A big part of refusing to pay the full retail price of basically anything ever, is that I always research what I would like to buy, and then I wait patiently for a long time for the price to drop.
Raising Mini Wise Money
8-year-old Mini Wise Money commands a stronger grasp of personal finance than Dr. Wise Money had in her late 20’s. I feel lucky in this respect as it’s every mother’s hope for her child to surpass her in wisdom, integrity, and life fulfillment.
I feel comfortable to say that my sentiments as a parent is representative of our society at large. As mothers and fathers, we strive to provide the best for our kids and we hope that they will develop and practice work ethic, charity, and resourcefulness.
While MWM taught me to not be “scared of monies” and not to be enslaved by materials–perhaps the most important lessons in personal finance–I have successfully educated MWM on the more technical and practical aspects of $.
This post shares the various ways Mini Wise Money has developed her money sense.
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MWM goes to work with DWM.
As an infant, MWM sat in a front carrier when DWM taught Berkeley undergraduate students. As soon as MWM could hold a crayon and sit up on her own, she drew and scribbled next to DWM, tutoring students across the country on Skype. As a compassionate toddler, MWM eagerly helped with squirting water into the mouth of a cerebral palsy patient that DWM cared for. MWM brought baby wipes when DWM was changing this wheelchair-bound patient’s diaper.
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MWM likes to listens to investment books,
read by her dad with an animated voice at the dining room table. While MWM loves the scene of “feeding frenzy” described in Lier’s Poker, MWM also learns the importance of putting her money to work by investing.
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MWM is involved in monetary decision making.
MWM has developed a strong sense of what “value” is. She understands that value is neither an isolated cheap/discounted price nor a high quality/highly desired (by her) item. MWM considers both the price and what she gets out of the purchase. For example, she bought a $20 pair of earrings that she really liked instead of $10 for 10 pairs of earrings that she thought was only “so-so.”
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DWM shares her money decision and milestones with MWM.
MWM knew when DWM paid off her student loans and how DWM did it. (DWM gets free haircuts from MWM since she was 2.5 years old. DWM doesn’t go shopping & works extra after coming home from the hospital.) MWM knew why DWM chose to fund her 529 college savings account rather than refinancing their home to 15-year fixed and lower interest rate.
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MWM learns she has plenty by giving.
MWM went through a phase when she had tremendous sympathy for DWM’s indebtedness and lack of savings. In MWM’s words, “Mommy, you are the hardest working, poorest person I know. Poor mommy.” I’m glad that phase is mostly over as it is neither healthy nor productive to throw yourself or your mom a pity party.
Together, DWM & MWM decided to sponsor a child, Mariela in El Salvador on the Eve of Thanksgiving 2014, realizing how much they indeed have compared to the rest of the world. MWM & DWM agreed to spend a little less on themselves and put $38/month to provide Mariela with everything she needs: education, healthcare, food, and access to church.
MWM says, “It’s funny how I feel like I have more when I share my $ with Mariela (our sponsor child)… I thought I’d definitely have less, but I feel like I have more.”
MWM also is very generous with family members; she makes offers like, “Mommy I will buy you a pair of new tennis shoes. Yours have holes on the sides and a lot of sand gets in when we walk Lola (our rescued dog)…”
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MWM knows & often practices delayed gratification.
Since MWM started banking at DWM/Mommy’s bank, which offers 10% annual interest rate since 2013, MWM has only spent 5% of all her deposits, including gift/holiday money & proceeds from her artwork sales and dog walking business. MWM says, “If I don’t spend my money now and let it grow, I will get more for college and buying a house when I’m older.
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MWM values experiences more than material objects.
DMW immediately starts MWM in lessons on any topic of MWM’s interests—from horseback riding, gymnastics, circus, oil-painting, piano, theater, singing and voice training. However, DMW asks MWM to think hard about opportunity costs of purchasing “stuff” rather than experiences.
MWM knows that what matters in life are held in two places,
her heart & her head.
While anyone can steal her platinum necklace (it was a gift, DWM and MWM would have put the equivalent cash into index funds), no one can take away the knowledge MWM has learned and the love she’s given and received.
DWM & MWM are partners in crime and best copilots. When it comes to $ matters, my daughter and I learn, practice together & hold each other accountable like in all other aspects of our lives.
MWM had said once, “mommy, you won’t be wearing shoes with holes if you didn’t have me. I’m expensive,” I told her I would not trade the whole world’s treasures for her, the little apple of my eye.
You can learn more about Mini Wise Money at her dedicated web page.
