INTRODUCTION

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.

Dr. Jim Dahle:
This is White Coat Investor podcast number 358 – What to do if you didn't match this week?

Today's episode is brought to you by SoFi, helping medical professionals like us bank, borrow and invest to achieve financial wellness. SoFi offers up to 4.6% APY on their savings accounts, as well as an investment platform, financial planning and student loan refinancing, featuring an exclusive rate discount for med professionals and $100 a month payments for residents. Check out all that SoFi offers at whitecoatinvestor.com/sofi.

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All right, for those of you out there who are first year medical or dental students or know somebody who’s a first year medical or dental students, and in fact, we expanded that this year, if you are pharmacy school or PA or NP or podiatry, whatever. We've expanded this year, our Champions program, but tomorrow's the final day. Champions have to apply by tomorrow in order to get a free copy of the White Coat Investors Guide for Students for you and all of your classmates.

All you have to do is give us your mailing address and we'll send you all the books. All you have to do is pass them out to your classmates. That's it. We'll even give you a little bit of swag for doing it. It's not complicated. It really is a free book. And the knowledge in the book is maybe not priceless, but it's worth millions each of your classmates. And if you multiply that by the hundred people in your class, that's a whole lot of money that you can be making for your classmates.

So please, if you haven't been handed a White Coat Investor Guide for Students and you're a first year student, please apply for the Champions program. Tomorrow is the last day. We need some time to print the books, get them shipped out to you before class ends this spring.

Tomorrow is the last day. March 15th is the deadline. Please apply. If more than one person applies from your class, no big deal. We just pick one of you. But for too many classes out there, there isn't anybody that's applied to be the champion. We can't send these books out one by one. We can't afford the shipping. We have to send them out in boxes in bulk. We need a champion to pass them out once they get there. And that's where you come in. So please volunteer to be a WCI champion for your class.

WHAT TO DO IF YOU DON'T MATCH

All right, it's match week. Congratulations to all of you who are fourth year medical students. Although some dental folks go through a similar process as well as some other professions, but this week is medical school match week. If you have matched, congratulations on making it to the next step of your career. It's pretty exciting.

However, I want to spend a few minutes today talking to the rest of you because the match is becoming more and more and more competitive every year. The reason for that is because medical school slots have expanded significantly and residency spots have not expanded as significantly. And so, the match rate has actually been falling for several years.

For MDs in US schools, it's still pretty high. It's still 91, 92, 93%. Most of the DOs are now going through what used to be called the MD match and their rate of matching is just about as high, maybe a percentage point or too lower, but still quite high. So, most people are still matching. That's not the case if you're coming out of a Caribbean school. It's never been the case coming out of a Caribbean school. I think the match rate overall for those schools, and it's better at some schools than others, but overall I think it's about 56%. That means 44% aren't matching. That's a huge number.

And to not match after borrowing a whole bunch of money for medical school is a financial catastrophe. If you owe $200,000, $300,000, $400,000 plus dollars in student loans and now you don't have a job coming that's going to provide enough income to pay that back, that can be a pretty serious financial catastrophe.

The numbers are probably actually worse for people who enroll in a Caribbean school because those are just the numbers of those who graduate. A fair number of people don't graduate from a Caribbean medical school. So, it's a little bit of a gamble to go there. A lot people call it Second Chance University or Second Chance Medical School, but it's a much bigger gamble than going to a US MD or DO school.

At any rate, obviously, the first thing you do if you don't match is you scramble. It used to be called the scramble. Now it's often called the SOAP. You basically find out on Monday of match week that you didn't match. Those who do match find out they matched on Monday as well, but they don't get to find out where until Friday, tomorrow, the day after this podcast is dropping.

It's a big ceremony. Everybody shows up and they open their envelopes and find out where they're going. It's very exciting. You bring your spouse or partner or significant other and it's a big party. It's great for most people, but for those who didn't match, they often don't show up at this thing at all. In fact, they worked their butt off all week trying to SOAP into an open position because the residency programs in a lot of cases are scrambling just as bad as the students are because they didn't fill all their spots. And it's a big deal for a residency program to not fill its spots.

Imagine if you were planning on having 10 residents in a given year. Well, what happens if you only have six? Well, that's a lot of shifts that aren't covered. That's a lot of calls that aren't covered. It's just as big a deal for the residency program as it is for the students. Everybody's incentivized to grab the unmatched students and get them into positions and fill up those residency programs. And that's what happens during the SOAP.

Tuesday of match week, the programs can start reviewing the applications and start making the rank list. The applicants don't make a rank list in the SOAP, they just hope for the best. And then come Thursday, the applicants are advised whether they matched in the SOAP.

And it's pretty wild, but you only get two hours to either accept or reject any offer that's given to you. I suggest you accept it. Most of the time you're far better matching into something than matching into nothing. It's got to be a terrible program in a terrible place to be worse and not matching at all.

And then of course, Thursday afternoon, the process begins again with any programs that are still unfilled. And you get two hours again to accept or reject the offers. And it's all over for that year. If you matched, you still get an envelope the next morning at match day. You open it with everybody else. You just happen to know what's inside it before you open it. If you didn't match, you probably don't even want to show up to that thing. It's probably going to be too painful to watch all your classmates glee as they open their envelopes and not have one to open yourself. That would take a real saint to be able to do that.

