By Dr. James M. Dahle, WCI Founder
New year, new you right? It's that time of year again. It's time to set goals and to work hard toward them for two weeks before we forget about them. Well, hopefully not, but maybe it would be best if you could set goals that can be accomplished by the end of January just in case.
I hope you include at least one financial goal in your New Year's Resolutions for 2021. Katie and I have two, which I'll discuss at an appropriate place later in the post. If you need some ideas about a goal for you to work on this year, steal one from the list below!
Top 10 Financial Goals for 2021
If you're like most doctors, you should probably be working on more than one of these goals, but today I just want you to focus on your biggest priority and commit to accomplishing it this year.
#1 Buy That Insurance Policy You Need
A huge percentage of doctors don't have all the insurance they need. If you need, but don't yet have, one of the following types of insurance, commit now to get it done this year:
When you need these insurance policies, nothing else will take their place. GoFundMe is not a life insurance company. Be sure to use a recommended, experienced independent agent to get your disability and life insurance.
#2 Buy a House
Lots of people think I'm against owning your home just because I think most residents ought to rent. Not true. In fact, about 80% of the net worth of the median American is home equity. I hope that's not the case with you, but there is little doubt that most of the time, in most areas of the country, if you are going to live somewhere longer than five years, you are highly likely to come out ahead financially if you own your home. This is a big step for most of us in our financial lives and if this is one of your goals for 2021, I hope you accomplish it. If a conventional mortgage doesn't make sense in your situation, at least save PMI and use a physician mortgage.
#3 Refinance Your Student Loans
Knocking 2–5% off the interest rate for your student loans is a worthwhile accomplishment. Interest rates have dropped dramatically over the last year. If you are not going for PSLF, not getting a REPAYE subsidy, and have not yet refinanced your student loans, this goal should be on your list for 2021. Private loans should be refinanced as soon as possible, but you probably ought to wait to refinance your federal student loans until the special 0% interest rate period ends (currently scheduled for Feb 1 but will possibly be extended a few more months). Be sure to use the WCI refinancing links when you do so. You get the best deal on the internet, you get hundreds in cash back, and you help support our mission to promote financial literacy among docs. Just because you refinanced a year or two ago doesn't mean you can't do it again!
#4 Pay Off Your Student Loans
Refinancing the loans is only the first step. Then you have to pay them. Over the last year, we have been highlighting the excellent work many of you have been doing crushing your loans. We will continue to do so. This is no small feat— you should be proud of it! Please share with us when you do it!
#5 Pay Off Your Mortgage
You know what else frees up a lot of cash flow in your life? Getting rid of other debts, especially a big mortgage payment. “Normal” people don't even pay off their mortgage in 30 years. Why be normal? Just switching to a 15-year mortgage cuts the time in half, but why stop there? If you're getting close, put this one on your list of financial goals for 2021.
#6 Max Out Your Available Retirement Accounts
Is this the year you finally get that Backdoor Roth IRA going? Most of the financially successful doctors I know take maximum advantage of their tax-advantaged accounts including 401(k)s, 403(b)s, 457(b)s, cash balance plans, HSAs, Roth IRAs, and even 529s. Maybe it's time for this financial goal in your life.
#7 Start That Side Gig
Many of us realized our income wasn't as guaranteed as we thought it was in 2020. If you've ever wanted to start a side gig, 2021 is the year. It'll take a lot more work than funding a Backdoor Roth IRA, but, hopefully, it will also provide a lot more reward. Curious what some of your fellow docs are doing? Check out this list.
#8 Get a Written Financial Plan in Place
Still no written plan? Still not exactly sure what you're supposed to do with your investments? There's a course for that, you know. However you choose to get it, you need a financial plan.