- How do you share $ sense with you kids?
- What lessons have you taught them?
- What lessons have they taught you?
Share your insights & questions below!
Website Round-Ups: Agreeable Aggregates
Are slightly forced alliterations in or do they just make me look dorky?
How I Can Retire at 38, But Won’t.
Let’s first talk about why I won’t retire at 38, even though I can.
- That’s less than 3 years out of fellowship. It would be the beginning of my professional prime as a radiologist. I’d like to use my skills and knowledge from 26 years of schooling to serve others. I get a wonderful sense of fulfillment from draining a patient’s pelvic abscess today; I will also relish saving someone’s life by making a imaging diagnosis in 7 years.
- I want to care for others beyond myself and my daughter (Mini Wise Money.) These people include my parents, MWM’s paternal grandparents, some of my extended family, & my sponsor child Mariela.
- I want to provide for MWM more than I have been blessed with growing up. While I worked 7 jobs in college trying to send meager money home to help my parents with their 30% interest rate credit card debts, I’d like MWM to have at least 1 but no more than 2 jobs in while going to school full time.
- I’d like to keep blogging. Blogging costs money and a lot of time. I plan to support my blog because helping others succeed financially & personally is rewarding to me.
- I’d like to give more. I sponsor one child now. I’d like to sponsor more. I may even adopt a child one day, so that Mini is not so lonesome when I’m in heaven one day.
3 things to help you achieve financial independence/ability to retire sooner includes:
- Lower the cost of your debt by refinancing.
- Mindful financial practice.
- Make your money work for you.
Now, let’s see how I CAN retire at 38.
I first started my calculations with my current post tax annual income of $52,671 and annual savings of $29300. My annual savings rate is 56%, which gives me financial independence (ability to retire) in 13 years.
Savings include 23.5k in Roth IRA & Roth 403b, as well as 1k in taxable investment & 4.8k in home equity. Note that my home equity does not exactly grow at 5% ROI (return of investment) but I have 5k of additional savings that will make the 4.8k in home equity a bonus even if it’s getting negative ROI (home value drops rather than grows.)
This does not account for the fact that in July 2020, I will get a pretty big raise from PGY to attending-hood.
Accounting for the transition into attending-hood:
My calculations with the jump in salary when finishing fellowship here:
My attending post tax annual income $160,857 (based on an ultra-conservative estimate of 250k annual income, when most rads I know are getting 300k to start at academic/VA jobs) and annual savings $137,486.
My annual savings rate is 86%, which gives me financial independence (ability to retire) in 2.8 years of finishing fellowship (8.8 years from finishing medical school.)
Assumptions:
- My employee job will pay $250k/year pre-tax. (I presume a contractor job will actually allow me to save more as business deductions are numerous and liberal.)
- I will continue to live like I do now after becoming an attending. Like I said before, I’m blessed to be born an materially low-maintenance girl. I get free haircuts from Mini; free clothes from friends and families who can’t stand my monotonous wardrobe (7 pairs of scrubs) and need more space in their own.
- With the same expenses, I’d save the rest of my post-tax dollars, so annual savings of $137,486.
I find it extremely liberating to learn that
at 38, just 7 years from now, by year 2023,
I will work because I love to,
not because I have to.
Financial independence does not mean that I will drop all that I love and care for today to travel the world or become a full time gardener. It simply signifies that
my motive for working & not retiring will be
more profound than monetary necessity.
Final fun morsel to chew on:
If I live as I do now (PGY2, with 22 years of schooling) but I choose plumbing instead of doctoring, I would have reached FI (financial independence) at 31. I would have also had more personal, family, and party time even before retiring at the tender age of 31.
Point is:
financial independence is not an end in itself;
it is a means to fully enjoy one’s life,
professionally and personally,
more than otherwise.
- How many years before you reach FI?
- I will continue to live, work, love the way I do today when I reach FI. Would you do anything different?
- Are there things you’d like to change today that may impact your time or path to FI?
Share your insights, experiences, and questions below!
Disability Insurance for Physicians: How to Design the Best Plan for You.
From what little I know of disability insurance is that getting your private, own occupation (as specific to your field as possible, e.g. neuro-interventional radiology, infectious disease etc.) disability insurance PRIOR to taking on your first attending job is absolutely necessary.
As much as I like to divert disability insurance premium towards Mini Wise Money’s 529 tax-advantaged college fund, I will likely start a disability insurance in PGY3 or PGY4 rather than waiting till end of PGY6 because:
- I’m not getting any younger; in fact, I will be 36 when I start my attending job. The sooner I get disability insurance, the lower rate I could lock in for life.