Step one, of course, is try to still match this year. Scramble, SOAP, whatever you want to call it, get into that. But by the time Friday rolls around, if you haven't matched, this is bad. This is depressing. This is humiliating, this is humbling. This is hard.

The first thing I think you ought to do is take a little bit of time, take a break, try to get over this shock. If you're at this position, and it's Friday, you haven't gotten much sleep, you might be feeling pretty down. If you're really depressed, go see a professional. It's probably not even a bad idea to see a therapist, even if you're not feeling that depressed.

This is a major life event and it can be really hard, not only on you emotionally, but also physically. You haven't slept much all week. You're going to be doing a lot of work worrying this weekend if you like most people. Call your family, call your friends, let them support you through this rough time and know that your journey to being a practicing physician isn't necessarily over.

For many of us, we didn't get right into medical school. For many of us, we don't get right into residency, but I know plenty of docs who did not match who are still practicing physicians. By next week it's time to go and meet with your advisor, meet with another faculty member in your desired specialty, and let's have a postmortem. Let's have a discussion. Why didn't you match? Were you a borderline or worse applicant to start with? Did you do a poor job of applying? Was there a major red flag on your application? Was there a problem with your interviewing style? Were you trying to couples match or something that's harder or were you just unlucky?

Not matching once is pretty common. If you ask around, you're going to find that many doctors had to apply to medical school two or even three times and can be the same thing with a match. The key is to match in your next attempt. And that's a lot like the key to matching the first time, which is being realistic. You have to know yourself, know what you're good at, know what you're bad at, know how well you stack up against your peers at your school and across the country.

Few applicants have top-notch grades, board scores, letter of recommendations, extra curriculars and interviews. Most of us are going to be better at some things than others. So, beg your faculty member, your advisor, to be brutally honest with you. You really need to know where your application is weak. Once you've figured that out, you have one year to address that weakness. Assuming you pass your boards, you can't retake those. Repeating medical school classes probably isn't an option either, although you probably have time to squeeze in another sub internship or something.

But you can certainly strengthen an application by getting more clinical experience and doing some research. You can get different and hopefully better letters of recommendations. You can get involved in other activities, whether they're paid or volunteer, that make you a more interesting person and a more compassionate and competent doctor. You can go get an MBA or an MPH with that year. You could do more practice or take a course on interviewing or public speaking. There are lots of ways to improve your application that don't necessarily involve taking your boards again or taking more medical school classes.

Now, as you apply again, you need to lower your expectations dramatically. Spend some money, a lot of money, both on applications and on interviews if you can get them. Apply to twice as many places as you think you need. Maybe apply to every program in your specialty. Go to every interview you get, leave it all out on the court. So if it doesn't work out, you can at least know you did everything you could.

Remember, your odds of matching the second time are just less than 50-50. But if you have to ask yourself if you're a glass half full kind of person or glass half empty kind of person.

Now obviously some specialties are more competitive to match into than others. If your desired specialtie is particularly competitive or even moderately competitive, you should also pick up a backup specialty the second time around. Maybe the backup specialty is just completing an internship. Sure, maybe your first love is ophthalmology. Wouldn't you rather be an internist than not practice at all? Look at all the options you have available to you after completing an internal medicine residency. There's all kinds.

If you need a backup specialty, you probably shouldn't be picking one from the top half of the list of most competitive specialties. You want something on the bottom half of the list. Maybe it's neurology or family medicine or internal medicine or peds or pathology. The things where you're much more likely to match into a position somewhere.

Now obviously there's plenty of very competitive pediatrics programs. But on average it's not nearly as competitive as matching into neurosurgery or ENT or something like that.

Okay. Now let's say you've applied two, maybe even three times. You still haven't matched. You can't strengthen your application anymore. You're never going to be a practicing physician. It's time to reconsider your options. What are you going to do for the rest of your life? How are you going to put food on the table? How are you going to pay off those student loans?

Well, you have two major options. The first is to leverage your medical degree into a job. While a doctor who has completed residency and practiced for a few years is very attractive for jobs in many industries, one who has never practiced can also be quite useful, especially with some additional training such as an MBA, some financial training, an MPH, an MPA or an MHA.

You may also find jobs in pharma, insurance or other related fields. You can coach pre-meds on how to get into medical school. There's lots of options. Alternatively, you can simply go into something else. You can open a business, start a real estate empire, go into sales, be a therapist or a coach or whatever. There's a whole world full of careers you don't even know about. You'll probably like some of them.

However, the elephant in the room, of course, is the financial problem caused by borrowing a bunch of money to go to medical school and then not becoming a practicing physician. So, student loans. Now, if you're fortunate enough to get through medical school with no debt, which is about 27% of MD students these days, or with minimal debt, if you only borrowed $10,000 or $20,000 or something like that, you basically have a fresh start from zero.

If you have a contract with the government like HPSP or NHSC, or you have an MD PhD, you'll need to read the contract and talk to the appropriate authorities. With the military contract for instance, you'll likely still have a service obligation. That's not so bad. You'll have a job. That job likely qualifies for public service loan forgiveness. If your contract was an MD PhD, you likely have no further obligation as you completed the PhD long before the match. You can simply go into the research side.

