But as I've started a career, started a family, there's only so many hours in the day. There's only so many hours in the day that I get to spend with my family. And because I've done my level best to be responsible with my money, ⁓ there's a little bit of wiggle room there to order DoorDash and not spend the time cooking a meal. So that way I can be engaged with, play with my daughter a little more or
Nate Reineke (09:34)
Yeah.
Chelsea Jones (09:58)
A recent one is we bought Lightning Lane tickets at Disney. Those are like really, I don't want to call them dumb examples. I wouldn't say they're super profound, but the Lightning Lane, kid you not, saved us an hour, hour and a half of wait time. And it allowed us to go see friends in another part of the park and have time to do that. And I've.
Nate Reineke (10:02)
Yeah.
Yeah.
Yeah. Especially with little
kids, you're like, it's about the best money you could spend, probably. But if you're tight and you're just barely squeezing that Disney trip in there, you're like, can't. You know, I don't. I think the podcast, everyone knows about vacation, Nate, on this podcast, if you've been listening a while. I don't want to go on a vacation that I can't spend money on lightning passes. Like, let's just not go.
Chelsea Jones (10:30)
Yeah, if you're, yeah. ⁓
you
Nate Reineke (10:49)
You know, just save up for an extra month and get them. I was talking to a very, very well-prepared family for retirement just a couple of weeks ago. And ⁓ one spouse was kind of like watches the watches are spending really tight. And the other one, I think, is also very responsible. But in comparison ⁓ to the tighter one, ⁓ just
Chelsea Jones (11:09)
Mm-hmm.
Nate Reineke (11:17)
She's like, she can't take it anymore. So she's like, she said, we're taking everybody to Mexico, like eight people, but I'm only allowed to go on one $1,600 excursion, not two. I'm like, I never thought as a financial advisor, I'd be telling people to buy the day excursion. But you know, when you're good with money and they have been good with money for decades, buy the day excursion. Blow it out.
Chelsea Jones (11:39)
Mm-hmm.
Yeah, yeah, if you're paying
yourself first, you're paying for future vacation, Nate, to go on the stinking excursion and be able to enjoy the vacation. it's so important to do that for so many reasons, spend time with your family, avoid burnout.
Nate Reineke (11:50)
That's right. That's right.
Yeah.
Agreed.
Chelsea Jones (12:03)
Yeah, have fun.
Nate Reineke (12:05)
Okay, you ready to get into some questions?
Chelsea Jones (12:09)
Let's get into them.
So the first question is from a neurosurgeon in New York. He said, I just got a bonus payment and I have a large lump sum to invest. Should I do a one-time deposit into my taxable account or dollar cost average? This is a great question. It's one that I get not super often, but more than once a year, so often enough. And the gist of it, there's a numbers answer.
And there is a feelings answer. And the thing to remember is at the end of the day, we want to make a plan that you'll follow. We need to keep that in mind. But if we're looking at straight performance, Vanguard actually put out a study. I think they do this every year or every other year, um, where they compare lump sum investing and dollar cost averaging and compare the returns. the lump sum investment outperforms dollar cost averaging two thirds of the time. I think the
Nate Reineke (13:04)
Yeah.
Chelsea Jones (13:04)
It
was like 68, 69 % or something.
So if you have the tolerance, stick it all in there at once. If that makes you queasy and if it's either stick it all in at once or don't do it at all because you're really nervous, you want a dollar cost average.
Nate Reineke (13:21)
Mm-hmm.
Yeah, yeah, that's a good point. ⁓ dollar cost averaging isn't necessarily like you think you're going to get better returns. just make sure that you stick with the plan sort of thing.
Chelsea Jones (13:40)
as both of those options are better than it sitting in cash.
Nate Reineke (13:43)
Yeah, that's right.
Chelsea Jones (13:45)
Okay, next up next questions from a cardiologist in Oregon. They said we earn 700,000 a year and we watch what we spend to some extent, and at the end of the month, we're out of money. What do think the problem is?
