GUEST POST: Money on the (Examination) Table

March 27, 2013

It’s Wednesday, which means it must be time for another guest post from the mysterious MD. (Check out his post from last week if you haven’t witnessed his genius yet.) Now read:

Grant_DeVolson_Wood_-_American_Gothic

 

Dear CYC principals,

To the bewilderment of most Canadians I chat with on a daily basis, I like the U.S. enough to move to and call it home. Don’t get me wrong. The standard of living in Canada is great, it’s uniformly safe, and physician salaries are generally higher. For entirely non-financial reasons that differ from yours, I want to make the switch. The long winters just get to me, people are passionately indifferent about everything, and there’s a general lack of the sort of entrepreneurial spirit I sensed when I lived in the United States. Plus, I’m still bitter that Quebecers didn’t separate. At 5:00 most mornings, all I want to do is chew quietly and stare at an English-only cereal box. Is that too much to ask? 

I will be building U.S. credit from scratch beginning July 1, 2013.

My (flawless) Canadian credit rating doesn’t directly transfer. Bummer. I was hoping to use it for leverage and become wealthy, like Paula Pant at Afford Anything does. The whole process is going to be a new venture. As outlined in a previous post, I’ll bring home close to the median U.S. household income for the next 3 years of residency.

That’s enough filler. I’ll cut to the chase. 

I’ve been mulling over the idea for a while, but I needed to find the right capitalists. Confident that the principals of CYC are up to the task, I have an opportunity for your corporation:

Lend me $150,000 to transfer a portion of my medical school debt once I move to the U.S. for residency training.

Transferring a portion of my student loans to a U.S. lender is daunting. I don’t have the contacts to find alternative credit at comparable rates.

Most private U.S. lenders offer 7-9% and are surprised when I refuse and tell them they’re missing an opportunity. They probably don’t have a printed form titled “Financially Literate Young Doctor from Canada Applying for U.S. Credit Right Out of the Gate.” No one answering the 1-800 numbers understands what I’m asking for, because it’s unconventional. Credit unions are rumored to be the place to go if you want an “alternative approach,” but I’m sick of dealing with mid-level managers who don’t have any independent decision-making capacity within their organizations.

I’m offering you a chance to be that lender.

Here’s the plan: One year from my residency start date on July 1, 2013, I’m going to send you an e-mail.

I’ll include a listing of my earnings and expenditures for 1 year. I will have $5,000 in liquid assets, I will have a zero credit card balance (naturally), and I’ll include my monthly cash flows (including pay stubs) to prove that I can properly allocate resources and control my cash. I’ll be ashamed if I get a large income tax refund, because I don’t lend my money interest-free. Nor should any of your readers.

This is my financial situation as of March 2013:

Current assets:

M.D. Augmented by an uncommonly strong work ethic. Professional and personal references not required. They’ve been rendered unnecessary by a few pieces of paper. In this case, official copies of USMLE scores in comparison to the national mean, given a standard deviation. Medical school (and most things in life) requires far more hard work than raw mental horsepower. I’m not that smart. You read how long it took me to figure out that my student debt was leverage, and not a thing that goes “bump” in the night.

A car. I don’t count my car as an asset since it’s not directly involved in making me money. But that’s me. You don’t seem like the accounting type, but if you are, my wife owns a nondescript one. We share. Ask me sometime (for your readers’ benefit) why she’s the registered owner and listed as the primary driver.

An emergency fund. Just kidding. No one who actually understands money has one.

 

Current liabilities:

($37,380) in Canadian federal student loans. In case you thought your government cornered the market on giving away money beginning January 2008, our government does too. Thanks, Harper. The turtleneck sweaters you wear underneath blazers to meet international leaders really send the signal that Canadians should be taken seriously. Or is that a dickey?

($141,995.19) on a student line of credit with a $150,000 limit. This is what I’m looking to transfer.

($38,026.00) on another student line of credit.

Net worth:

($217,401.19)

Alternatively, you’ll see the investment opportunity right now and take the money off the table and put it in your pocket. Then, write a blog about how the CYC principals put their money where their mouth is, and float a $150,000 loan at a fixed rate and term I’m willing to negotiate. We can chat about the specifics from now until when I start working in July. I won’t pay a dime in origination fees, though, since I found you. I might even consult my crude compatriot for advice while we hammer out the details, if he would only stop wasting our time objectifying women on his blog.