But if you're like most students, like the 73% of students who have substantial student loans, you've got a bigger problem. If those loans are mostly federal, you can enroll in an income driven repayment program and you should give serious consideration to any job that qualifies for public service loan forgiveness. You might actually be earning more money in forgiving student loans than in salary in those situations.

You can also consider IDR forgiveness, although unlike PSLF, that comes with that big tax bomb after 20 or 25 years, not to mention the extra 10 to 15 years of payments. It doesn't require you to work for a nonprofit though, nor do you even have to work full-time or work at all.

If you have private loans, you're going to have to find something that will earn enough money to pay them off. That can be tricky. But if you're smart enough to graduate from medical school, you're smart enough to figure something out there.

In the meantime, remember that the big advantage of student loans. They can ruin your credit, but they can't foreclose on your brain. Student loans don't go in bankruptcy, but they're also unsecured loans. The worst case scenario is ruined credit, forfeited tax refunds and rarely having 15% of your wages garnished. It's not the end of the world.

All right. Obviously failing to match is a major career in financial catastrophe. Do all you can to avoid it, but if it happens to you, attempt to SOAP your way out of it and apply again. If you still can't match, consider your other options both with and without inside and outside the medical field and pay special attention to your student loan burden as you do.

Again, congratulations to those of you who matched this week and my condolences to those who have not. I hope this section of the podcast has provided you some options and some hope to deal with this situation you have in front of you.

Okay, we have a promotion this week as part of match week. It's actually a promotion at studentloanadvice.com. Once you match, you're probably starting to think about those student loans and what to do with them. Well, we're going to incentivize you to meet with our folks at studentloanadvice.com and get a plan for your student loans in place.

There ought to be enough incentive. I think our average client there comes out ahead by $180,000 or $190,000, mostly in increased public service loan forgiveness. But as an additional incentive for this week, and this promotion only runs through the 19th, we're going to give you a free copy of our Continuing Financial Education 2023 course if you book a consult this week. And of course, once you complete the consult, we'll send you access to that course. That's our promotion for this week for anybody who books a consult at Student Loan Advice. You don't have to complete the consult this week, you just have to book it. And once you finish the consult, we'll send you that free course.

WHITE COAT INVESTOR ANNUAL SURVEY RESULTS

All right, I wanted to spend a few minutes talking about our survey. Many of you answered our survey. Our podcast is probably our biggest reach of everything we do at the White Coat Investor. And so, many of you are the folks who answered our annual survey.

And the annual survey is super important. It really does guide what we do here at the White Coat Investor for the next year. It has a major impact on how we run the business and on the content that we produce and the way we do things. Thanks to all of you who filled it out. Obviously those who won the awards, the lottery, the whatever we call it, the drawing for filling out the survey, you've already been notified. If we didn't contact you then you didn't win. I'm sorry. But let's go over some of the survey results that I think you guys will find very interesting.

All right, we'll just go through it pretty quickly. A lot of these are pretty quick questions. We asked what country you live in. 99% of you are in the US, Canada, Australia, Saudi Arabia, Denmark, Japan. Lots of other things came up on the survey, but you're still 99% Americans. You're from pretty much all of the states. There's more of you in California than anywhere else, but there's also more people in California than anywhere else. Lots of people in Texas, Florida, New York, etc.

We asked you how old you are. And it turns out that 46% of you are in your 30s. About 25% of you are in your 40s. About 11% of you are in your 50s and about 12% of you are 60 plus. Only 6% under 30, which are mostly medical students and residents. Almost a quarter of you are 50 plus. I'll bet that wasn't the case 10 years ago in the early years of the White Coat investor, but it is now.

85% of you are married. That surprised me it was that high. About 12% single and the rest divorced or widowed. Majority is still male. I think it's about 72% of White Coat Investors are male. That hasn't changed much over the years. I'm not sure why that is. I think some of it might be guys tend to be more interested in finance. Maybe people in high income professions are still mostly male even though there's now more women in medical school than men. Maybe males just relate better to me than women do. I don't know. But that's been about the way it's been for a number of years.

We're certainly doing some things to try to reach out to women in particular. You've probably heard of the Financially Empowered Women. Megan, our podcast producer has a major role in that. And so, if you haven't found out about that, you can check that out at whitecoatinvestor.com/few.

All right. We asked what phase of life you're in. 69% of you are attendings or the equivalent, people working full-time in their careers. We actually asked this year how many people are working part-time and it was a decent chunk. It ended up being, it looks like about 15% or so working less than full-time hours. And I thought that was pretty interesting.

We've got a heavy physician bias. Lots of docs, not so many other people. But we've got 7% dentists, 3% ABCs, 3% tech workers this year. One year in our survey we had 8% pharmacists. I don't know where they all went. This year was only 2%. Still more than lawyers, though. Not that many lawyers listening to the White Coat Investor podcast. Maybe we ought to do more to reach out to them.

Interestingly, 72% of you are employees. Only about 10% own your own practice. About 18% of you own a practice with partners. We also discovered that two thirds of you are less than 10 years out of training. But we have people throughout their entire career path.

