Podcast #142 Show Notes: Should You Raid a Roth IRA To Pay Off Your Loans?

Should you raid your Roth IRA to pay off debt? No, I think tapping into your Roth IRA for any reason is a bad decision. You only get so much Roth space in your life. Using the Roth IRA for anything except retirement is not a good idea because that money is compounding tax-free for years, and the longer you let it do that, the more valuable that benefit becomes.

But the Roth IRA has other benefits too. It is great for estate planning. Even with the recent changes in the estate tax laws, you can still stretch a Roth IRA for 10 years after you die. So basically it can double in value before anyone has to take anything out of it. Plus you can name a beneficiary for it, so rather than having to wait for it to go through a will and go through probate and become public, it just goes straight to the beneficiary.

It is also very good in almost every state for asset protection. Money in retirement accounts is generally not touchable in the event of an above policy limits judgment, that isn’t reduced on appeal. That is another great reason not to raid your Roth IRA, especially to pay off debt that goes away when you die.

We discuss the question of withdrawing from your Roth IRA in more depth in this episode as well as discuss the state of this podcast in the last year including the best and worst episodes we’ve put out, a long rant on podcast guests and questions, and I introduce you to a new podcast to add to your weekly listening.

This podcast is sponsored by one of my favorite partner companies, Earnest. You can save money on your student loans by refinancing with Earnest. The cool thing about Earnest is that you can choose custom terms to fit your budget. You can pick your exact monthly payment. You can select fixed or variable rates. You can even choose your custom term. Now, obviously, the shorter your term, the lower your interest rate. They’re not going to pass you off to a third party servicer. They’re not going to penalize you for making any of your payments early. Plus, your family’s protected with loan forgiveness in the event of your death. Similar to the federal student loan programs, but obviously with a much better interest rate. You can refinance anything from $5,000 to $500,000 which is a much wider range than most of these companies offer. So check out Earnest today. You get 500$ cash back when you refinance loans greater than $50K.

Quote of the Day

Our quote of the day today is from William Feather who said,

“A budget tells us what we can’t afford, but it doesn’t keep us from buying it.”

Isn’t that true? It doesn’t matter what you write down. What matters is your behavior.

State of the Podcast

We put out 52 episodes this year. Total downloads for the podcast are 3,463,911. The best episode, based on downloads, was number 100, How To Get Rich As A Doctor. Our top guest episodes this year were with Bill Bernstein, Rick Ferri, Jonathan Clements, Allan Roth, and David Draginas. The top episodes without guests were How To Pay For A House and  Understanding The Mega Backdoor Roth IRA.

Most of our listeners are in the United States but I was impressed to see that we had listeners in 149 different countries. The top ones are Canada, Ireland, Australia, the UK, Germany, India, Japan, and France.

Within the United States, most of our listeners live in California, despite my rants on living in high cost of living areas. The other states with large percentages of listeners are Texas, New York, Florida, and Illinois. It’s like a who’s who of where not to practice (outside of Texas maybe) but some of those are pretty high liability places to practice. Cities with the most listeners are New York, Los Angeles, Chicago, the Bay Area, Dallas, Atlanta, Washington DC, and Philadelphia.

I spend a bit of time in this episode discussing my conflicts of interest. For those that missed the State of the Blog post a few days ago, I spell those out clearly there as well. I think it is important that you know what those conflicts are.

Money Meets Medicine

I introduce you to a new podcast this week. Many of you ask for more frequent WCI episodes but that just isn’t going to happen. But Jimmy of the Physician Philosopher has teamed up with Ryan Inman of the Financial Residency podcast to put out the Money Meets Medicine podcast. Ryan is a financial advisor married to a doctor and you probably know Jimmy as the newest member of the WCI network. New episodes will be available each Wednesday.

The Money Meets Medicine podcast is really about teaching the personal finance topics that doctors wish they’d learned in medical school. While the target audience is doctors, it’s obviously going to be helpful to other medical professionals and high-income earners too. You can expect to learn a wide range of topics from behavioral finance stuff, life planning, and then down to the nitty gritty, like tackling student loans or investment practices. They hope to cover a wide range of topics in the podcast. You can expect to learn the topics you should have been taught in medical school, but probably weren’t.

The great thing about this podcast is the difference between the two co-hosts, a fee-only financial advisor and a do-it-yourself-approach person. The first episode is about batching your financial lives and simplifying and automating things. The second episode is on financial advisors and how they can add value, which they said was a fun episode to record because of being a do-it-yourself person with no plans to ever have a financial advisor and then one that advises professionally. In that episode, they broke things down to three different groups of doctors and which groups would benefit the most from a financial advisor and which maybe wouldn’t. Episode three is about fitting a Peloton into your budget. It is a great podcast to add to your queue so check it out.

Podcast Guests and Questions

I go on a long rant about podcast guests and questions in this episode. We received a lot of negative feedback after the Physician Millionaire episode because we didn’t include an equal number of men and women. We received emails from 19 men and 3 women. We emailed the first ten people and took the first seven that scheduled a recording time. Only one of those 7 were women. We are open to doing a women-only physician millionaire episode. We currently have three guests. If you are a woman with a net worth of more than a million dollars and would like to come on the podcast and tell listeners how you did it, email Cindy at [email protected]. If we get enough people willing to come on the show we will do it.

My rant is really because I get a lot of requests from people that seem to want to hear about financial situations that are just like theirs. They feel like if the person isn’t just like them or has some difference, lives in a lower cost of living area or a higher cost of living area or has a different income or a different specialty or different race, different gender, whatever, that the situation doesn’t apply to them. I share several examples of emails I receive like this. I agree with them. It is thrilling to find solidarity with people who are just like you. However, the more specific you get, the harder that is to do. We can only offer you what we receive. If you want more questions from women on the Speakpipe we need more women to leave questions. If you think that you are different than who you normally hear on the podcast, participate and share, either as a guest or by leaving your questions. People want to hear from you!

But also recognize that you can learn from the experiences of people who are not just like you. Take what is useful and apply it to your life. Liken what you read on the blog or in books or what you hear on the podcast to your situation. The people you hear from are not going to be exactly like you. Your financial life is not exactly like mine, but they’re going to be somewhat like you and that’s why you’re here, so take what you hear and apply it to your situation. If it doesn’t apply, ignore it. But 95% of what you hear here is going to apply. So just leave the other 5% and don’t let the fact that it isn’t perfectly addressed to your situation keep you from getting anything out of it. Now on to some listener questions.

Reader and Listener Q&As

Finding a Trustee

“My wife and I have recently added our first child to the family, and like true White Coat Investor disciples, our thoughts turned to estate planning after we figured out diapers and feeding. If we both pass away, we would leave behind a portfolio worth about 1.5 million, invested in a Boglehead three fund approach, plus 4.5 million in life insurance proceeds. While we have trustworthy people who would take great physical care of our daughter, they don’t have the interest or the aptitude to properly manage these investments. We were considering using a corporate trustee to take financial management out of a potential guardian’s hands. Vanguard has such a service that seems reasonable at about half a percent with a sliding scale after the first $5 million. It sounds like a natural fit considering our existing holdings are exclusively in Vanguard index funds, but we have to be dead to truly test drive this service, so I’m hoping you have some thoughts for whether this is a good idea and if so, how to find the right trustee at a fair price.”

taking money out of ira to pay debtIf you do not have a family member that you can trust to manage this money on behalf of your child, should you die, you probably need to at least arrange for a professional trustee to be hired in the event of your demise. You don’t necessarily have to hire them before you die, but you need to give some direction to who the trustees should be.