- As meager as my PGY2 income seems compared to attending income, my family & I can NOT live without it. So I need to insure this my current income so our family can weather unexpected downturns in life.
This is a guest post from veteran insurance expert, Bob Bhayani, MBA at DrDisabilityQuotes.com. We have no financial relationship.
Protect your Greatest Asset: Your ability to earn.
It takes years of education, training and commitment to practice medicine. If you became too sick or hurt to work, what would happen? Would your patients have to go elsewhere? How would you earn an income? Would your lifestyle have to change?
Currently, the major players with the high quality disability insurance products for physicians are, Guardian, Mass Mutual, The Standard, Ameritas, MetLife, and Principal. At any given time, any one of these top quality companies may offer the best disability insurance for physicians at their current place in life, from medical school, to residency to fellowship and beyond. The specialty that a physician is trained in also comes into play with determining the strength of the policies that are available. Where does a physician start in identifying the company that best matches his or her needs, priorities and preferences when looking to purchase disability insurance for physicians? The best place to start is by understanding how to differentiate between disability insurance provisions, riders and definitions.
Checklist:
- Elimination Periods and Waiting Periods. This is the amount of time you have to wait for your first disability check and the maximum length of benefits is extremely important to know. The elimination and waiting periods can also dictate your price for the disability insurance policy. Typical waiting periods are 30, 60, 90 & 180 days. The most common waiting period that is chosen is 90 days.
- Non-Cancelable and Guaranteed Renewable Policy. This is an option on an individual disability plan that prevents your insurance carrier from cancelling the plan or changing the definitions for the length of the benefit period. The policy is also automatically renewed as long as the premium is paid on time.
- Definition of Total Disability. When you are unable to perform all the material and substantial duties of the policy’s definition of total disability, then you would fall into a total disability claim resulting in fullmonthly benefits.
- Residual Disability Rider. This rider is used when you have some loss of time or duties and loss of income, usually at least 20%, but some insurance carriers will go down to 15%. This is a more liberal definition than partial disability since you usually don’t have to be totally disabled during the elimination period to qualify. This rider is available on al quality disability insurance plans and should always be considered.
- Future Increase Option Rider (FIO). This rider allows you to increase your disability policy by the stated monthly maximum amount purchased without having your health re-examined by an insurance company on the anniversary date. This is an extremely important rider to those wanting to protect a projected higher income since their health status could change, making them ineligible for increased coverage without this rider. You would still be required to provide proof of the larger income through W-2s and/or tax returns to qualify for the increased coverage.
- Cost of Living Adjustment Rider (COLA).This would increase the monthly benefit by the CPI not to exceed a ceiling of typically 3% or 6% compounded or simple interest per year during a claim. If you’re disabled for 5 years or more, it may be difficult to keep up with the bills if your expenses keep on rising but your payout is fixed.
- True Own-Occupation Coverage. Own-Occupation applies to your current occupation and the ability to perform it. This is extremely important because cheaper forms of disability insurance may require you to take any job you are physically able to perform, even if it pays a fraction of what your former employer paid. Own-Occupation would allow you to receive a monthly benefit regardless if you were working in another occupation.
- Business Overhead Expense Coverage. If you own your own business and/or incur business expenses that don’t come out of your regular paycheck, you may want to insure against overhead charges as well as lost income. Without Business Overhead Expense Coverage you may see your paycheck protected but lose your business because the expenses will pile up.
- Disability Buy-Out Insurance. Buy-Out Insurance would fund the sale of a disabled partner’s portion of the business if he/she is disabled, preventing him/her from returning to work.
Financial Ratings
A disability could strike at any time – now, or 20 years from now – so it is important that your disability insurer have the financial strength and stability to weather the worst of economic storms. A good way to do this is to see how various rating agencies rate a particular company. Using A.M. Best Company for example, a company rate ‘A=’ or better demonstrate the greatest financial strength to withstand bad economic conditions.
If you would like some more information, a free quote or consultation please contact Bob Bhayani, MBA at (973) 771-9100 or visit our website at DrDisabilityQuotes.com.
Any Medical Students, Residents, or Fellows that apply will be eligible for 10 to 30% Discounts with Unisex pricing, Application Process, Insurance Medical Waiver and a Financial documentation waiver. This streamlines the process greatly.
- Do you have a disability insurance?
- How and where did you purchase your disability insurance?
- If you currently don’t have an own-occupation disability insurance, when do you plan to purchase one?
Comment below!