We asked you guys how many years you've been following WCI and very few of you had been following less than one year. But many of you, 21%, only one to three years and another 26%, only three to five years. That puts the majority of people have been with WCI less than five years. And I find this fascinating because about five years ago I burned out and almost shut down WCI and half the people we’re now helping, hadn't even heard of it at that point. That's gratifying to me and makes me feel good about figuring out a way through that WCI burnout and keeping this thing going.

We asked how you find WCI and that's still a major part of how we've grown. 28% of people were just referred by a friend, a colleague, a partner, whatever. They were told about WCI. A lot of you were given or you bought the WCI book. About 14% of you.

But more and more you come in just off an internet search. You're searching for something, you're searching for whole life insurance and what to do with it or financial advisors or whatever. About 36% of you just kind of stumbled in here off the internet after searching for something else. We'll continue to make great efforts to help people continue to do that.

All right, let's get into some of the more financial interesting stuff about our audience. We asked do you have any student loans. And it turns out that 49% of you have already paid off your student loans. 28% of you still have a student loan and 23% of you never had student loans. And I'm pleased to see that a huge percentage of you paid off your student loans in less than five years. 42% paid off your student loans in less than three years. 27% paid off your student loans in three to five years. 24% took five to 10 years, and only about 8% of you took more than 10 years to pay off your student loans.

Current student loan balances for those who have it, a little over half of you have less than $200,000. The other half has more than $200,00. What does it look like? About 8%, 9% owe more than $400,000 in student loans. So, plenty of you out there, if you have a big student loan burden, you are not alone.

A lot of you have a plan to deal with your student loan debt. About 95% of you have a plan. If you don't, I mentioned studentloanadvice.com earlier. Meet with them, get a plan for your student loans.

We also asked if you have a written financial plan. And unfortunately that number was not 95%. That number was only 53%. And I don't like that. I don't like that 47% of White Coat Investors, people who are enthusiastic enough about what they're hearing here, what they're reading on the site to answer a survey 47% of you still don't have a written financial plan. And I think that's not a good idea. Maybe not everybody needs a written financial plan, but I think the vast majority of you would surely benefit from having one. So, whether you're writing it yourself, with or without assistance from something like our Fire Your Financial Advisor course, or meet with a personal financial planner to help you design that, I think getting a plan in place is very worthwhile.

All right, we asked you how many earners are in your household. About 40% of you are a one earner household. 55% are two earner household. And then, of course, a fair number of you are retired.

We asked how much you earn practicing medicine. And this was interesting. There were people all over the chart. Obviously some people are not earning anything practicing medicine, they're retired or whatever. But we discovered that about 15% of you make less than $200,000 practicing medicine. And then about another 17% make $200,000 to $300,000. Another 16% make $300,000 to 400,000. Another 14% make $400,000 to $500,000 and about 12% make $500,000 to $750,000. And then we've got a small slice of people that are making more than $750,000 a year.

I think the bottom line there is that yes, the vast majority are earning between $200,000 and $500,000. But there's plenty of people that are outside of those numbers. That's why what I think about when I think about a physician income is $200,000 to $500,000, but there's plenty of you making more and there's plenty of you making less.

We asked about your household income and numbers were significantly higher there than just looking at your physician income. But still we see that the vast majority of you, probably 55% are between $100,000 and $500,000 a year in household income. But again, lots of people that are outside of those numbers.

It's tricky. It's tricky to create content that's applicable to somebody making $150,000 a year and somebody that's making $1.5 million a year. Most of what we create I think is for people in the middle that are making that $200,000 to $600,000 in income. But we also try to make sure we're creating content for people on the high end as well as the low end there. But if you feel like you make $120,000 a year and the vast majority of what we're creating does not seem applicable to you, well, that's why, because most of the audience is making more money than you.

Likewise, if you're making $1.8 million a year and it feels like most of our content is geared to somebody making less than you, there's a reason for that. Because you are absolutely crushing it income wise and most people aren't anywhere near where you're at.

All right. Despite that huge variation in income and a lot of you making a whole bunch of money, my favorite question from the survey asked about your annual household spending, what you're actually spending. And here the numbers are almost all the same.

We found that the only 8% of you are spending under $50,000 a year. About 24% of you are spending $50,000 to $100,000. 44% are spending $100,000 to $200,000. And another 19% are spending $200,000 to $300,000. If you look at that, you sum that up, you can see that something like 90% of White Coat Investors are spending between $100,000 and $300,000 a year. 90% of you. We all earn different amounts, but we're spending pretty similarly, which I thought was pretty interesting.

We asked about your net worth and we discovered that some of you are doing very, very well. Only about 11% of White Coat Investors are not yet back to broke. They have a negative net worth. 84% of you have at least a six figure net worth and two thirds of you are millionaires. A third of you are multimillionaires and 5% of you are decamillionaires. So, lots of bias here, obviously. You're more likely to fill out a net worth survey if you have high net worth. But many of you are doing very, very well. So, congratulations to you on that.

We asked how many of you felt like you were financially independent. 21% of you said you were. We asked what you want your retirement nest egg to be. And we got responses that are all over the place. A very small slice actually that said 1 to 2 million. A bigger slice said 2 to 3 million. And about 19% of you, an even bigger slice said 3 to 4 million. 20% of you said 4 to 5 million. 23% said 5 to 7.5 million.