Now Vanguard does that. Lots of banks do it. There are companies that this is all they do. They do charge fees to do it. 1% is pretty common, just like a financial advisor often charges. Obviously Vanguard tends to be low cost. Often Vanguard service is not as ideal as it could be. It is not quite as slick as that as of E-Trade, Fidelity, or Schwab. Sometimes you do get what you pay for, but I certainly wouldn’t think it’s a bad idea to use a trustee from Vanguard.

But I don’t know if that’s necessarily the best trustee. I haven’t been in this situation. I don’t know that I have ever done a deep dive into trying to evaluate the services of various trustees. But I think the key, if you don’t have a family member or a good friend that you can trust to do it, is to hire a professional. Ask about the prices upfront, make sure they’re reasonable, within the going rate for what you can get, and find out what they do. From there, as long as they’re willing to follow the guidelines you put in the trust, and you have reasonable investments and reasonable management fees, I think you’re fine.

Should You Raid a Roth IRA To Pay Off Your Loans?

“I have very good friend that I’ve known for about five years who’s a pulmonary critical care fellow in California who is attempting to pay off his loans, his very sizable loans, ASAP. He has not attempted to go for public service loan forgiveness. Part of his plan is raiding the $10,000 in contributions he’s made to his Roth IRA. I’m trying to convince him that it’s a bad idea, that Roth money is very valuable for his asset protection, its long term tax benefit, and the inability of him to replace that $10,000. Am I missing something? He doesn’t seem to be convinced that he should keep the money there since he expects 5% to 7% in the stock market long term, versus a 6% interest rate on his loans.”

Obviously I don’t think this is a great idea to raid a Roth IRA to pay off loans. There’s a couple of reasons why. One, you only get so much Roth space in your life. Yes, you can create more later on with Roth 401k contributions, Roth conversions, etc. But for most of us, we’re going to be pretty limited in how much Roth we have. So I don’t think you ought to be pulling money out of it willy-nilly. I think it really needs to be a big deal for you to be pulling money out of your Roth IRA for anything but retirement because that money is compounding tax-free for years, and the longer you let it do it, the more valuable that benefit becomes.

But above and beyond that, there’s a couple of other benefits. Roth IRAs are great for estate planning. Even with the recent changes in the estate tax laws, you can still stretch a Roth IRA for 10 years after you die. So basically it can double in value before anyone has to take anything out of it. Plus you can name a beneficiary for it, and so rather than having to wait for it to go through a will and go through probate and become public, it just goes to the beneficiary. So it is really slick for estate planning.

It’s also very good in almost every state for asset protection. Money in retirement accounts is generally not touchable in the event that, it’s an unlikely event, admittedly, but in the event that you have an above policy limits judgment that isn’t reduced on appeal, you generally get to keep everything in your retirement accounts, and so that is another great reason not to raid your Roth IRA, especially to pay off a loan that goes away when you die.

But the other thing that’s interesting here is this doctor feels like they can get 5% to 7% in the market, and he has loans at 6%. Well, first refinance the loans. Then you probably won’t have 6% loans. You will have 2% or 3% or 4% loans. But number two, in the long run, if you invest a Roth IRA aggressively into stocks and perhaps even more risky stocks, like small value stocks, I think 5% is pretty darn conservative. If that’s really all you expect is 5% nominal, I think you can probably invest a little more aggressively and expect a little bit higher return than that.

Certainly 7% is getting more into the reasonable range, but bear in mind if you actually look at the performance of the US stock market since its origination, you’re looking at nominal returns of 10% to 11%, and so even after inflation, that still works out to be 7% or 8%, so that’s probably going to cream these loans. I don’t know that I would drag the loans out because of that, but I certainly wouldn’t raid a Roth IRA just to pay them off. I’d tried to leave that money there.

Retirement Accounts for Part-Time Employees

“My husband is a specialist making a high six figure salary and I stay at home with our kids. Last year I was invited by a university to coach remotely online for them. It was a really easy gig I could do at night when the kids were sleeping, I made about $35,000 as an independent contractor last year, and I put most of that money into my solo 401k. Now they’re making all the remote, 1099 employees become W2 employees, which seems strange because you won’t be living in upstate New York. We’re not offered any supplies, like a computer to work from, and I’m not receiving any benefits. So my question is, is there some sort of loophole to contribute more than the standard $6,000 into an IRA or now that I’m a W2, I’m just stuck with that?”

“When you’re a W2, you’re an employee. When you’re an employee, even if you don’t have any benefits, you cannot use a self-employed retirement plan. You cannot use a SEP IRA, Simple IRA,  individual or solo 401k. You can’t do it. You have to be self-employed. If you’re not self-employed, you can’t put money in there, and that’s just the way it is. So no, there’s not some other loophole. I mean, the only thing that’s even close to a loophole are the rules on traditional IRA contributions. If you make a lot of money, like most doctors do, and you have a 401k or other retirement plan at work, you usually can’t deduct your traditional IRA deduction. If you don’t have a retirement plan at work though, you can deduct that traditional IRA deduction.
But then you’re just talking about $6,000 into a traditional IRA versus a Roth IRA through the backdoor Roth IRA. So it’s not some huge benefit. But the bottom line is that is one reason, especially if you’re part-time, to be self-employed because it gives you a lot more options as far as retirement accounts go.

Ending

Thank you for being a listener of this podcast. Please leave your questions at the WCI Speakpipe. Email Cindy if you are a woman millionaire and are willing to be a guest on the show. And make sure you check out the Money Meets Medicine podcast.

 

Full Transcription

Intro: This is the White Coat Investor podcast where we help those who wear the white coat get a fair shake on wall street. We’ve been helping doctors and other high income professionals stop doing dumb things with their money since 2011. Here’s your host, Dr Jim Dahle.

Dr Jim Dahle: This is White Coat Investor podcast number 142, Should You Raid a Roth IRA To Pay Off Your Loans.

Dr Jim Dahle: Welcome back. I know you probably heard a podcast just last week, but it’s actually been about a month since we recorded any, and so we’re excited to be back recording podcasts. We’re recording this one today and the one that you’ll hear in a couple of weeks today. And it’s good to be back behind the desk, in front of the mic, recording these podcasts. We had a great Christmas and New Year’s break. We went down to Costa Rica as a family. It was a lot of fun. Thankfully, Katie lined up all the arrangements because I was way too overloaded to be planning a trip. But I said if she planned it, she could go wherever she wanted, and I’d go along with a smile and enjoy it. But it really was a fun trip. We took the kids, we stayed on the beach for the first three days.

Dr Jim Dahle: We took them scuba diving, put them in an explore scuba class, and so they had their pool day and they all did great. So the next day, you know how it is out of the country if you’re a scuba diver. They took our kids to 55 feet the next day, and they all thought it was just incredible. So it really wasn’t that great of a dive site, but when it’s your first time underwater, it’s pretty cool. And we went up in the jungle, did some zip lining. Actually one of the best zip lines I’ve ever been on. And I’ve been on several in Central America and the Caribbean. Also, had some great hikes and did some cave exploration, and really had a great time in Costa Rica. Highly recommend it if you get a chance to go, but it’s one of the wonderful things about having your financial ducks in a row, is that you can go do stuff like that and not have to worry about it.