Nate Reineke (14:00)
Oh, so this was another an oversight on my end. should have heard this loud and clear and thought there ain't no way. But instead, what did I do, Chelsea? You watched me do it. I dove into the budget. I'm like, what are you spending your money on? Goodness gracious. Seven hundred thousand. You know, you can barely say there's no money at the end of the month. That doesn't make any sense. What are you spending your money on? I just like, you know, it's just like the typical.
financial person's response, let's rip open that budget. And you know, we looked at it and it didn't seem too bad. And the first question I should have asked is what's your take home pay? Right. Because I cannot tell you how many times when I get this, ⁓ it ends up being that they're withholding way too much money. They're withholding way too much money. And sure enough, a couple of months later, we find out I didn't even uncover it. I'm so ashamed.
Chelsea Jones (14:28)
I have to move.
Mm-hmm.
Nate Reineke (14:53)
As their accountant said you're getting this massive tax return like I think six figures and so there was like ten thousand dollars a month or more that just They're like where's all that? I don't get it. Why can't I spend it now? All of sudden they have plenty of money And so if you feel like there ain't no way there ain't no way I'm spending this much money check your withholding check your withholding and
Chelsea Jones (15:00)
Yeah.
Mm-hmm.
Nate Reineke (15:22)
I know most people want to withhold extra so they don't owe anything, if you're planning just right, you get close enough and you have an emergency fund, you can pay your tax bill if it's a couple thousand dollars at end of the year.
Chelsea Jones (15:33)
Yeah, and in this case, he was a partner to practice and so he made quarterly payments and was overpaying. And if there's a year where you get a $150,000 refund, but your CPA doesn't change your quarterly tax payment, get a different tax preparer.
Nate Reineke (15:39)
Yeah.
Yeah,
fire them.
Chelsea Jones (15:54)
And that's a red flag, because you don't want to be overpaying your tax prepayment. That's like a recipe for wondering where the extra $10,000 a month went.
Nate Reineke (16:08)
Yeah, how
are going to pay yourself first if an extra $12,000 a month is going to the IRS so they can hand it back to you and you lost at a bare minimum interest? You know, a lot of stress along the way.
Chelsea Jones (16:23)
is. Okay. The next question comes from the wife of a retired general surgeon in Oregon. She said my husband's on Medicare, but I'm not. And my insurance covers our youngest son. Should I have an HSA?
This has a couple of moving pieces too, a few things to note. ⁓ As you listeners out there, one of these things to note probably applies to you. So first, as long as you have qualifying coverage and you don't have some kind of thing that requires you to go to the doctor frequently, then
Nate Reineke (17:05)
Mm.
Chelsea Jones (17:06)
you probably should have a high deductible plan and pair it with an HSA. The HSA, we talk about HSAs all the time. It's the single best savings vehicle because you get tax deferral, you can invest the money, it grows tax free, and you can take it out tax free for medical expenses, ideally in retirement so that way it can be invested and grow the whole time. So get the HSA if you're able to.
Nate Reineke (17:16)
Mm-hmm.
Chelsea Jones (17:33)
Since her son is on her insurance, you'll actually be able to contribute the full family amount.
Nate Reineke (17:39)
Mm.
Chelsea Jones (17:41)
But the kind of tricky things to remember is first, if your son falls off your insurance, you know, if he gets it, there's employer, if he turns 26, I think that's when they get kicked off. You have to reduce your contribution amount to only be the individual limit. Cause it has to be you plus one other person to qualify for the family coverage. And in this situation, it can't be her husband.
Nate Reineke (18:00)
Mm-hmm.
Chelsea Jones (18:10)
He's on Medicare. Medicare automatically disqualifies you from having an HSA because it's not had an optimal coverage. And then in the same vein, once you, the wife, turn 65, you can no longer qualify or you can no longer contribute to your HSA.
Or you shouldn't, you don't want to. Because once you apply for Medicare, even if you delay Medicare enrollment, a lot of times it can be retroactive and it could go all the way back to cover you at 65 retroactively. And if you have HSA contributions going in after age 65 and they become disqualified later because you have retroactive Medicare coverage, that's just a big mess you don't want to deal with.
Nate Reineke (18:30)
Mm hmm. Right.
Mm-hmm.
Chelsea Jones (18:56)
HSA is best for most people. If you're on Medicare, no HSA. And then family limit is you plus one other person, and it doesn't have to be your spouse. It can be a dependent. So those are the takeaways there.
Nate Reineke (19:11)
Okay. All right. One last question.