Our back-and-forth negotiation can occupy the pages of your outstanding blog to educate your readers how to think and invest like a wealthy person, and not like a debt slave. Over the next few years, you can periodically post about our arrangement, and create a case-study on what’s possible through hard work and prudent financial decisions. In doing so, you may find yourself a collective candidate for Financial Retard of the Month and stop flogging this dead horse. You may also find MD to be an additional candidate for Man of the Year and delay honoring Wes Welker until next year. He’s further proof that hardworking people who refuse to accept mediocrity can get ahead. Is that in your book? If it isn’t, it should be.

Win-win-win. I’m including your readers here.

Another idea: Have your readers cast a vote on your options once they’re fully fleshed out if you really want to know how intelligent they are. 

I’ll fully submit to the process of due diligence, and I’ll send you the pertinent information once things have been negotiated. I can even prove I completed my undergraduate studies debt-free, like our new heroes Steve Boedefeld and Zack Tolmie. Remember them*?

Then, down the road, we’ll go into business together.

I’ll find creditworthy medical students and residents and design a better risk model than most private lenders use. You source the capital, and I’ll broker the deals. I love my day job, but why not apply a little effort and put our money to work for us? If you know someone else who’s interested and would add value to the venture, let them in. 

If none of these options appeal to you and your hard-earned capital is better placed elsewhere, your readers would benefit from reading your rationale.

While you evaluate the proposal from my perspective, I’ll do the same and evaluate it from yours. That’s great advice I read somewhere.

So you know I mean business, I’ve attached a picture of my wife and me.

 

*I mean it. These guys are (sadly) modern-day heroes.

Filed Under: Guest Posts, Healthy Living

GUEST POST: We’re Off to Off the Wizard

March 20, 2013

Last week we ran a guest post from MD, an…MD who exemplifies beautifully what we preach here at Control Your Cash: buy assets, sell liabilities, go into debt but only for economically viable reasons. (A humanities degree is not an economically viable reason.) Today he’s back, this time in epistolary form. His viewpoint is similar but not identical to ours, which is yet another reason why we’re running his posts. Now excuse us as we remove WebMD from our bookmarks:

 

This handsome fella is Dr. Oz, right?

This handsome fella is Dr. Oz, right?

Dear CYC principals,

I have to admit, writing the last guest post took far more time than it should have. I’m flattered you accepted the post, really. Although good writing does take a long time, I have another excuse, I promise. I haven’t written a full page of prose in years. Besides, my natural style is illegible point form, and no, I haven’t heard that joke about poor physician handwriting. Nor the one aboot being a passive Canadian.  

I don’t have a Facebook or Twitter account, so I can’t (and wouldn’t) read any of the comments about my previous article. I just don’t find either service to be useful. I like the approach you take to reader comments, too. Yes, I understand the irony, given that I’m writing anonymously. And yes, that was a pre-emptive strike. When the overwhelming urge to see pictures of my snotty-nosed nieces and nephews rears its bubbly head, I use my wife’s Facebook account. For most communication, I use e-mail or pick up the phone. That makes me old school, I know. And surprisingly productive.

I’m a medical rookie chomping at the bit, wading into a swamp of old doctors, new ideas, and an internet-savvy patient population.¹ Most intelligent forums on medical issues are policed by doctors with a Bostonian pedigree.² Few doctors write well enough to keep readers awake and it makes me feel good that since you’re still reading this, I’m unique. CYC seems to do a reasonable job of separating the wheat from the chaff. Continue to do that. The last thing this world needs is another terrible personal finance blog. Not that anyone is asking me to, but I won’t stop practicing medicine to write, it’s that enjoyable. Plus, I leveraged debt to finance my education and I’ll work doing what I trained to do. It’s silly to borrow for school unless you do.

The topics in medicine and personal finance that share common ground are legion. Here are two: Gastric Bypass Should Be Mandated for Every “Disabled” Medicaid Recipient ³, and There Should Be a Scale at the Airport Check-In Counter for You, Not Your Bags. I once casually suggested the former cost-cutting solution to my attending bariatric surgeon as a medical student and spent the next 4 hours retracting a 150-pound pannus. I was never really sure where on the patient’s body it originated. Are you also tired of paying for other people’s gluttony and sloth?