Dr Jim Dahle: I get a lot of emails from people about trip insurance, should I buy trip insurance for this? And you know, I’m kind of not a big fan of trip insurance. And the reason why is I feel like if you can’t just throw the money away, you probably shouldn’t be going on the vacation. And that’s essentially what a vacation is, is just throwing money away anyway. So I’m not a big fan of trip insurance, but I was a big fan of Costa Rica, had a great time down there and now I think the only Central American country I haven’t visited is Panama. At any rate, our podcast today is sponsored by one of my favorite partner companies, Earnest. You can save money on your student loans by refinancing with Earnest. The cool thing about Earnest is that you can choose custom terms to fit your budget. You can pick your exact monthly payment.

Dr Jim Dahle: You can select fixed or variable rates. You can even choose your custom term. Now, obviously, the shorter your term, the lower your interest rate. They’re not going to pass you off to a third party servicer. They’re not going to penalize you for making any of your payments early. Plus, your family’s protected with loan forgiveness in the event of your death, which is a nice feature, right? Similar to the federal student loan programs, but obviously with a much better interest rate, you can refinance anything from $5,000 to $500,000 which is a much wider range than most of these companies offer. So check out earnest today at www.whitecoatinvestor.com/earnest E-A-R-N-E-S-T. And guess what? You get 500 bucks cash back when you refinance. If you will go through those links, it’s even better than what you will get if you go to the Earnest regular website.

Dr Jim Dahle: So that’s whitecoatinvestor.com/earnest. Our quote of the day today is from William Feather who said, “A budget tells us what we can’t afford, but it doesn’t keep us from buying it.” Isn’t that true? It doesn’t matter what you write down. What matters is your behavior, so thanks for what you do. Your work is not easy. I had a difficult case the other day, a lady who came in with a torsed ovary which was not obvious at first, and took a number of studies in the ER to actually diagnose it. And of course, once you make that diagnosis, the first thing you’re doing is getting a gynecologist on the phone to rush in and get this ovary untwisted. It was great to see somebody who is so dedicated to his craft that he came right in and whisked the patient off to the operating room. So it’d be wonderful if we’re able to save that ovary.

Dr Jim Dahle: I’ll have to follow up on it later, but the point is what you’re doing is not easy. It’s difficult, it’s high risk, it’s high liability, and that’s why your pay is high. And what we’re doing here at the White Coat Investor podcast is trying to help you convert that high pay, that high salary into a high net worth. Your net worth is everything you own, minus everything you owe, and so your income really doesn’t have a lot to do with it unless you can spend less than your income and use that money to build your net worth. All right. I’ve got a mea culpa to talk about today. Apparently I outed a listener, and I felt really bad about it. It was someone that had sent me an email and I’d talked about their email, I thought I had essentially stripped any identifying information out of the email.

Dr Jim Dahle: And I usually do that. I often change specialties, I change genders, I change names, I change locations often. And the likelihood of you actually identifying somebody whose email I read on this show is incredibly low. But in this case, apparently, I did not de-identify the person as much as I should have. And somebody actually figured out who they were, that practiced in their specialty and in their area, and they asked him a question. And the listener kind of felt bad about it because he had mentioned his income in the email, which he didn’t necessarily want out in the general public or among his peers or colleagues. And so my apologies for doing that. I will do better in the future at de-identifying information. If you do find yourself in that situation, and you think you recognize somebody’s situation, don’t go ask him about it and don’t be the sleuth trying to figure out whose email it is on the White Coat Investor podcast.

Dr Jim Dahle: Same thing with picture locations, right? So I had somebody email me the other day saying, “Hey, I went and looked at the picture you’d posted of your house about your renovation, and I saw a street sign in the background. So I zoomed in and found out what street it was. And then I went to Google Maps and I looked at the houses around there until I found the ones that were next to yours, et cetera, et cetera.” Well, here’s the deal, if you Google my name and my state, you can find my address. You can also find some phone number from about 20 years ago. But you can find my address. This stuff is not that hidden. Most of us as physicians, if they Google our name and physician and state, they can find out where you work. No problem. You know? If someone really wants to wait outside your work and gun you down, there’s not going to be a lot you can do about it.

Dr Jim Dahle: So we’re not terribly safe in our world, and you can only anonymize yourself so much, especially when you have your name on your podcast and your website, and so on and so forth. But at any rate, don’t go hunting down the locations of my pictures, and don’t go trying to identify people who are on the podcasts that are trying not to be identified. People don’t like that. It makes them feel uncomfortable. But I have actually turned off the location function on my pictures on my iPhone. So you may find a few locations a little bit harder to find, those of you who are into that tech sleuthing. All right, so every year I try to talk a little bit about the state of the blog, the state of the White Coat Investor, the state of the podcast. And so this is that episode today.

Dr Jim Dahle: We’re not going to call this state of the podcast episode though, because that was like our worst episode last year. Apparently nobody wants to listen to that, so we’ll keep it a little briefer today. Talk a little bit about how we’ve done over the last year and where we’ve come from, and try to make it a little bit more interesting this time, apparently. So it’s interesting to go back over the podcast and look at what the best episodes were and the worst episodes were. Our worst episode of all time, as far as downloads goes, just over 10,000 downloads, was number 15, What To Do If You Have No 401k As A New Attending. I have no idea why that’s the worst episode. Obviously it was relatively early on when we didn’t have as many listeners. Most of the bottom 10 or 15 episodes are those early on ones, before the podcast had built much traction, but it was interesting to see what it was.

Dr Jim Dahle: The worst episode of the last year was called Solving Your Financial Mistakes, which was a recent one. And that may be why you guys just haven’t listened to it yet, it’s still in your queue. But after that one, the lowest downloads was about 20,000, the episode on taxes on stock options. Apparently not very many of you have stock options and aren’t very interested in that. But remember when I named these podcast episodes, right? A lot of these are questions, right? And the episode may have 10 or 15 questions from listeners, and we got to choose one of those questions to name the podcast after. So don’t assume just because you see a name on a podcast that the entire podcast is about whatever the subject is in that name. We’re just trying to put a subject in there that’ll get you interested enough to listen to it, but that’s not what the whole podcast is going to be about.

Dr Jim Dahle: Interestingly, our top best episode of all time was number 100, How To Get Rich As A Doctor. So I guess no surprise there given the topic, everybody wants to learn about that. It was also the one we ran right at the beginning of the year last year. I think we have about 34,000 downloads so far on that one. Other really popular ones include the episode with Bill Bernstein and Rick Ferry and Jonathan Clements and Allan Roth and David Draginas. These end up being pretty popular episodes. Of the ones that didn’t have a guest on them, How To Pay For A House was pretty big. Understanding The Mega Backdoor Roth IRA, number 127 was pretty big, and so that’s what you get. Most of you are listening in the United States about 540,000 of you, about 5,000 of you are in Canada, so about 1% out of Canada, even fewer from Ireland, Australia, the UK, Germany, Puerto Rico, India, Japan and those 590 of you in France.

Dr Jim Dahle: Actually we had people listen to this podcast from 149 different countries, which I was pretty impressed with. I don’t know how many of those are our US people who are traveling or military members or what, but 149 countries people listen to this podcast in. Which state might you imagine that people would listen to this podcast more frequently from? Well, despite what I say about California, and it being a hard place for doctors to practice, that’s where more people are from than anywhere else. With 64,000 of you from California, 45,000 from Texas, 33,000 from New York, 27,000 from Florida and 25,000 from Illinois. It’s like a who’s who of, where not to practice outside of Texas maybe, but some of those are pretty high liability places to practice. Cities with the most listeners, New York tops the list at about 50,000, Los Angeles has got about 31,000, 22,000 in Chicago.