Basically, about two thirds of you are saying you need 3 to 7 million dollars as a nest egg in order to retire, which I find amazing since so many of you are only spending $100,000 or $200,000. Less than $200,000, and you think you need $7 million. And yet you really only need a portfolio of maybe 3 million to support what you're actually spending, which I find kind of interesting.

We asked you what age you want to retire at and it turns out most of you are not the hard core FIRE types. Very few of you wanted to retire under 40, not very many more wanted to retire before 45. Only 8.5% of you want to retire between 45 and 50. Once you get into your 50s though, you start seeing that a lot of you want to retire. 50 to 55 is 25% of you. 55 to 60 is 28% of you. 21% of you want to retire in the first half of your 60s. And about 13% of you want to keep working even beyond 65.

So, I don't know what FIRE is for physicians. Maybe 45. Let's say that. That's not very many of you that actually want FIRE. Most of you like your jobs enough that you want to keep doing them at least into your 50s.

We asked how many of you use a financial advisor. 65% of you said you do it all on your own. 13% of you said you used to use an advisor and about 15% of you said that you only occasionally use an advisor when you have a new question, which I find this all very interesting. That the ones who are actually using an advisor is just a relatively small percentage of you, about 20%. Whereas I think among all doctors, probably 80% want and need a financial advisor. And yet only about 20% of you guys are using one. I think it's just a selection bias issue there. I think those who come here, those who pay attention to the White Coat Investor are those who are more likely to be able to manage their own money. Despite not using advisors, many of you use a tax preparation firm. About 57% of you pay a professional to do your taxes.

All right, we asked what you invest in. No surprise. Stocks, bonds, high yield saving accounts, real estate. Only about 12% of you have invest in any sort of crypto. About 14% of you invest in small businesses. In the last year 91% of you have invested in index funds and only 14% in actively managed funds. 20% of you bought individual bonds, about the same number bought stocks. 5% of you bought crypto in the last year. 12% of you bought direct real estate. About 19% of you bought passive real estate.

Despite that interest in some of these alternatives, your portfolios are still heavily invested in stocks. 51% of you have 75 to 100% of your portfolio in stocks and another 36% have 50 to 75% of your portfolio in stocks.

We asked what percentage of your portfolio is invested in real estate. The biggest category at 70% is less than 10% of your portfolio. And another 17% invested less than 20%. So, probably 90% of people have 20% or less of their portfolio in real estate. Many of you plan to add it in the future. About 45% of you plan to add real estate in the future and another 26% aren't sure if you will or not.

Most of you have completed a backdoor Roth IRA every year, but still 19% of you haven't. And it makes me wonder why. Sometimes you say because you can contribute directly to a Roth IRA, you just don't make that much. 24% of you don't know how to do it. That bothers me a little bit given how long I've been teaching how to do a backdoor Roth IRA. If the only reason you're not doing a backdoor Roth IRA is because you don't know how to do it, check out our backdoor Roth IRA tutorial.

72% of you have a disability insurance policy. Boy, there's a lot of you that still don't, but not that many of you said you don't because you still need to purchase one. Most of you don't need one. Whether you're retired or financially independent or whatever.

Lots of you have purchased a guaranteed standard issued disability insurance policy. About 19% of you. That surprised me that it was that high. We learned that more of you have policies with Principle and then followed by Guardian than any of the other companies. But we also see 12% at MassMutual, 11% at Ameritas, 10% at The Standard.

About 72% of you have a life insurance policy. We asked about burnout and 47% of you said you've had burnout and it's occasionally impacted your work and life. About 18% of you say it's had a significant impact on your life, and only about 32% of you say you really haven't been affected by burnout.

All right, let's talk a little bit about the questions I asked this year that were specific to the podcast. I asked about how often you listen. And about 51% of you say you listen every week. 13% say once a month or so. About 16% listen a few times a year. 19% of those who took the survey don't listen to the podcast at all.

We asked what types of podcast segments you prefer. And 45% of you, the biggest category, prefer that we just teach on individual topics, which is basically what we do on the blog. We pick a topic and we blog about it. And a lot of you would like us to just do that on the podcast too, which wasn't really the idea behind the podcast when we started it. We were mostly going to do interviews, we're going to do questions, but maybe we need to do a little bit more of that teaching that we haven't done in the past. We've tried to add that on to the Milestones to Millionaire Podcast. You've probably noticed if you listen to that. So, we'll try to do a little bit more of that going forward.

We asked you about the Friends of WCI podcast episodes we do, and found that 43% of you love them having another voice on the podcast with me. And about 32% of you don't care and only 16% of you hate them. We're probably going to do a few more of those this year. Be ready for them. I'm sorry for those of you who hate listening to anybody besides me. There's not very many of you though.

We asked who you guys thought we should get on the podcast. The two most frequently requested people were Warren Buffett and Dave Ramsey. We've tried both. We're probably not getting either one of them, so you can give up on that. But please continue to send us your suggestions. A lot of the people we bring on the podcast are people that are listeners have suggested.

All right, this is the part I've been waiting for. I've never asked this question on the annual survey before, but this year I asked whether you like being told on the podcast “Thanks for what you do.” Because I get complaints about this. People write in and say, “Ugh, quit saying that. I hate it.” But we ask people and it turns out by a ratio of 20 to one, you guys actually do like it. I thank you for what you do. So, there you go.