#9 Update Your Estate Plan
Here it is. This is our big financial goal for 2021. It has seemed so overwhelming to us as our financial lives have become more complicated, but it can't be put off any longer. Our original estate plan is now grossly inadequate for our needs. I suspect this is the case for many of you, as well. Maybe you need a will, maybe you need a trust, maybe you need to look over your beneficiaries, or maybe you just need to move your assets into your trust. Let's work together to get it done this year. I'm sure I'll be doing some posts along the way to keep you updated.
#10 Hit Financial Milestones
Still haven't found a financial goal for 2021? Okay, we'll find one for you in this section. Here's a list of popular ones. Feel free to steal whatever one you like.
- Get back to broke (i.e. hit a net worth of $0, a big accomplishment when you start your career at a net worth of -$300K)
- Become a millionaire
- Save a certain amount ($25K, $50K, $100K, $200K, or hit a certain savings rate)
- Get a million dollars into your investment accounts
- Become a pentamillionaire
- Become a decamillionaire
- Hit your financial independence number
- Increase income by a certain amount
- Pay a certain amount in taxes ($100K, $200K, $1M. Hard to get excited about this one until you realize it's really a reflection of income)
- Give away a certain amount of money (This is our second financial goal for 2021)
I'm sure there is a goal in this list for you this year. Write it down. Talk about it with your friends and family. Post it as a comment below so we can help keep you accountable. You can do it, we can help!
What do you think? What are your financial goals for 2021? Comment below!
Start the New Year with a Financial Plan!
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“This course was excellent. I no longer feel the pressure or need to hire a financial advisor. I also like how we have permanent access to the material in case we need to brush up on topics down the line.” – DK
Great list!
My goals include:
– Pay off six figures of student debt
– Buy second investment property
– Get back to my dog’s net worth ($0)!
It is a great list. But why would one wish to keep on going past financial independence? Rather than be a decamillionaire, one may choose to reach the finish line and start giving even more away.
Thanks for your emphasis on giving. The rewards for giving go on and on!
Good question, SemiRetiredPD. I just reached that lofty threshold at age 55. Ten years ago, I would have not believed that possible and would have guaranteed that if we did make it to eight figures, my wife and I surely would both be retiring.
However, we both like to work, we both like the sense of identity, purpose, and community that having a job brings, and as new empty nesters, we need stuff to do. I wish I could say that I am quitting to build furniture by hand or restore vintage Corvettes or raise llamas or whatever else sounds cool and interesting, but that’s not my skill set or really who I am. Deep down inside, we are both probably worker bees and so long as the job is not too draining or demanding will continue to be(e).
Congrats on hitting 8 figures by 55.
I just crossed the pentamillionaire level in 2020 (turning 50 in April 2021). A $5M net worth was what I first set out to hit when I found out about FI after my divorce. Seemed like a pipe dream then (around time of divorce in 2011 I had a negative net worth of almost $850k).
An 8 figure net worth seems like it is out of the question but who knows. I plan on working until my daughter goes to college (I will be 53). Based on the slope I calculated from my net worth vs time chart that “only” adds about $1.6M if the trend line continues (although it has been getting higher based on past few years as my investments are now carrying their own weight and bringing passive income).
That’s a remarkable feat. Almost a $6M turnaround in NW in only 9 years? I assume you had a rather large shovel though I’m more interested in if there were any significant wealth generators for you besides investing in the usual index funds, etc.
Care to share details? I’m always looking for ideas/inspiration to improve my own position. Thanks in advance.
Did you enjoy reading that post? It wouldn’t exist if I had not “kept going past financial independence.” 🙂
But as far as accumulating more money, there are only two options eventually–spend it or give it away (including leaving it to heirs at death).
Recently I reconsidered how I arrange my finances to enhance income in a major way. Further focusing on tax favored investing is my goal for 2021.
Early in my medical career, I started various side gigs, including real estate investing and a few medically related start up businesses. Several of the side gigs have worked out well beyond my wildest dreams. I currently enjoy six different income streams, leading to crazy income taxes over the last few years, 46% marginal and 42% effective.