Dr Jim Dahle: 17,000 of you in the Bay area, 16,000 of you in Dallas, about the same in Atlanta and Washington DC and Philadelphia. So the big cities in the US. No surprise there. Most of you listen to this on Apple products, the vast, vast majority, but a fair number of you also on Overcast and Spotify, and a few of you just in Chrome it looks like. All right, so we had a pretty good year here at the White Coat Investor. We have three missions at the White Coat Investor. The first one is to help those who wear the white coat get a fair shake on Wall Street. We want to help you do better with your finances, help doctors stop doing dumb stuff with their money. That was the original mission. That is still our primary mission, and that is really what we’re all about here. What gets me up in the morning is helping you.

Dr Jim Dahle: So the biggest parts of this empire, for lack of a better word, the White Coat Investor empire, are the blog, the newsletter, and the podcast. The blog was first, and I really like blogging. I love writing. It’s a lot of fun, and I love the bite sized chunks you get in a blog. But guess what? The blog is probably not the biggest thing anymore. The biggest thing is probably this podcast, which is pretty fun considering that we just started on a whim. But on the blog you’ll notice, if you check it out, and I know a lot of you don’t, I’m surprised how many of you don’t spend a lot of time on the blog just because you’re in the podcast. But on the blog we run posts six days a week. You know about the show notes for the podcast that we run on Thursdays. Monday and Friday I have original material that I’ve written. On Tuesday, we have classic materials, so something I’ve written before and I’m republishing, updating, etc.
Dr Jim Dahle: On Saturdays, we have a White Coat Investor network post from the Physician on FIRE, Passive Income MD, or The Physician Philosopher. And then on Wednesdays, we have a guest post, which could be from you. Sometimes it’s from financial professionals, sometimes it’s just from regular readers, but we try to mix it up there on Wednesdays. So on a typical 52 week year, that adds up to a lot of posts, about 312 posts we put on the blog in there. We’ve got now over 1800 posts on the blog, and a typical blog post is read from anywhere between 13,000 and 26,000 people, either by email or on the site itself. We had about 13,600,000 page views on the website this year by 2.9 million unique individuals. So that’s a 22% increase and a 45% increase respectively.

Dr Jim Dahle: So a pretty good year on the website. The most widely read post this year on the website was actually, Why Tesla Owning Doctors Hate Me, and it’s pretty fascinating because I really love Teslas, they’re really fun to drive. But I don’t think people should buy them until they can afford to buy them. And I don’t think they should be buying individual stocks. So because of that, lots of people with Teslas don’t like me much when I tell them those things. We’ve got the newsletter you’ve heard about a number of times on the podcast. It’s totally free to you. It goes out to almost 40,000 people now. That’s an increase of 82% from last year. I did about 18 speaking engagements this year. They ranged from Grand Cayman to Anchorage. Obviously those two were pretty fun speaking engagements, but I had quite a few in between as well. In 2019, we gave away the Financial Educator Of The Year award, that was won by Garava Agarwal.

Dr Jim Dahle: He won $1,000 cash for that, but we had a lot of great submissions for that. So looking forward to maybe doing that again this year. The books are doing well. You know, it’s interesting. I published my second book early last year, in 2019, and it’s sold 10,393 copies, so that was good enough to rank it as high as 17th in its categories. But what’s interesting about it is when that one came out, the other one started selling even better, and so it had a great year. We sold 37% more of the original White Coat Investor book this year. We sold 17,638 copies of that. So we’re up to about 86,000 total copies of The White Coat Investor, A Doctor’s Guide To Personal Finance And Investing. We’re up to 18,800 Twitter followers. We’ve got 14,000 Facebook followers. We got 187 of you on Pinterest, and over 5,000 of you on Instagram now, which I truly ought to thank Michelle, our social media person for all of her work there.

Dr Jim Dahle: Those of you who participate on our Reddit, our subreddit, there’s about 2,700 subscribers there, so we get about 3,000 people a month in that subreddit. The White Coat Investor Facebook group continues to grow like crazy. At the end of the year, we had 36,000 members, which is a 204% increase. You guys made 8,969 posts and 157,837 actual comments on it, so pretty impressive. It’s awesome to see so many White Coat Investors in one place. Thank you for those of you who are following the group rules there to make it a pleasant community and also answering each other’s questions. We had a great time with the White Coat Investor scholarship this year. We gave away over $90,000 in cash and prizes. The grand prize winner was Alison Neeson, who wrote a delightful essay about being short, being short, not only in stature but also in cash. And you can find a link to that in the show notes or on the website.

Dr Jim Dahle: Thank you very much to our platinum sponsors for this year’s White Coat Investor scholarship. These are people and businesses who contributed at least $6,000 to it. That includes Larry Keller, Bob Bhayani , Splash Financial, Ben Utley, and Alexis Galatti with strategic tax planning. Your White Coat Investor forum had a pretty good year. We had the forum break in October and November, but have a rebuilt forum. I think is better than ever before. I encourage you to come check that out. It’s a whitecoatinvestor/forum. We’ve got about 8,500 registered users on that forum. They put up a total of 6,192 posts last year. We have a YouTube channel. A lot of it is the video version of these podcasts. I guess I’m still not a YouTube star. I’m not sure. That hasn’t really taken off nearly as well as a lot of the things we’ve done at the White Coat Investor.

Dr Jim Dahle: I think it’s probably because I’m too ugly and too boring, but we put up 75 videos this year there, and have now got 101,600 total views this year, which was a 276% increase, so that’s exciting. Our top video was the one about how to fill out Form 8606, which is the one you fill out for the backdoor Roth IRA. The White Coat Investor network, we had a new addition this year, the Physician Philosopher, but all three members there, the Physician on FIRE, Passive Income MD, and the Physician Philosopher, are smacking it out of the park. They’re just doing great, growing by leaps and bounds. Lots of exciting stuff there, and we’ll actually have the Physician Philosopher on this episode in a few minutes. We didn’t have a conference in 2019, but we’ve got one coming up in March 2020. That one filled up in just 22 hours. Well, we’ve actually been through the whole waiting list.

Dr Jim Dahle: I think we have a very minimal waiting list right now, so if you still wanted to come to this conference, it’s entirely possible you’ll be able to. Get yourself on that waiting list, and as people drop out or have conflicts come up or can’t make it, we’ll swap you and get you into the conference. Our online course continues to be taken by lots of people. We’ve now had a total of 2,117 students go through the course, so that’s pretty exciting. We got some plans for a new course, new courses. Hopefully, we can get to them this year, but it’s been a pretty exciting year at the White Coat Investor. We had a great year, both in terms of reaching as many of you as possible, as well as creating jobs. We’re in the process right now of hiring a chief operating officer for the White Coat Investor, and of course, it’s a for-profit business that we continue to make good money, which allows us to be generous, allows us to be financially secure and it creates a lot of jobs, so that’s a lot of fun.

Dr Jim Dahle: But one thing I try to cover every year, as I talk about the state of the blog, the state of the podcast, is our financial conflicts of interest. You see, we’re not willing to do this for free. Anytime you don’t do something for free, you’re going to have some conflicts of interest. So I think it’s really important that you understand my conflicts of interest. As you listen to these podcasts, as you read our posts, et cetera, you ought to know what I am incentivized to do. So a few things you ought to know about. One, I’m incentivized to run content that relates to my advertisers’ businesses, especially those that I have an affiliate marketing agreement with, more frequently than other content. Now obviously with any conflict of interest, you try to resist it, but you should know what I’m incentivized to do.