As rewarding as helping these patients is, preventable illnesses like obesity (and sloppy debt) are the product of ignorance and poor education, both of which I strive to change.

Let’s start with this comparison: Too many people swallow Dr. Mehmet Oz’s pills in the same way they swallow Suze Orman’s. You’ve interviewed her already, and Dr. Oz is a comparable menace to people’s health (and net worth). It’s a farce. Patients bring his pseudoscientific medical advice into the office all the time and ask questions about it. For example: “I sit on the couch all day eating pork rinds watching TV and Dr. Oz says to wash my face in my cat’s urine for its antioxidant properties, what do you think?” A cursory glance at his Wikipedia page is helpful, and more authoritative than most of the sources he uses to back up his claims.

I don’t know how to rank his broad skill set in order of aptitude, but I’ll give it a shot. Since I’ve never seen him operate, I owe him the professional courtesy of omitting “cardiothoracic surgeon” from my ranking. That he’s a good one, I have little doubt. It’s what he went to school for. At one of those floridly consanguineous ones, too.

In order, these are his remaining claims to fame: TV personality > American > Turk > author > source of quality medical advice. Why do people listen to this wizard? Probably for the same reason they listen to his Oracle at Elcaro Studios.⁴ Someone’s printing money in Chicago, and it’s not Al Capone.

Here’s my first piece of official medical advice for your blog: If your doctor dresses like an investment banker and is in cahoots with Oprah, find another doctor. When I see Dr. Oz on TV before I have a chance to change the channel, I probably react in an analogous fashion to when you’re confronted with the financial garbage submitted to your weekly Carnival of Wealth.

The issues with the medical system (both mine and the soon-to-be-mine) provide a great platform for repeating the same advice you give at every available opportunity at CYC: buy assets and sell liabilities. Those medical assets (among others) are your ideal body weight, your ideal blood pressure, and your age-specific preventative screening tests. It’s the application of such simple principles, compounded over time, that will make (and save) thousands. Billions on the national scale, literally. 

Profit is an important motivator, and has been responsible for the transfer of vast amounts of wealth from the insured to the insurers (those assessing and pooling risk). As a general rule, those who bear risk are rewarded. This has made health insurance companies so profitable that the current elected government stepped in to cap their profits and disrupt free markets. All at the behest of the 99%, or the 47%, but who’s counting? 

The passage of the Affordable Care Act (ACA) attempts to correct a product of unbridled capitalism and greed: the unacceptable reality of lifelong coverage limits for an insured 3 year-old who develops leukemia. Until the ACA was passed into law, this was commonplace and legal. This is an instance of where you should stop complaining about The Man’s existence. Seriously. I’m sure your readers understand there is a role for governments, albeit small ones. Denial of coverage based on preexisting conditions, I can live with.

(Let me clarify: I don’t feel sorry for people who don’t buy adequate health insurance. The onus is on them to find coverage [and read the contract] before they need it, not after. Still, some unfortunate kids have parents who cover them adequately, only to find at age 12 that the leukemia treatments from 9 years earlier ate up the lifetime limit. Leukemia returns, and bankruptcy ensues. Call me a softie, but we can do better.)

Advise your readers that instead of throwing feces across the aisle like the chimps in Congress, they should understand what has actually been proposed by the ACA, and what has been implemented thus far. They’ll be glad they did. They may also begin to realize just how much the media warps the facts for political gain, on the off chance they’re not reading real journalism.

While we’re drawing comparisons, concepts like “herd immunity” apply to both medicine and finance, specifically to the realm of insurance. It almost sounds like a form of socialism, and yeah, those needles sometimes hurt. Your intelligent readers will be able to figure it out; the others will have to wait for a future guest post. That reminds me, if your readers haven’t done so already, they should have their children vaccinated.⁶ Yesterday.

 

¹ Do not bring the results of a Google search containing your physical complaints to your physician. You’re wasting everyone’s time. There’s a reason an M.D. takes 4 years to obtain. Listen to CYC and hire professionals. Good ones, avoiding wizards at all costs.