All right. We asked some questions about conferences. It turns out more of you prefer the West coast than the East coast and none of you want the Midwest. But most of you just don't care. You're coming wherever it is. So, we'll hope to see you at future WCICONs. We're probably not going to do them during the weekdays anymore though. It was about three to one of people that prefer having it on the weekends.

All right. One of my favorite parts of the survey is I ask you for criticism. Now, I hope most of it is constructive criticism because that's literally gold in this industry. And so, the first question we asked was what do you disagree most with the views of WCI on. And I was pleased to see that 76% of you don't disagree with anything I say. And then I got thinking about it. I thought we were running kind of a multimedia education company, not a cult. Surely 76% of you that can't find anything you disagree with me on, that seems a little too high to me now that I think about it. But I'm happy to see it.

The biggest thing people said they disagree with me on is real estate investing, which I found interesting. So, let me reiterate my stance on real estate investing just so everybody understands what it is. And then you tell me if you really disagree with this.

My stance is that it's a worthy asset class with good returns and low correlation with stocks and bonds, but with some additional hassle. It's certainly optional. That's my stance. What part of that do you disagree with? That it's optional? You don't think it's optional? I don't know. I think it's odd that number was that high. There was one or 2% on a bunch of other stuff like whole life insurance or crypto or stock timing or market timing. But that was the biggest category, it was real estate investing.

Okay. I asked you if you think I tell you to spend less or to spend more, whether I'm telling you wrongly. And 93% of you said I get the balance just right and only about 5% of you say I tell you to save too much. So, it sounds like we're getting that right.

I asked you if you've ever been offended by our content and 96% of you said you never have. I'm pleased to see that. Almost all of you, 96% of you gave us a four or a five on whether you feel you can trust our recommendations. We'll keep working hard to deserve all the five star reviews we can get there.

And then of course we give lots of opportunity for you to type in whatever you want to tell us about improving the White Coat Investor. A lot of the stuff you guys ask for, we've already done. I'd encourage you to check out the search function on the website. You guys asked for stuff like “I'm trying to teach medical students basic financial management and simple images that can be referred to on a PowerPoint would be awesome.” I put that together five years ago, give it out every year as part of our medical educator award that we give out each year. It's right there under the WCI plus tab on the website. You want to download PowerPoints to teach somebody? It's all there.

Same thing people ask for stuff for lower income specialties, for stuff for single doctors. They ask for audio versions of books. We have audio versions for the books. A lot of this stuff people ask for, they just don't realize we've already done.

I like some of the humorous responses. People tell me we need more cowbell in the podcast and maybe they'll give me a cowbell one of these times. We'll ring the cowbell and then I'll have people complaining too much cowbell I'm sure.

And then of course, lots of the responses are stuff that one person says one thing, one person says another. For example, “I love Jim, but I wish you rotated in more hosts to add credibility.” And then the next comment will say, “I don't like the different voices on the blog so I stopped reading them.” We can't please everybody all the time.

We appreciate all of your comments. Many of them are very helpful, particularly when there's a trend of comments. It really does drive the decisions we make. Both business decisions like the advertisers we have and how many ads we run, as well as content decisions, what kind of content we cover. Thank you so much to all of you who responded to the survey this year.

CORRECTIONS

All right, I got to do some corrections. This is one of the reasons I like blogging. If I screw up a blog, I got an email by 6:00 AM the morning it's published, fixing it telling me, “Hey, you made this error.” I go in, I fix it in 10 seconds. Most of you never even noticed there was an error. On the podcast, that's harder because the corrections don't run for like three, four or five weeks afterward just because of our normal production schedule that we do for these podcasts. And so, it's a little bit harder to do corrections. I apologize for that. But I think it's important that we get stuff right. And so, even if the correction doesn't come for a few weeks, it's important that it gets corrected.

All right. We had a discussion in episode 349. This was a question from Dr. C from the southeast who had kind of a unique situation he was in, where he was attracted to a practice and had been given a loan from that practice or from the hospital to the practice. And then he got a 1099-C and I told him mistakenly on the podcast that this was completely taxable income.

Well, that's not entirely true. I got into a long email exchange with another physician in a similar situation. And basically the 1099-C includes not only a taxable portion, a part that went to pay off student loans, but also a part that was also offset by business expenses in the practice. And so, it's not entirely true that that entire 1099-C that this doc got was taxable income. It turned out to be a really complicated issue. And I just wanted to get that correction out there.

If you're in that sort of a weird situation, you need to talk to your accountant, your lawyer, whatever. Figure out how much of that is taxable. Probably the amount that went toward your student loans, but not the amount that went toward paying your share of the practice expenses.

Okay. Another correction we need to do. We had a fellow that came on and it was unbelievable. I can't remember what episode it was, it was a few episodes ago, but it was a fellow that had access to four 403(b)s and I told him that he couldn't contribute more than the total annual contribution you're allowed to make for employee contributions. And that is actually not correct. You can contribute more than that $23,000 a year. What you can't do is deduct more than that $23,000 a year.

So, if you got to contribute $25,000 or $26,000 or $28,000 in total to all of those 403(b)s to get your entire match, you should do so because the match is more valuable than what you're losing on that deduction. I hope that's helpful. But I learned something new from that. It's amazing. 13 years of doing this, I'm still learning new stuff every month.