Dr Jim Dahle: Likewise, I’m incentivized to accept guest posts and podcast guests from financial professionals who advertise with me more frequently than those who do not. Although I don’t actually have any sponsored posts or podcasts, other than the ones that are used to fund the scholarship, 100% of the proceeds of which are not going to me. I’m incentivized to recommend you refinance your student loans, and perhaps it wouldn’t be a good move for you. It’s actually pretty rare if you’re not going for public service loan forgiveness, but that’s an incentive. I’m incentivized to recommend you seek out professional help with insurance or financial planning or investment management or student loan advice or purchasing or selling real estate, negotiating contracts, borrowing a practice loan, preparing your taxes. Maybe you can do some of this on your own. I’m incentivized to recommend professionals to help you. I’m incentivized to recommend alternative investments such as real estate over boring old index funds.

Dr Jim Dahle: Although if you pay attention, you’ll hear me tell you that 85% of my portfolio is in boring index funds, and so I don’t know that I’m succumbing to that incentive. But bear in mind that I do have that conflict of interest. I’m incentivized to accept advertisers who do not meet my high standards for recommendation to friends and family. I’m incentivized to recommend the only advisor who charges asset under management fees when a flat fee advisor may be less expensive. Although on our recommended list, we’ve got a pretty good mix of both types of fee-charging advisors. I’m incentivized to recommend you use a physician mortgage loan over a conventional one. I’m incentivized to recommend you read financial books including and especially my own. I’m incentivized to recommend you take my financial course and that of my affiliate partners. I’m incentivized to recommend you attend our conference, WCI CON, either in person, virtually, or preferably both.

Dr Jim Dahle: I’m incentivize against recommending content by others who have the same affiliate marketing partners that I do or compete for the same advertisers, unless I’m a partial owner of their site. I am incentivized to recommend the content of Physician on FIRE, Passive Income MD, and the Physician Philosopher. I’m a minority owner of each of those businesses. And I’m incentivized to recommend you use the White Coat Investor forum over the Bogleheads or other forums and that you use the White Coat Investors Facebook group over others, right? I have lots of conflicts of interest, and there’s no way to avoid them, so we try to manage them as best we can, and we try to be very clear about them. And that’s partly why I’m talking about them today. Our third mission, aside from helping you get a fair shake on Wall Street, and feeding my entrepreneurial spirit, is simply to connect you with the good guys.

Dr Jim Dahle: There’s a lot of terrible financial firms out there, and I think you’re going to get a much fairer shake if I can connect you with the good ones when you are in need of some financial services. And so we do that through our selection of advertising partners, as well as our recommended pages that we keep on the main website at whitecoatinvestor.com, and if you go there, you can find recommendations for student loan refinancing companies and mortgage lenders and insurance agents and financial planners and real estate investing companies, et cetera. And so if you need some financial services companies, I would recommend you check out those options there. All right. We have an awesome couple of guests on the podcast. You probably know them well. I hope you do. If you don’t, I’m going to give you a way to get to know them even better.

Dr Jim Dahle: Our two guests today are Jimmy Turner, aka the Physician Philosopher, and Ryan Inman, who is the voice behind the Financial Residency podcast, if you’ve ever listened to that. A financial advisor married to a doctor who also has been in this space for some time, so I wouldn’t be surprised if you already know both of these guys, but they have recently teamed up and are co-hosting a podcast called Money Meets Medicine. You can find that at moneymeetsmedicine.com, or go to your favorite podcast player and just put in money meets medicine and it’s going to pop right up. But for those of you who are like, “Why isn’t there more than one White Coat Investor podcast a week?” Here’s your chance. Here’s another one. Every week they’re going to have a podcast episode out and you can check it out. So Jimmy and Ryan, welcome to the White Coat Investor podcast.
Jimmy Turner: Thanks for having us.

Ryan Inman: Yeah, appreciate it being here.
Dr Jim Dahle: All right, so what’s your podcast about? Tell us about it.

Jimmy Turner: Yeah, so the Money Meets Medicine podcast is really about teaching the personal finance topics that doctors wish they’d learned in medical school. And while the target audience is doctors, it’s obviously going to be helpful to other medical professionals and high income earners too. So you can expect to learn a wide range of topics from behavioral finance stuff, which Ryan and I love to talk about, life planning, and then down to the nitty gritty, like tackling student loans or investment practices. So we kind of hope to cover a wide range of topics there. But you can expect to learn the topics you should have been taught in medical school, but probably weren’t.
Dr Jim Dahle: All right. And I’m going to ask this to Ryan next, but why did you choose to do it with Ryan?

Jimmy Turner: So why did I choose Ryan? Good question. Actually, the first question I think probably the answers is, why have a cohost at all? And the reason for me was that I’ve always enjoyed co-hosted podcasts because I’m super ADD, and so that allows me to maintain my focus while I’m driving on the road. I can actually still listen and pay attention. I’ve always found it more entertaining when there’s a cohost involved, and so I was looking for that. And then why Ryan?

Jimmy Turner: Well, I guess a few reasons. So Ryan’s a fee only financial planner, and so he kind of meets the gold standard, which I have. It’s pretty strict on financial advisors. And I thought it’d be a unique perspective having a do it yourself approach person like me co-hosting with a financial advisor that advises people professionally. And Ryan had already had a pretty strong foothold with Financial Residency, had the resources, knew the background, how to do podcasts well. And Ryan and I, finally we met at FinCon and hit it off, and we kind of banter back and forth and make fun of each other. And I thought that might be a good chemistry to have on a podcast, and I think the listeners have liked it so far.
Dr Jim Dahle: All right. Same question to you Ryan. Why Jimmy?

Ryan Inman: Well, it’s pretty obviously I love podcasting as a medium to connect with people, and the show had been growing, and I did some solo shows and I had some guests, but I really wanted to do something different where we were having more meaningful conversations and there was history between me and the person that I was talking to. And so as we talked at FinCon, and we’ve been friends for a while, I thought Jimmy’s got a really unique perspective on personal finance, and would be an excellent fit to kind of host together a show. And we did a trial run of this on Financial Residency, so for the last quarter of 2019, Jimmy and I basically had a show going, and we not only had a ton of fun doing it, because we like to joke and have a good time, but a lot of the listeners were commenting that they loved learning from both of us and that it was just a different style of learning. So that kind of really sparked us to launch Money Meets Medicine, and excited to be doing it.

Jimmy Turner: We basically just like to make fun of each other.
Dr Jim Dahle: Yeah, I noticed a little bit of that from the first couple of episodes I’ve listened to. So what day does it come out?
Ryan Inman: So right now we’re producing the podcast to come out on Wednesdays, and we’ve already had people that are asking for more shows, but we are not committing to that right now. So right now, one podcast every Wednesday, and who knows where to go from there?
Dr Jim Dahle: Awesome. And how does this interact with financial residency, Ryan? Are you still planning to continue podcasting there?
Ryan Inman: Yeah, I’ll still continue to have the show there. We have a lot of listeners call in for different segments that we have, but this will be now completely removed off of it and Jimmy and I will be really focusing on Money Meets Medicine, and really providing high quality content in a real lighthearted and fun manner.
Dr Jim Dahle: Cool. So what’s the format going to be? Is it mostly just going to be the two of you, or are you going to have guests on? Are you going to take questions? How’s it going to work?

