Home > Archive: May, 2007

Archive for May, 2007

Article about me in national magazine

May 28th, 2007 at 12:55 pm

I've referred to this article in a couple of posts and several people asked if they could read it. I was hesitant to post a direct link because of the personal info, full name, town, etc. So instead, I've copied it here and edited out my last name and exact location. I've also removed the source, but it was a national financial magazine geared toward those in the medical field.

Keep in mind that this article was published over 3 years ago and was written about 6 months before that, so it is nearly 4 years old. Our numbers are even better now as my student loans are gone, DD's 529 is over 21K, we are still driving the same 2 cars mentioned, our investments have nearly doubled to 390K and we now save 18-20% of income, not 13% like in the article.

How this young doctor keeps debt at bay

Mar 5, 2004

This 39-year-old physician has school debt, a house, and a family—yet he's squirreled away more than $200,000.

Family physician Steven G. is a happy camper.
He's 39, he's paid off most of his medical school debt, and his savings are growing. He's on track to have college funds and retirement savings ready when he needs them—and that's on a salary of about $105,000.
No, you won't find the G.s shopping at Neiman Marcus. "Some doctors drive fancier cars or live in bigger houses," says G.. "We live below our means. But we don't feel deprived. We enjoy today, but we prepare for tomorrow."
G. has come a long way. He graduated medical school in 1990 with about $102,000 in medical school debt. When he married two years later, the newlyweds' joint assets totaled about $6,000. Now they're up to about $200,000, not including their house, cars, or collectibles.
G., who started practicing in 1993, is an employee in a two-doctor urban office. He and wife, Marci, 40, a homemaker, and daughter, Jennifer, 8, live in a three-bedroom colonial in New Jersey.
Other than a $10,000 gift from G.'s mother toward their down payment, Steve and Marci have built their own stash. And G. predicts he'll be set for a comfortable retirement around age 62, after paying his daughter's college education.
Determined to wipe out med school debt
G. vowed to wipe out his debts early on. In 1994, after he'd been in practice for a year, his Health Education Assistance Loans totaled about $62,000. That year, he started making extra principal payments (an additional $450 a month on top of the $225 due). Then, in 1999, he took out a home equity loan of $28,000 to pay off his car and part of his student loans. Those HEAL loans are down to about $11,000 now. The home equity loan has a $25,700 balance and 15 years left. "Once the HEAL loans are paid off, I'll have a chunk of money to put toward the home equity loan," he says. "I'll pay off all my debt way ahead of schedule."
G. also began saving early. "We started putting $50 a month via automatic deposit into our first mutual fund in 1992, and increased that amount as my income rose," he says. The account is now worth about $22,000. The G.s have since added other funds and investment accounts, IRAs, and a 529 plan. Currently, 13 percent of G.'s gross pay goes toward savings and investments. Some large financial goals are looming, and the G.s aim to be prepared. "Our daughter will have a Bat Mitzvah in about five years, which we expect will cost about $20,000," says G.. "Five years later, she'll head for college."
Rather than take a loan or charge the expenses, G. plans to save for both the Bat Mitzvah and college. "The 529 plan we started last July now has about $3,000," he says. "Once my HEAL loans are paid off, I'll redirect some of that money into the 529. I expect to have about $75,000 by the time Jennifer starts college."
The G.s do use charge cards, but refuse to carry a balance. That keeps them from spending beyond their means, and from throwing away money on interest charges. "Credit cards can be the bane of existence for many people," he says. "We can't see spending first and then paying off; we save first, and then pay for what we want."
Despite their frugality, the G.s don't neglect charitable giving. "We donate money and volunteer our time and services to our synagogue, and support our local public television station and my undergraduate college," he says. They also donate old clothes, toys, books, and household items to Purple Heart Veterans, Goodwill, and other causes.
Taking frugality as a way of life
What's G.'s secret? Attitude.
"We are not into status items, and we're not upgrade happy; once we buy something we stay with it," he says. "But we don't feel like we're sacrificing. Marci and I enjoy our lifestyle."
The G.s will buy top quality items that are important to them. "We both love to cook, so we have Calphalon pots and pans, and KitchenAid appliances," he says. "We also have an extensive collection of Walt Disney memorabilia, and have spent thousands of dollars on it over the years. They're obviously not necessities. For things we don't consider a big deal, we buy something functional," he adds.
Take cars, for instance. The G.s own two that they bought used: a 1998 Toyota Camry LE and a 2000 Toyota Sienna LE minivan. "The Camry was a dealer demo, and had 11,000 miles on it when we bought it," he said. "I plan to keep it for another five to seven years." The minivan was two years old when they bought it last year.
"Our living room has had the same old furniture and IKEA bookshelves for the past 10 years, interspersed with some new pieces," he says. "Our house is nice, but it's not a mansion." The G.s intend to stay in their current home, although they may remodel or add on to create more space.
Finding bargains and getting the best prices also help the G.s' saving campaign. "We shop carefully," he says. "We buy some food items at Target because they're cheaper than at the supermarket. We'll pick up things at yard sales or thrift shops. Especially when my daughter was young. Why pay full price for overalls that she'll wear for three months, when you can get them for $1 at a thrift shop?"
The G.s take out novels from the library rather than buy them at bookstores, although they purchase reference books new. The family usually eats at home. "We prepare most meals from scratch. It's healthier and cheaper than dining out." And the G.s don't pay for any household help.
Vacations also reflect the G.s' stretch-your-dollar philosophy. They spend at least one week a year in Disney World, "but we stay at a $39-a-night motel two miles from the park, rather than on-site, where it could cost several times as much," he says. This year, they spent another week in Massachusetts. "We stayed at a Marriott using Rewards Points earned on our charge card."
But they also splurged. "One weekend last year, for our anniversary, we stayed at a luxury hotel in New York, ate at fancy restaurants, and went to a Broadway show," says G..
Steve and Marci have a crucial advantage: They have similar attitudes toward saving. "There's no way we could have accomplished what we did if one of us was a spender and the other a saver," he says. "We can't think of a single instance where either one of us wanted to blow money on something ridiculous and had to be talked out of it."
No financial advisers need apply
The G.s don't use a financial adviser. "We got a financial analysis done twice—in 1996 and in 2001—by our insurance broker," says G.. "The most recent one showed a very small projected shortfall for our anticipated retirement needs. But we identified the factors that will correct that gap in the near future. It mainly involved repaying my student loans and having that money for additional investing.
"I'm proud to say that our broker was quite impressed," adds G.. "In fact, he ended up telling me that I was overinsured, and he actually reduced my life insurance coverage by $250,000. It's not often you hear an insurance salesman telling you to buy less insurance!"
While the market slump of the past few years zapped G., he's not sweating. "The market correction had a big impact on paper, since we keep about 80 percent of our portfolio in equities," says G.. "But that decline came after a huge run-up, so we're still way ahead of where we started, and the recent recovery has erased much of the paper losses."
Thanks to the G.s' philosophy, they're certain they'll be comfortable later in life. "We figure that it will be much easier to live a modest lifestyle after retirement because we're not living extravagantly today," says Steve. "We hope to live at least as well, if not better—more travel, theater, fine dining. We want to enjoy retirement, not spend it struggling to get by on a tiny nest egg."