Okay, here's another thing. I had mentioned at one point on the podcast that really public service loan forgiveness is the only way to get tax free loan forgiveness. That's not entirely true. There are a few state programs that also give you tax free loan forgiveness. There is a program called PERLP, which also will not send you a 1099 when they forgive their loans to you.

And of course, for the next couple of years if you're able to get IDR forgiveness, and most people aren't because they haven't made their 20 or 25 years of payments. But if you're one of a small fraction of people that does qualify for IDR forgiveness, and I can't remember when the deadline is, but I think there's still a year or two left, that is also currently tax-free forgiveness. If you're starting an IDR forgiveness program now, don't expect that to be the case. In 20 years, maybe it will, maybe it won't. But keep that in mind.

USING A FAMILY FRIEND AS A FINANCIAL ADVISOR

Okay. I think we need to get into some of your questions here. Let's listen to a Speak Pipe question, and talk about investing with a family friend.

Speaker:
Hey Jim, thanks for all that you do. I was just wondering if you think there's ever a scenario where it would be worth investing with a family friend financial advisor within the community that's pretty well connected. Currently I invest all of our own 529s, Roth IRAs and brokerage accounts, but they've been asking to manage them. And I'm wondering if the kind of social capital that would be gained by using them, even if it's just a small amount I'm sending them each month, may be worth the investment and the loss in management fees. Thanks Jim.

Dr. Jim Dahle:
All right. The vast majority of the time, it is not a great idea to invest with a family member or a close friend. And there's a number of reasons why. The first reason why is that this advisor is at a firm where the main method of finding new investors, finding new clients, is hitting up your family and friends. They're probably not at a firm you want to do business with.

There is a very short list of firms, I think it's maybe up to six or seven firms right now, that I would never do business with. I would never send my friends there. Maybe I'd send my worst enemies there, but I would not send  a family member or friend there. And most of these are firms where there's a big focus on prospecting your family and friends to bring in new clients. So, that's one big problem with it.

The second big problem comes when you want to fire them. Super awkward, super awkward to fire your brother-in-law. Super awkward to fire your cousin or your cousin's father or whatever. I guess that's your uncle, your cousin's father. But anyway, it's not a great situation. Plus there's all this extra social pressure to invest with them to pay higher fees than maybe you otherwise would.

All of a sudden you're now mixing family with finance and that can cause a lot of problems. And if you owe somebody money in your family, they say Thanksgiving dinner doesn't taste the same when you owe money to someone sitting across the table from you. I just think it's a bad idea to mix most of the time.

Now, is there ever a scenario when I'd consider it? I'm sure there's some scenario I'd consider it but it's not usually because they have access to some sort of special investment. If that's the case, it's probably more of a sales technique than anything else. So, I'd use extreme caution when investing with a family friend or similar person.

As a general rule, you don't want to invest in things that people are coming to you and trying to get you to invest in. You want investments that are bought, not sold. And a lot of times if a family member is coming to you and pressuring you to buy it, that's not an investment you want to have anyway.

QUOTE OF THE DAY

Our quote of the day today comes from Warren Buffet who said, “Do not save what is left after spending. Instead spend what is left after saving.” Good advice. Sometimes they call that anti-budgetting. You put all the money in your retirement accounts first and then you just spend whatever's left in your checking account and then next month you do it all again. You don't have to track your spending, but you still make sure you have a 20% or whatever savings rate. It works just fine if that's how you want to manage your monthly income.

Let's take a question from Joe about annuities.

TAKING OUT A LOAN AGAINST AN ANNUITY

Joe:
Hi Jim, this is Joe in Florida. I'm a longtime listener of your podcast and also reader of your blog. I have a question about annuities. I know from reading your blog that annuities are generally something to be stayed away from, but unfortunately I do have a family member that purchased an annuity many years ago. They took a loan out on that annuity and now owe more interest than the annuity itself is worth. In short, they're going to default on this loan. I've done some research and I know the distribution they took on a loan is going to count as income. My question is what happens with the unpaid interest? I'm thinking it probably also will count as income, but I was just going to see what your thoughts were. Thanks Jim.

Dr. Jim Dahle:
Wow, that's a bummer. Borrowed money against the annuity and now you owe more than the annuity is worth. You would think there would be some sort of method in place to keep that from happening. Sometimes people get in trouble with a similar issue with universal life policies. As you get older, as you get into your 80s and 90s, the life insurance component is often larger than the investment return and you can actually get in trouble if you borrow too much money out of a universal life policy. I suppose the same thing can happen with an annuity.

And yes, basically everything just becomes taxable income at ordinary income tax rates when that defaults. I think you're going to end up paying taxes on all of it. Not only the amount you borrowed out of the annuity, but also the interest that's accumulated on that. I'm not 100% sure on that. It's probably worth running that by a tax professional, which I am not. But that's my understanding is that you have to pay ordinary income taxes on all of that default, and that includes the interest.

Now you've probably got some basis in there. If it's a non-qualified annuity, you wouldn't have to pay taxes on that, but otherwise certainly all of the earnings and anything above and beyond the earnings is going to be taxable income. So, sorry to hear about that situation.