² A prime example of one such publication can be found here. For those who loathe the sort and have spare time, please revive this after you read this and this.

³ There are good studies from Scandinavia that indicate this could save billions of taxpayer dollars.

⁴ I’m so proud of you for putting that together.

⁵ Those colored tabs at the top of the page have the potential to save you thousands of dollars and hours of frustration. As a special bonus, see if you can find the best hospital in your area. I might be there.

⁶ See and adhere to the guidelines at the right side of the web page, under “For Everyone”.

Filed Under: Guest Posts, Healthy Living Tagged With:

GUEST POST: Take (One Of The) Two And Call Me In The Morning

March 13, 2013
NOTE: Last week we received the following post, unsolicited, from a physician and avid reader who asked to remain anonymous. We agreed that it was so far beyond fantastic, we weren’t sure how to react.
You need to understand: people submit multiple guest posts to us every week, almost all of them garbage. This one was beautifully written, concise, loaded with practical if uncomfortable advice, and he even annotated it. Finally, someone who took our guest post guidelines to heart. With no further introduction, here it is:

 

empty lab coat

 

My father-in-law is a brilliant farmer with no post-secondary education. I always wondered why he didn’t blink when I told him 4 years ago how much medical school was going to cost. He finances $350,000 tractors and $500,000 combines with debt, and I never understood why. Now I do. $150,000 in student debt at 3% to finance an M.D. is a leveraged investment made to acquire an asset. As such, it’s not a liability.

Wait a second, guest poster/avid CYC reader/slow-learning doctor. I thought guest posts on CYC are rare, and I thought guest authors had to be adamant about avoiding student debt.

You’re right; they are rare. And no, you don’t have to shun student debt before you can author a guest post on CYC. You must, however, understand its role in creating wealth. The CYC principals do. So do most wealthy people who own educational assets. This makes CYC unique in a sea of debt-hating bloggers who incessantly try to convince you that life’s number one priority is to flog your debt into submission. Remain calm, ignore them, and read on.

If you’re thinking about borrowing money to attend an institution that charges (insert average in-state tuition here) to learn (insert pointless degree here), stop. Especially if you were planning on using a government hand-out under the guise of a loan to get drunk and attend your classes hung-over in the back row. Educational choices are an opportunity to apply CYC’s fundamentals: analyze your options and divide them into distinct categories – assets and liabilities. Buy one of the two, sell the other, and call me in the morning.

Sheeple all over America are being fed the same rotten advice by the graying shepherd: “Nothing is going to have as great an impact on your success in life as your education,” and “the best job qualification you can have is a college degree or advanced training.” This sounds like a government with a pathological urge to over-spend on non-assets. It gets better. Without commenting on what type of college graduates should be trained, Mr. Obama wants to “see America have the highest proportion of college graduates in the world” by the end of the decade. That most government student loans don’t incorporate criteria regarding your proposed field of study exposes the truth that Uncle Sam is in the business of giving away money to students, not lending it. As young Americans are herded towards this 2020 target, we need individuals in political office like this financial stud, who was scorned for his modest choice in vehicle by a journalistic coward. Vote for men (and women) like this. The political momentum behind a federal bailout for over-extended student debtors is gathering steam. You can already hear the shouts across the crowded collegiate bar: “I’ve got this round boys, Obama’s going to pay for it anyway.” It’s funny, because it’s true. And millions of Americans bleat a version of the same thing every day.

Take, for example, the college-educated car-scrubber-turned-paper-runner Landon Crider, or eager-beaver Megan Parker, both interviewed in a recent New York Times article narrating the tragic plight of the overeducated. Instead of reading CYC and heeding Kincaid’s and McFarlane’s pleas, Ms. Parker chose to borrow $100,000 to land a job as – wait for it – a receptionist, commanding an annual salary of $37,000. Working as a receptionist from 9-5 is a perfectly admirable way to put food on the table. However, going into 6-figure debt for the opportunity to answer phones for lawyers indicates that Ms. Parker savors the life of a wage-slave (commonly referred to as “employee” by most 21st-century masters). Her boss understands this, and uses it to his advantage (good for him). In the interview, he said “‘College graduates are just more career-oriented.’” Allow me to translate: “They’ll work for far less money than they should to pursue the noble goal of ‘getting ahead.’ Plus, all my employees have a massive student debt load so they can’t quit.’” Even a journalist picked up on the problem with a degree-only law firm, but she still wrote about her subjects’ poor choices with a tone that suggests the predicament is a human rights violation.¹ Guess who she voted for? Not this guy.