Where their money goes

2002 Total income $105,000
Income taxes $27,100
Property taxes 4,600
Pre-tax contributions to savings and investments 0

Total adjustments $31,700

Total spendable income: $73,300
Housing (including mortgage payments utilities, and maintenance) $16,000
Loan and debt repayment 7,000
After-tax contributions to savings and investments 14,400
Food and dining out 5,000
Insurance (Life and disability) 5,900
Autos (gas, repairs, insurance) 5,500
Vacations 6,000
Hobbies and entertainment 2,000
Medical and dental expenses 3,500
Clothing 1,800
Charitable contributions and gifts 3,500
Miscellaneous 2,700

Total expenditures $73,300

Top 5 Tips for the Casino

May 25th, 2007 at 12:40 am

1. Know the odds - The casino, or house, has a mathematical advantage in every game played in a casino, but that edge is not the same for every game, or even every bet within a given game. In a game like Keno, the house edge is 25-30%, meaning for every $100 you wager, the house can expect to win $25-$30. On the other end of the scale are the Craps and Blackjack tables where the house edge is just 0.6% and 0.8% respectively. So compared to that Keno game, at the Craps table, for every $100 you wager, the house can expect to win just $0.60. Where do Slot Machines fall? It depends, but isn't good in any case. The house edge on slots varies from about 3% to 25% depending on the machine. The worst table game odds can be found at the roulette table where the house edge is 5.25% (with double zeros).

2. Learn the game - The odds I just discussed apply only to players who are utilizing perfect strategy. An untrained blackjack player gives the casino more like a 20% edge, instead of the 0.8% edge from a knowledgeable player. There are numerous websites and books at your local library or bookstore where you can study the games (craps or blackjack hopefully) and learn basic strategy to maximize your odds and minimize the house advantage. There are also many online casinos where you can play for free to practice your skills before setting foot in a real casino wagering real money.