Ryan Inman: Yeah, so not only have people been asking, have multiple shows a week, please, but we’ve already had probably what, five, six pitches just in the first few shows? For people to be guests on the show. And Jimmy and I are still kind of hashing out how we even operate together, how the format’s going to go between us. And so we’re not committing to guests just yet. And it’s I think something that we could talk about in the future, but for right now we just want the show to really gain its own identity, and so that’s what we’re focusing on most right now.
Dr Jim Dahle: Awesome. So is the podcast going to have sponsors?
Jimmy Turner: Yeah, we’re going to have some sponsors on there. So we have a sponsorship spot that’s basically at the beginning and end of the podcast episodes, and so it’s kind of a permanent fixture. It stays there so long as the Money Meets Medicine podcast exists. And there’s also advertisement spots on the main page as well, that can be found at moneymeetsmedicine.com but yeah, we’re looking for people in the space that want to talk to doctors, and have people on that could provide some benefits for our listeners. If anyone’s interested, they can reach out at [email protected], and happy to see what we can do.
Dr Jim Dahle: Awesome. So I just got done yesterday listening to your first episode about batching, you know, batching your financial lives and simplifying things, automating things, et cetera. What should we expect to hear in the next few episodes?
Jimmy Turner: Well, I think tomorrow’s episode that drops is on financial advisors and how they can add value, which is a fun episode to record because, of course I’m a do-it-yourself person, and don’t have a financial advisor and probably never will. And Ryan does it professionally. So we kind of broke things down to the three different groups of doctors and which groups would benefit the most from financial advisor and which maybe wouldn’t, and had some fun chat about that. And then I think we’ve got, what was the next one on Ryan? What’s up after that?

Ryan Inman: Well, after we started recording, I looked back at the fancy Peloton that you have. And so we’re talking about fitting the Peloton in your budget.
Jimmy Turner: Oh yeah, the Peloton. Yes, we need to have that conversation. JT 175 is Peloton name if you want to follow me.
Dr Jim Dahle: But he’s not competitive at all. Not at all. Well that’s exciting. And when Jimmy says tomorrow, what he means is last week, by the time you’re hearing this, that episode is already available. If you want to go over and take a listen at Money Meets Medicine, so this is great. So where can they find the podcast guys?
Ryan Inman: Well it’s on any major player that you’re listening to right now, Apple, Spotify, all that good stuff. And of course then moneymeetsmedicine.com, and we’ll have some broken out show notes as well as the frame if you’d like to listen to it on a computer, maybe working or something, it’ll be there as well inside those posts.
Dr Jim Dahle: Awesome.

Jimmy Turner: Yeah, make sure and check out the show notes. They have all the stuff we mention during the show and links and other helpful stuff to see as well. And they come out every Wednesday when the podcast drops.
Dr Jim Dahle: Cool. Ryan and Jimmy, thanks for coming on the White Coat Investor podcast and introducing your new podcast. Those you want to check that out. You can find it at moneymeetsmedicine.com.
Jimmy Turner: Thanks Jim.

Dr Jim Dahle: All right. Let’s talk for a minute about some of the feedback we’ve gotten recently. You know, it’s really interesting, this may be a bit of a rant, but I get a lot of requests from people that seem to want to hear about financial situations that are just like theirs, that are exactly like theirs, and they feel like if the person isn’t just like them or has some difference, lives in a lower cost of living area or a higher cost of living area or has a different income or a different specialty or different race, different gender, whatever, that the situation doesn’t apply to them. Let me share a few examples of this from my email box.

Dr Jim Dahle: Okay, so here’s one. It says, “My question has come since I hear many positive stories, but then again, these physicians are in affordable areas. For example, Fort Wayne, Indiana, I’m looking for narratives of physicians that began training $150,000 in debt, no down payment and to an expensive metropolis.” Okay, well that’s very specific. I got to find somebody that had exactly $150,000 in student loans, doesn’t have a down payment, and went to an expensive area. I mean some doctors are in that situation, but the more specific you’re looking to have something, the less I’m going to be able to match what you’re looking for.

Dr Jim Dahle: Here’s another one, “I really enjoyed listening to your Millionaire Doctor podcast. I was wondering if it would be interesting if you could do a similar podcast with non MD high earners. I’m a PhD and have been an avid follower of your blog book, podcast, et cetera. I was wondering what fraction of your listeners are non MDs, and an episode like that would be interesting to them.” Well, first of all, lots of you are DOs to start with, but there’s also plenty of DDS and DMDs, so not to be degree specific, but it’s probably 85% or 90% of the listeners are either doctors or in training or school to become a doctor.

Dr Jim Dahle: That still leaves a fair chunk of you that are tech workers and business owners and attorneys and pharmacists and whatever. Here’s the deal, right? I mean we have a lot more in common by virtue of our tax bracket than we do by virtue of our profession. And so I think you got to realize that everybody’s not going to be exactly like you. And you can probably learn something from the finances as somebody that’s similar to you and not exactly like you.

Dr Jim Dahle: All right. Here’s another one that I got. “I was preparing to write you a disappointed email about podcast 139, that was the one about the physician millionaires, because I was wanting to hear from a female physician millionaire. First, James came on, then Suresh, who was great, so wholesome, then Michael, followed by two dentists, Bob and Brendan, finally Gail and Rich. Seven guests, two dentists, one female. As a longterm listener and reader, I’m still a little disappointed there was not better female representation, but ultimately I’m happy to hear from Gail. Thank you for being inclusive to your listeners. Would encourage continued diversity and inclusivity in future podcasts. Please end manels.” So manels, if you’re not aware of what those are, that’s a panel that is all men.

Dr Jim Dahle: Similar email here. “I was listening to your recent podcast Inspiration To crush Your Student Loans, and wanted to suggest the next time you do a similar inspirational podcast, add someone who has lots of family financial obligations to your mix because so many of us do, and we still can pay off our student loans quickly and build our net worth. I haven’t heard someone like me on your podcast yet and I’d love to. I’m primary breadwinner. I have two small kids. I’m supporting my mom 100%, I’m supporting my adult daughter in college about 75%, and my elderly grandparents partially. Also unusually, I was a single mom through college and med school. By the time I found your website, I had over $300,000 in student loan debt. Even after going to a cheaper state med school and being a temperamentally frugal person who grew up poor.

Dr Jim Dahle: “I’m often inspired when I hear women on your podcast talking about money and I’m in several female-only financial social media spaces. I think women’s perspective on this issue is valuable and different from most men’s and it is more unusual to have women-led households making lots of money and talking about their financial decisions. I’d love to hear more people talk about making great financial progress while also giving significant monetary support for extended family and working full time. It’s thrilling to find solidary and others walking a similar road as you.”

Dr Jim Dahle: I agree. It is thrilling to find solidarity when you find people who are just like you. However, the more specific you get, the harder that is to do.
Dr Jim Dahle: Here’s another one. “I love your blog, but why didn’t you interview any women physicians?” Again, this is about the physician millionaire episode. Here’s another one. “I can’t wait for you to do this again in another few years with six women and one man. More to that point, what are the differences between men and women and how they want to live? As someone who has been an avid reader of your blog, I’m really disappointed you did not think to have a fair share of men and women on this episode. Also, most of them follow along your plans, but what about people who don’t? I plan to be a millionaire in my early forties and have a huge mortgage, a car loan, and live an amazing, enriched life. So what else is out there?”
Dr Jim Dahle: Okay, I had somebody else write back to me about that episode that we had six men and one woman on. “Let this obstacle just give you time to reach more people. In the world we live in today, it is important to think about different backgrounds and perspectives. This is your mission, right? To make people smarter with the money. Are you leaving out tons of people? Are you not thinking about how women are scared to negotiate raises, are still primary caregivers, et cetera? How does this affect their ability to reach the goal you talk and think about every day? What about gay docs? Hey, this opens up a whole new area for you to collaborate with other people and think about, and I’m sure you’ll get a zillion downloads when you release the seven women millionaires docs episode.”