This is why you really shouldn't invest in annuities. What an annuity should be used for is an additional way to spend your money in retirement, not a way to invest your money trying to save for retirement. If you buy the good annuities and we're talking about things like a single premium immediate annuity, this sort of thing can't happen. All you're doing is giving a lump sum of money to the insurance company and in exchange they're promising to pay you a certain amount of income every month until you die.

You're never going to have this problem with that sort of an annuity, but if you're investing in an annuity for decades, then you're borrowing money against it or whatever, you can obviously get into some trouble with that.

WHAT TO DO WITH EXTRA MOONLIGHTING MONEY AS A RESIDENT

Okay, let's take another question about moonlighting. Lots of you moonlight out there and I appreciate that. Moonlighting fills a lot of gaps where people pick up some extra call or they cover some shifts. Without that a lot of times there're not doctors out there when people need doctors. So, thanks for what you do and thanks for those of you who do it over time.

All right, let's take a listen to this question.

Brian:
Hey, Dr. Dahle, this is Brian. I am a PGY-2 internal medicine resident who will be doing either a chief resident year or a hospitalist year prior to applying to fellowship. Even if I do a chief year, I plan to do a significant amount of moonlighting at an attending rate to increase my income during that year. What advice do you have for me with my influx and income for this one year with regard to continuing to position for public service loan forgiveness, paying off debt, saving for retirement, et cetera? Thank you.

Dr. Jim Dahle:
Okay. This is a common situation for lots of docs where they have a year with higher income and then they go back into training. Not uncommon at all. What do you do with that year? Well, you try to make the smartest financial decisions you can, you take advantage of that higher income knowing that you're going back to a lower income.

Probably the most important thing to do is not to inflate your lifestyle. If you blow up your lifestyle during that year when you have an attending income, it's going to be really hard to go back to living on a fellow's salary. So, whatever you do, continue to live like a resident during that year. But that should give you a pretty good chunk of change to use.

So, how do you want to use it? Well, it depends. It depends on what your financial priorities are. Now, some things should be a pretty high priority. Let's say you have some 15% credit card debt. Yeah, go pay that off. That's a pretty good idea. Maybe you don't have an emergency fund yet. Well, you probably ought to save that up. What's a typical emergency fund for a resident? We're probably talking $10,000, $15,000, something like that. If you don't have that, get that saved up and put away somewhere safe.

Other priorities tend to be maxing out retirement accounts, paying off cars, or maybe you've got a car that's on its last legs that you need to replace. That's a great year to do that. It's probably not the time to be buying a house if you're going right back into fellowship. You're probably only in fellowship for one or two or three years. That's too short of a timeframe to be buying a house unless you know for sure you're going to stay there afterward. So, that's not necessarily a priority.

As far as student loans go, it comes down to your student loan plan. If you are one of those people that's just done a residency and you are probably working at the same institution for a year and then you're starting a fellowship. That might be seven years toward PSLF. If you've got a bunch of federal student loans, PSLF is probably a good option for you to stay on as faculty after that fellowship for three more years and get PSLF. But if that's not your plan, if you're planning to pay off your loans then making big payments on your student loans during that year you have an attending income is not a bad idea at all.

If you are trying to maximize your public service loan forgiveness, one way you can do that in that year that you otherwise have relatively high income is to maximize payments into tax deferred accounts. 401(k)s, 403(b)s. You're probably not going to qualify to do a deductible traditional IRA contribution, but maybe you have access to an HSA you can contribute to. All these things that keep your income lower so your IDR payments the next year are going to be lower.

The other thing to keep in mind is you only have to recertify your income for the student loan folks when they make you do it. But you can, if your income goes down, recertify your income sooner. As soon as you go back into fellowship and your income drops, you ought to go back in and recertify that income so you can have lower IDR payments, and thus more forgiven via PSLF. Because you don't want to spend that first year of your fellowship making student loan payments as though you have an attending income. That's going to suck up your entire income making those payments if you're not careful.

So, yes, plan for that year. You need to plan carefully. Consider all those things I discussed. If you have extra income, start saving for retirement like an attending would. But for most people, just having a big fat bag of cash going into fellowship knowing that your income is going to be lower for the next one to three years wouldn't be a bad idea either. Maybe buff up that short-term savings account a little more than you otherwise would.

SPONSOR

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All right, don't forget about our match week promo. For those of you who book a consult with Student Loan Advice. You don't have to be a student. You can be anybody that books that consult before the 19th and you'll get a free CFE 2023 course that includes the CME that comes with it. Tomorrow is our final day of the WCI Champions program. You can apply at whitecoatinvestor.com/champions.

Thanks for those of you who've been leaving us five star reviews and telling your friends about the podcast. Recent review came in from Emile who said, “Life changing podcast. This podcast and the corresponding White Coat Investor book has been easily the most influential podcast to my life and career of any I’ve heard. Strongly recommend for anyone who does not feel 100% comfortable with their finances.”

All right, it's been a long podcast. I hope it's been worthwhile to you. We had to do some corrections and I wanted to talk to those of you going through the match this week. But I hope it's been worthwhile for all of you.

Keep your head up, shoulders back. You've got this. We're here to help. We'll see you next time on the White Coat Investor podcast.

DISCLAIMER

The hosts of the White Coat Investor are not licensed accountants, attorneys, or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.