3. Establish your limits - Other than learning the game, the most important things to decide before you start playing are how much you are willing to lose and at what point you will stop if you are winning. Many people do the first one and forget to do the second. As a result, when they are doing well and find themselves ahead, they don't stop playing. Instead, they keep on wagering and, inevitably, end up losing money when they could have walked away ahead had they set, and stuck to, a winning limit, not just a losing limit.

4. Get a Player's Club card - On your first visit to a casino, stop at the Promotions desk and sign up for their Player's Club. It goes by a different name at every casino. You will get a card with a magnetic strip. You then insert that card in any slot or video poker machine or hand it to the pit boss at any table game. Your play will be monitored and recorded and you will earn points toward comps, or complimentary gifts. Comps can range from free parking in the casino garage to free meals to major stuff like TVs, stereos or free vacations. Contrary to common belief (I was surprised to learn this myself) but comps are not reserved only for the high rollers. After just my 2nd trip to one casino this year, wagering just $300 each trip (and winning several hundred one of those times) I received offers for free hotel stays at that location. It definitely pays to get the card and to stay loyal to one casino (or family of casinos).

5. Gambling is entertainment, not investing - Since this is a personal finance site, I should point this out. Money that you take to the casino should come out of your Entertainment budget or envelope. This should be money that isn't needed for anything important like rent or college or retirement. If you win, you can certainly put some extra money toward those things. If you lose, however, you don't want to come up short where it really matters.

Go and play and have fun and GOOD LUCK!

Top 10 Reasons for an Annual Physical

May 23rd, 2007 at 08:19 pm

Top 10 Reasons for an Annual Physical

“I feel fine.”
“I only go to the doctor when I’m sick.”
“Doctors only recommend physicals to make more money.”

People have all kinds of excuses for not getting regular check-ups. Here are 10 reasons why you should. For the record, I’m a board certified family practice physician in practice for 14 years.

1. High blood pressure: Often called “the silent killer”, high blood pressure usually causes no symptoms at all but greatly increases your risk of having a heart attack, a stroke, kidney damage and other serious health problems. Millions of people have high blood pressure and don’t know it until something bad happens. Seeing your doctor annually and getting your BP checked can identify the problem before it harms you.

2. Diabetes: Like high blood pressure, high blood sugar can have no symptoms until it is severe, but will still be damaging your body even though you can’t feel it. An annual sugar test can identify this hidden disease. This is especially important if you have a family history of diabetes or you are overweight. Women who had elevated sugar during pregnancy are also at higher risk of developing diabetes later in life and should be regularly screened.

3. Cholesterol: Same story. No symptoms. Unless you get a simple blood test, you don’t know your cholesterol is high and hard at work clogging your arteries and setting you up for a heart attack or stroke.

4. Cancer screening: Many common cancers can be checked for with simple tests as part of your annual physical. In the office, we can screen for breast, colon, skin, cervical and prostate cancers by exam, blood test, Pap smear and sending you for a mammogram. Patients 50 and older should also get a colonoscopy.

5. Vision: It never fails to amaze me how many patients come for physicals and can barely read the eye chart. I wonder how many auto accidents are due to drivers who just can’t see what is happening around them.

6. Vaccines: You aren’t all done with shots once you turn 5 years old. Adults need shots, too. Tetanus boosters, flu shots, pneumonia vaccines, pertussis boosters, hepatitis B, etc. This is particularly important if you are planning any foreign travel, but even if you aren’t. Speaking of travel, you should always check with your doctor well in advance of a trip to see if any special vaccines are needed (typhoid, yellow fever, malaria medication, etc.).

7. Obesity: Many people never step on a scale outside of their doctor’s office. As a result, a lot of folks seem truly surprised when they come in, get weighed, and see how many pounds they’ve gained. Often, just seeing that number motivates them to make some changes, start eating better and get back to their exercise routine. Plus, it gives me an opportunity to discuss their weight and make suggestions about how to address it.

8. Smoking: Studies have shown that patients whose doctors counsel them to quit are more likely to quit. If you smoke, hopefully your doctor will raise the subject during your annual exam and talk to you about quitting. There are various methods to help you quit that your doctor can prescribe if you are ready and willing to make a quitting attempt.

9. Thyroid disease: This is a common problem, particularly in women. There are symptoms, but many of them are very general and people attribute them to other things: fatigue, weight gain, dry skin, changes in the menstrual cycle. This is another case where a simple blood test can identify the true cause of those symptoms and your doctor can prescribe medication to correct the problem.