Dr Jim Dahle: So it turns out that a few people are like, “Man, there’s six guys and one woman on that episode.” Well, you know what? We put the call out to everybody, and what did we get back? Cindy, what were the numbers? So we had 19 men volunteer to be on the episode and three women. So the first 10 that volunteered, we sent out emails saying, “Hey, schedule a time.” And the first seven who schedule the time, that’s who we put on the episode. So we ended up with six men and one woman. But the truth of the matter is we don’t actually go through and count up everybody on the show. When I look at the SpeakPipe questions, when I look at the volunteers for our student loan episode or for our millionaires episode, we don’t actually go through and count and make sure we have a certain number of people that are African American or Hispanic American or that are DOs or dentists or women or whatever.
Dr Jim Dahle: And we don’t try to come up with some sort of representative sample. Number one, because a lot of times we don’t have all that information from people. And number two, because what we’re trying to do is get some information out there that you can use in your situation. For example, I had a little more moderate perspective on the discussion that came in. “I want a second other commenters about that episode, that as a woman I was not at all offended by the selection of guests for your podcast. Keep up the excellent work which you do for all of us. Know that most of us are tremendously grateful though I disagree with the critical bent and unreasonable implicit demand for equal representation in every episode, I do think it would be interesting to hear more experiences from women navigating early career and establishing FI.

Dr Jim Dahle: “And you have great posts from guest commenters and blog readers and again, not every podcast or post has to do everything, but there’s added complexity the first years out of training for women. Can’t delay having kids forever because infertility increases and this is costly even if successfully addressed, plus better health outcomes if not really advanced maternal age. How much of a pay cut is extra time with young kids worth in terms of job selection? The economics of maternity leave. How much is high quality childcare and outsourcing domestic chores like cleaning, and attending luxury versus an appropriate investment in your career focus and more? These competing demands do make it more challenging to front load effort into your financial life. Though of course, you don’t get a pass on math for dealing with added challenges.”

Dr Jim Dahle: So a couple of points I want to make about all this. First, I can only put out what I get. I don’t have some magic reservoir of questions and volunteers composed of left-handed, green skinned, bisexual, pediatric nephrologists who were previously engineers and are now practicing part-time on Indian reservations. If you are unique in any way, and most of you are unique in some way, recognize that there are listeners who are asking to hear from you. They want your questions, your situations, your challenges, and your successes. So please leave your questions on the SpeakPipe.

Dr Jim Dahle: And when opportunities come up to volunteer to be on the podcast, please volunteer. People do want to hear from you, people who are like you and want to hear about your challenges. We literally publish pretty much every question we get on the SpeakPipe. If you hear fewer women’s voices or fewer green people’s voices or whatever, it is because that is what is left for us. We don’t make these up, and we can only use what we get. So one opportunity that we do have coming up is an episode composed entirely of financially successful women physicians, millionaires at a minimum, but this assumes we get enough volunteers to do that. I think we’re at two right now, so we need at least four or five more to come up with a whole episode about this.

Dr Jim Dahle: We didn’t get enough last time, but I have great hopes, that I ask specifically for women, that we’ll get enough to do an episode this year at some point for women physician millionaires. Okay. The second point I want to make is how important it is to take what is useful and leave the rest, and this applies to any book you read, any blog you read, any podcasts you listen to, whatever. There’s a line from the Book of Mormon. That it says, “I did liken all scriptures unto us that it be for our profit and learning.” And what the writer means by liken is he took what was similar about that situation and applied it in his life. So liken what you read on the blog or in books or what you hear on the podcast to your situation. The people you hear from are not going to be exactly like you. Your financial life is not exactly like mine, but they’re going to be somewhat like you and that’s why you’re here, so take what you hear and apply it to your situation.

Dr Jim Dahle: If it doesn’t apply, ignore it. But 95% of what you hear here is going to apply to your situation. So just leave the other 5% and don’t let the fact that it isn’t perfectly addressed to your situation keep you from getting anything out of it. The mission of this podcast is to help you get a fair shake on Wall Street. It is not necessarily to increase social justice or promote any sort of political agenda. So while we try to be inclusive and diverse, whenever possible, we are severely limited by what you bring to us. Unlike the blog, the podcast is almost entirely driven by you, the listeners, not me, the host. All right, I think we have a few minutes. Let’s take a few of your questions now. I certainly have plenty to choose from at this point. Somewhere down the road we may not be able to run every single one of the questions we’ve gotten, but I’m going to try to do it for as long as we can. So this first question comes from Andrew. Let’s take a listen.

Andrew: Hi Dr Dahle. Thanks for everything you do. My wife and I have recently added our first child to the family, and like true White Coat Investor disciples, our thoughts turn to estate planning after we figured out diapers and feeding. If we both pass away, we would leave behind a portfolio worth about 1.5 million, invested in a Boglehead three fund approach, plus 4.5 million in life insurance proceeds. While we have trustworthy people who would take great physical care of our daughter, they don’t have the interest or the aptitude to properly manage these investments. We were considering using a corporate trustee to take financial management out of a potential guardian’s hands. Vanguard has such a service that seems reasonable at about half a percent with a sliding scale after the first $5 million. It sounds like a natural fit considering our existing holdings are exclusively in Vanguard index funds, but we have to be dead to truly test drive this service, so I’m hoping you have some thoughts for whether this is a good idea and if so, how to find the right trustee at a fair price. Thanks again.
Dr Jim Dahle: Okay, so here’s a great question, right? You got a new baby that’s going to have 6 million bucks if you die, right? Who should be the trustee? Well, it needs to be somebody you trust. That’s the most important thing. So if you do not have a family member that you can trust to manage this money on behalf of your child, should you go away, you probably need to at least arrange for a professional trustee to be hired in the event of your demise. You don’t necessarily have to hire them before you die, but you need to give some direction to who the trustees should be. Now Vanguard does that. Lots of banks do that. There are companies that this is all they do, so there’s lots of things you can do there. They do charge fees to do it. 1% is pretty common, just like a financial advisor often charges. Obviously Vanguard tends to be low cost, and so in this situation they are low cost 0.5%. Often Vanguard service is not as ideal as it would be if you’ve ever tried to use their website you know what I’m talking about.

Dr Jim Dahle: It’s not quite as slick as that as of E-Trade or Fidelity or Schwab. And so sometimes you do get what you pay for, but I certainly wouldn’t think it’s a bad idea to use a trustee from Vanguard. But I don’t know if that’s necessarily the best trustee. I haven’t been in this situation. I don’t know that I have ever done a deep dive in trying to evaluate the services of various trustees. But I think the key, if you don’t have a family member or a good friend that you can trust to do it, is to hire a professional. Ask about the prices upfront, make sure they’re reasonable, within the going rate for what you can get, and find out what they do. And from there, as long as they’re willing to follow the guidelines you put in the trust, and you’ve got reasonable investments and reasonable management fees, I think you’re fine there.