Contrary to what you’ve been told, education is not an asset as a stand-alone entity. Shares of a whale-oil company ceased to be assets when light-bulbs began illuminating streets and homes. For an education to be an asset (and thus an attractive investment), it must exist in a market that gives it tangible value. This guarantees a stream of cash flows related to the initial investment. All other measures of educational value are in terms of personal fulfillment. If you’re searching for answers to ultimate questions in a class called Big Questions² with 127 other budding debt-slaves, stop calling it an “investment” and don’t borrow money to do it. Besides, you’ll only find true fulfillment in other, more Messianic sources. In your undergraduate years, for example, major in Biochemistry and Biomedical Sciences³ or something else useful. You remain free to minor in Music Cognition, Communications Studies, or whatever else you want. Heck, pull out all the stops and take an elective in Personal Finance instead of Philosophies of War and Peace.

To really go against the grain, try the seemingly foreign concepts of working and saving for things. If Steve Boedefeld and Zack Tolmie did it, you can too. According to the author of the article, not borrowing money to acquire liabilities is enough of an accomplishment to be distinguished as a “rare species.” Congratulations, you two. Be like Steve and Zack. Buck the trend and complete your undergraduate studies debt-free.

That sounds like a lot of work.

Right. Most things worth having are.

Every course offering in your college’s academic calendar is not a ticket to prosperity. Search for a program that satisfies this basic investment criterion before you borrow to pay for it: it must result in a positive return on investment for the useful life of the asset. In other words, find out if there are jobs in your field of interest that will pay off your debt before you retire (or default). Such analysis is mandatory before leveraging debt. Make time to read and understand the difference between an intelligent choice in higher education and a wasteful one by digesting what CYC thinks about my fellow Canadian or about this money pit.

Based on data collected by the American Association of Medical Colleges, U.S. medical school graduates carry an average of $166,750 in student debt. Following 4 years of medical school, Graduate Medical Education prepares residents for independent practice and lasts 3-7 years, depending on specialty choice. The GME training salaries are far less than most people think: resident physicians earn a median salary of $49,651 in their first year of residency. For the customary (and recently-capped) 80-hour work week, it works out to approximately $12.67 per hour ($49,651 per year/[80 hours per week × 49 weeks per work year]). Remember that, the next time you decide to spit on, swear at, and berate us for being part of the 1%.⁴ After residency, most physicians typically earn well over $150,000 per year for the remainder of their careers doing what they went to school to do. Plus, it’s a rewarding job that contributes to humanity and advances civilization.

You’re just fortunate that you’ve found a job you like that pays well.

You’re right, I am extremely fortunate. But I don’t like my job; I love my job. You’re indignant, I understand. That’s because you’re currently pursuing a Women’s Studies major to work beside Ms. Parker. It’s not too late to identify a different field with an attractive return, and switch. Don’t drown in sunk costs. If you’re weighing your options, your job before borrowing to finance an education is to discern an asset from a liability. Don’t avoid debt as a matter of principle.

If this sounds like the same advice CYC gives on regarding all prospective investments, it is. Why should your education be any different?

Keep reading this blog. Buy the book.

—————————————

¹ The author of the article even challenges her readers to “consider” in the second paragraph. For long-time CYC readers, you know why this is a no-no. For new CYC readers, don’t consider reading about this weak word, read all about this weak word here.

² The courses of study referenced in this post are actually current undergraduate courses listed by my college in the academic calendar.

³ Your guest author’s course of undergraduate study. This serves as an example, not as a template. Market conditions change and vary regionally. Please decipher the basic premise.

⁴ Common on the floors of academic teaching hospitals. We usually respond with “Thank you.” Less often, we respond with an order to switch from orally to rectally administered medication, because, well, the pen is mightier than the sword.

Filed Under: Education, Guest Posts, Healthy Living Tagged With: , , , , ,
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