Chelsea Jones (19:12)
Peace.
One last question from a dermatologist in Texas. My in-laws are selling their home and we're thinking about buying it and turning it into a rental property. What do you think?
Nate Reineke (19:25)
Okay, so still getting questions despite the rough real estate market about should I buy real estate, should I diversify my portfolio, should I start making passive income. I've made my thoughts really clear on that throughout the podcast. don't necessarily think, well, you and I, Chelsea, when we help people invest, we try to avoid income at all costs because obviously most doctors are in a really high tax bracket.
unless you're going to become a real estate professional, maybe your spouse is going to become a real estate professional, put 1000 hours into real estate so they can actually enjoy the tax breaks that real estate might offer you. It just generally isn't a great fit. It's a lot of time and energy. ⁓ And again, I've said this many times doesn't mean real estate is a bad investment. It's just not generally a good investment for physicians who are busy. ⁓ Unless
Chelsea Jones (19:54)
Mm-hmm.
Nate Reineke (20:23)
They are good at one thing. And that is finding really good deals and that their copious extra time that the physician has. So if they're really good at finding great deals that's how you win in real estate. You don't win in real estate just by buying any old property. Right you can buy any old index fund usually and might give you a return.
Chelsea Jones (20:47)
Mm-hmm.
Nate Reineke (20:50)
There's some are better than others, but it's it's hard to totally screw that up if you're buying a total market index fund ⁓ But you can't just buy any old property It's got to actually you have to get a deal and if you can't get a deal, it's probably not gonna produce a bunch of income It's probably gonna produce a bunch of headaches Okay, so Let me ask you Chelsea if you're in-laws are trying to sell you are trying to sell their house
Are you gonna squeeze him to death for a great deal?
Chelsea Jones (21:20)
No.
Nate Reineke (21:21)
Probably not you're gonna like pay full price plus some like ... here mom and dad like I know you need to buy your ... retirement home tomorrow and you need some extra cash but ... you know I my financial advisor told me I need to squeeze you to death for a good deal. Like no course not.
Chelsea Jones (21:25)
Yeah.
Yeah, that's just,
that opens up a whole can of worms that I personally just would not want to get into mixing finances with, especially in-laws. Like I don't want that potential like friction to even be there.
Nate Reineke (21:43)
No. No.
Of course. Yeah.
And of course that was this dermatologist in Texas that was their answer. Of course they're not going to. They just wanted to pay a full price, like not more, but not less. And so that just doesn't seem like a good real estate transaction to me. And this tends to be how the average person, including doctors who aren't real estate people, like they're not all in on real estate. This is kind of how they operate. They just kind of buy a house that's good for them.
Chelsea Jones (21:59)
Mm-hmm.
Mm-hmm.
Nate Reineke (22:22)
And then they just think well I'm already I already have the ... house. might as well just keep it for as a rental that's not any way to buy a rental house you buy a rental house because it's good investments not because it's a good it was good for your family when you bought it. Now sometimes it works out sometimes you have a ... ridiculously low interest rate it just happens to be in ... good neighborhood that rents well but at least the people that I know that are really great in real estate they are ruthless.
with finding good deals and most of their properties that are the real money makers are nowhere near the neighborhoods I see physicians living in. They're in neighborhoods that have a bunch of renters, right? Therefore, they're a little bit cheaper, they're near a college or something. So I think the short answer is this isn't a great deal and unless you really want to get it all in on real estate,
Chelsea Jones (22:52)
Mm-hmm.
Mm-hmm.
Nate Reineke (23:20)
and spend time away from your work, which probably makes you a lot more than real estate does, I don't think it's a good idea.
Okay. In-laws, Thanksgiving. Think about how Thanksgiving dinner would taste if you just rinsed your in-laws for like a great deal on their house. I don't think it tastes very good. ⁓ All right. Well, that's it for today. Thank you everyone for listening. We are so thankful for you and all the support we get on the podcast. ⁓ If you have any questions, you can send them our way.
You can send them the podcast at physicianfamily.com and if you're thankful for us, you can give us a rating, can like our show and it helps us get our name out there. If you send us a question, we'll make sure to answer it hopefully before the holiday season and yeah, until next time remember you're not just making a living, you're making a life.