Dr Jim Dahle: I had an interesting email the other day, it came from a doc who actually went to my medical school, graduated about three years behind me. So I guess we were there together for one year. And he has come up with a cool product that serves a need that I think a lot of us have had. Have you ever had your kid or a neighbor kid fall, bang his head and sustain a laceration for whatever reason, and you’re like, “Ah, I could fix that except I don’t have the stuff.” And so they end up going to the urgent care or going to the emergency department, and they come back with a $1,500 bill for a laceration that you knew how to fix, and you were willing to fix. You just didn’t have the stuff to do it. Well, this company has decided to fill that need and they sell suture kits to doctors.
Dr Jim Dahle: These are real professional grade material that you get in a suture kit, and you don’t have to pilfer it from the hospital anymore. You can actually just buy it, and it costs a whole lot less than if you went to the suppliers for all these things and tried to assemble it yourself. You can just order it and you have it. Somebody gets cut, whatever. You’ve got the tools, you’ve got the suture material, you’ve got the lidocaine, you got what you need to clean it out, et cetera. And so you can get those packaged up, these suture kits. I think it’s a great business. I’m excited to help promote a doctor’s entrepreneurial idea, especially when I think it’s a really great idea, and I’ve negotiated a 10% off discount for you. So you can get that at whitecoatinvestor.com/suture, okay? whitecoatinvestor.com/suture. Check it out. Lidocaine, suture kits, some other medical supplies there, but I think it’s a great opportunity if that’s something that you could use.

Dr Jim Dahle: All right, our next question off the SpeakPipe is anonymous. This is the one I named the podcast episode for. Let’s take a listen.
Will: Hi, Dr Dahle. This is Will. I’m an anesthesiologist in Arizona. I have very good friend that I’ve known for about five years who’s a pulmonary critical care fellow in California who is attempting to pay off his loans, his very sizable loans, ASAP. He has not attempted to go for public service loan forgiveness. Part of his plan is raiding the $10,000 in contributions he’s made to his Roth IRA. I’m trying to convince him that it’s a bad idea, that Roth money is very valuable for his asset protection and it’s long term tax severability, and the inability of him to replace that $10,000. Am I missing something? He doesn’t seem to be convinced that he should keep the money there since he expects 5% to 7% in the stock market long term, versus a 6% interest rate on his loans. Thank you very much.
Dr Jim Dahle: Okay, so this docs friend is thinking of raiding the Roth IRA to pay off loans. I actually believe this doc. You know, usually when you get these questions, “I’ve got a friend who’s wondering what he should do about this discharge he has.” You know? But this situation, I think it really is the friend. Obviously I don’t think this is a great idea to raid a Roth IRA to pay off loans. There’s a couple of reasons why. One, you only get so much Roth space in your life. Yes, you can create more later on with Roth 401k contributions, Roth conversions, et cetera. But for most of us, we’re going to be pretty limited in how much Roth we have. So I don’t think you ought to be pulling money out of it willy-nilly. I think it really needs to be a big deal for you to be pulling money out of your Roth IRA for anything but retirement because that money is compounding tax-free for years, and the longer you let it do it, the more valuable that benefit becomes.

Dr Jim Dahle: But above and beyond that, there’s a couple of other benefits. Roth IRAs are great for estate planning. Even with the recent changes in the estate tax laws, you can still stretch a Roth IRA for 10 years after you die. So basically it can double in value before anybody has to take anything out of it. You know, that’s still a great benefit to be able to do that. Plus you can name a beneficiary for it, and so rather than having to wait for it to go through a will and go through probate and become public, it just goes to the beneficiary. And so it’s really slick for estate planning. It’s also very good in almost every state for asset protection. Money in retirement accounts is generally not touchable in the event that, it’s an unlikely event, admittedly, but in the event that you have an above policy limits judgment that isn’t reduced on appeal, you generally get to keep everything in your retirement accounts, and so that’s another great reason not to raid your Roth IRA, especially to pay off a loan that goes away when you die.

Dr Jim Dahle: But the other thing that’s interesting here is this doc feels like they can get 5% to 7% in the market, and they’ve got loans at 6%. Well, first refinance the loans. If you go to the refinance and resources, you can find under the recommended tab at White Coat Investor, you probably won’t have 6% loans. You’ll probably have 2% or 3% or 4% loans. But number two, in the long run, if you invest a Roth IRA aggressively into stocks and perhaps even more risky stocks, like small value stocks, I think 5% is pretty darn conservative. If that’s really all you expect is 5% nominal, I think you can probably maybe invest a little more aggressively and expect a little bit higher return than that.

Dr Jim Dahle: Certainly 7% is getting more into the reasonable range, but bear in mind if you actually look at the performance of the US stock market since its origination, you’re looking at a nominal returns of 10% to 11%, and so even after inflation, that still works out to be 7% or 8% after inflation, so that’s probably going to cream these loans. I don’t know that I would drag the loans out because of that, but I certainly wouldn’t raid a Roth IRA just to pay them off. I’d tried to leave that money there. All right. Our next question comes from Marico. Let’s take a listen.
Marico: Hello Dr Dahle. Thank you for everything you do. So here’s my question. My husband is a specialist making a high six figure salary and I stay at home with our kids. Last year I was invited by a university to coach remotely online for them. It was a really easy gig I could do at night when the kids were sleeping, and I made about $35,000 as a independent contractor last year, and I put most of that money into my solo 401k. Now they’re making all the remote, 1099 employees become W2 employees, which seems strange because you won’t be living in upstate New York. We’re not offered any supplies, like a computer to work from, and I’m not receiving any benefits. So my question is, is there some sort of loophole to contribute more than the standard $6,000 into an IRA or now that I’m a W2, I’m just stuck with that? All right, thank you so much Dr Dahle.

Dr Jim Dahle: Okay, so Marico used to be a 1099 and now is a W2. So here’s the deal. When you’re a W2 you’re an employee. When you’re an employee, even if you don’t have any benefits, you cannot use a self-employed retirement plan. You cannot use a SEP IRA, you cannot use a simple IRA. You cannot use an individual or solo 401k. You can’t do it. You have to be self-employed. If you’re not self-employed, you can’t put money in there, and that’s just the way it is. So no, there’s not some other loophole. I mean, the only thing that’s even close to a loophole are the rules on traditional IRA contributions. If you make a lot of money, like most doctors do, and you have a 401k or other retirement plan at work, you usually can’t deduct your traditional IRA deduction. If you don’t have a retirement plan at work though, you can deduct that traditional IRA deduction.
Dr Jim Dahle: But then you’re just talking about $6,000 into a traditional IRA versus a Roth IRA through the backdoor Roth IRA. So it’s not some huge benefit. But the bottom line is that’s one reason, especially if you’re part-time, to be self-employed because it gives you a lot more options as far as retirement accounts go.

Dr Jim Dahle: All right. Our sponsor for this episode was Earnest. Earnest is really great because you can choose custom terms to fit your budget. So you can pick your exact monthly payment or you can select your interest rate or you can select the term, which is what most people do. They decide how long they want to pay, and then Earnest tells them what the interest rate for that term is going to be. You can get fixed and variable rates. They won’t pass you off to third party servicers. They don’t penalize you for making payments early. They protect your family in the event of death or disability, and the minimum out there to refinance is super low. Only $5,000, and the maximum, $500,000, is pretty high. So if you have debt between $5,000 and $500,000, you can refinance with Earnest. You go through the link I’m about to give you. You can get $500 cash back as well if you refinance over $50,000, so please put that towards your loans and get them paid off of you and faster. That link is whitecoatinvestor.com/earnest.
Dr Jim Dahle: Be sure you’re signed up for the White Coat Investor newsletter. Be sure to check out the White Coat Investor forum. You can get both of those at whitecoatinvestor.com/newsletter or whitecoatinvestor.com/forum. Thanks for leaving us a five star review and for telling your friends about the podcast. Head up, shoulders back. You’ve got this and we can help. We’ll see you next time on the White Coat Investor podcast.
Disclaimer: My dad, your host, Dr Dahle, is a practicing emergency physician, blogger, author, and podcaster. He is not a licensed accountant, attorney, or financial advisor, so this podcast is for your entertainment and information only and should not be considered official, personalized financial advice.