In 2020 and going forward, we rearranged the active/passive income streams and we are focusing on real estate investments with favorable tax deductions. We will retain much more of our income through reduced taxes based on the incentives the government has embedded in the tax laws. This turns out to be our highest yield financial move at this point. In earlier years, I was oblivious to these strategies.
Congrats on your
tax problemsuccess!Nice motivational article for the new year!
One of the dumbest financial moves I’ve ever done was taking out a SallieMae loan during med school for no good reason other than to have some spending money and boost my lifestyle.
For a $27K loan, I got to keep $25K, and then have to repay more than twice that, currently at about $32K.
My goal is to eliminate that loan this year and zero out all other debt, except for my federal student loan and my mortgage which will take a while longer.
With regards to my house, I’m either going to refinance to a 15 year mortgage or sell and buy another (smaller) house in an area nearby that I always liked more. And in regards to #2 above, while houses may not technically be considered “investments” by some, it hopefully isn’t a loss either. In much of the talk of houses I never see the amount of rent saved considered in the final tally. If you can live in a house and break even when you sell it, you’ve actually come out ahead by not having to pay rent all those years.
Looking forward to another year of great articles and podcasts from The WCI!
I agree, to do a fair analysis you have to consider saved rent and all the transaction costs, two things most ignore in their calculations.
man, since I now have a written financial plan, not sure of any resolutions I can make financially, except to follow my written financial plan 🙂 can’t make it any easier than that!
Thank you so much for this entire blog! I recently met with a “financial advisor” for the first time and laid out all of my financial past and present (and, unfortunately, my illiteracy which I now realize he seized upon) and he insisted that the only reasonable next step for me was to put $2000/month into a whole life insurance policy. The $2000/month that I just finished paying off credit cards with and was planning to move on to the next highest interest debt. I am 3 years out of residency, employed family medicine; single with no dependents with $400K in private and federal student loan debt (definitely seemed like Monopoly money in college and med school), a mortgage, and a car payment. I’m not maxing out my contributions to my 403(b), only paying the matched amount. (He told me not to worry, no one should ever max their 403(b) or 401K contribution). Within 2 hours of suggesting it, he’d already emailed me a copy of the completed application for the policy and the next day the company was calling to set up my health screening! This speed set off alarms so I started looking for more information about whole life policies and stumbled upon WCI. Reading your posts and others’ comments was literally like replaying my conversation with him. His actual recommendation was that I stop paying off my debts at this time and work on accumulating more wealth through the life insurance because I could always get money from it in “2-3 years” if I needed it! He also suggested taking a loan from my house’s equity to pay the premium if needed. And told me this was going to a great year for “us” and to be sure to send more of my “doctor friends” his way! He assured me that “most other physicians” are taking advantage of whole life insurance as an investment option and I should too.
We talked today and I was ready with my WCI knowledge but he literally had a comeback for every reason I gave as to why this wasn’t a good idea for me. I finally got tired of the back and forth and remembered that it’s MY MONEY that we’re talking about and politely ended the conversation and the relationship.
Not only has your blog been helpful for this insurance episode, but it also offers so much other information that I know will help me to turn my current situation around and make good choices going forward. I literally read it while eating breakfast, between patients, walking the dog, and when I should be asleep- whenever I can! It’s is so unfortunate that we don’t get this information in our training! Thank you!
That’s malpractice to recommend whole life to someone with $400K in student loans, much less tell them not to max out their retirement accounts in order to buy more whole life.This one is a salesman masquerading as an advisor. I’d probably turn him in to state regulating agencies too honestly. That’s really bad advice. So good job not following it, you did the right thing.
If you need a good advisor giving good advice at a fair price, check these folks out:https://www.whitecoatinvestor.com/financial-advisors/
If you actually need life or disability insurance, check these folks out: https://www.whitecoatinvestor.com/websites-2/insurance/