10. Anemia: Again, something like thyroid disease that has symptoms that people often attribute to something else. Fatigue, decreased exercise endurance, headaches – all things that many of us feel from time to time. That annual blood test can determine if the underlying cause is a low blood count. If so, your doctor can work with you to find out why you are anemic. The cause could be something simple and benign or something much more serious. Catching it early could make a big difference in the outcome.

Garage sale report

May 19th, 2007 at 11:19 pm

We had our garage sale today. The weather forecast was iffy but wrong and it turned out to be a beautiful day.

We woke at 5am to start setting up. First sale was at 6:50am and we were pretty busy almost the entire morning. We started packing up just after 2:00pm because we were pretty much done and the weather was starting to turn. We didn't want it to start raining while everything was still out.

Our goal for this sale was to get rid of stuff, not make big bucks. With that in mind, it was very successful. We sold lots of stuff, including some larger items that were taking up a lot of space in our garage. Usually, we are much firmer on our pricing but this time we took almost any offer on things.

Total for the day was about $250. We spent $30 for the newspaper ad so netted about $220. Not a lot of money considering the amount of work involved, but we're satisfied and, like I said, we were more focused on freeing up garage space which we did nicely.

My ebay 10th Anniversary!

May 15th, 2007 at 12:34 pm

I registered for ebay on May 15, 1997, 10 years ago today.

My first sale was a pre-opening commemorative guide to Disney-MGM Studios Theme Park which I think went for about $17.00. My most recent sale was 2 days ago for a lot of 50 promotional pens for $15.50 to a woman in England. Along the way, I've logged sales to every state and most major countries.

My best month I had sales of just over $2,600. My best year I had sales of over $13,000.

For a few months in 2000, I did ebay full-time after leaving my old job.

At my peak, I was running 100 active auctions at all times. Back then, auctions ran for 10 days and I would list 10 new items every day.

I currently sell pretty casually, 16 listings in the last 60 days, and that was after a very extended period of not selling at all. I just started back recently, but I'm looking forward to many more years of active selling.

Just placed Garage Sale ad

May 13th, 2007 at 11:36 pm

I just e-mailed the ad for our garage sale next Saturday to our local paper. I brought up the old signs from the basement and just need to change the date on them.

All the stuff we will be selling is already packed up and ready to go in the garage. In fact, we have tons more stuff than we can possibly put out in one day. My plan is to have this sale and then have another at the beginning of September. Anything that doesn't sell next week goes to Goodwill, NOT back into the garage. It is time to clear this stuff out once and for all, one way or another.

Now we just have to hope for good weather.

Selling free stuff on ebay for $$

May 12th, 2007 at 03:18 pm

Nothing beats using ebay to sell stuff that you've gotten for free. No complaints about fees and commissions when anything you earn is pure profit.

I recently had 2 auctions close for a total of $28.02. And I've got 2 active auctions for identical items that are up to $14.21 so far. That's at least $42.23 (minus fees) just for keeping my eyes open to opportunity and taking advantage of the situation.

The best part is that what I'm selling is something that I have ongoing access to, though in lesser quantities. Even so, I can accumulate enough items every month or so to put up another auction. Even $30/month is $360/year for doing basically nothing. That sounds good to me.

Home repair success

May 12th, 2007 at 02:53 pm

Sometimes it is the simple things that excite us.

About a year ago, my daughter accidentally swung the front storm door open a bit too far and stretched the hinges out of place. Ever since then, the door wasn't quite right but we hardly ever use it as we enter through our garage, so I never did anything about it.

Then a couple of weeks ago one of the spring closers broke. Now the door really wasn't right as it was hanging down a bit and not flush with the frame. To close it, you had to lift up on the handle to get it back in the frame.

Well, I finally went to Home Depot and bought a new closer. That fixed one problem but not the hinge problem. I was able to fix that with a hammer and a nail punch to tap the hinge plate back into shape.

Now the door is good as new and it cost me all of $10.50. And I had been procrastinating because I really thought the door was trashed and I'd have to replace it for a few hundred dollars. Wasn't I pleasantly surprised?

2 new cell phones today

May 5th, 2007 at 08:36 pm

We took the plunge and bought DD her first cell phone. We've been researching it for a few weeks. We checked the prepaid options but finally decided to add a line to our Cingular/ATT family plan. On the surface, the prepaid option looked cheaper. However, with her on our plan, calls she makes to our cell phones (or us to hers) are free. Also, any friends she calls who are on the Cingular/ATT network would also be free.

We never use all of our plan minutes and, in fact, have about 4,000 rollover minutes stored. So even if, with her, we now use all of our plan minutes, we've still got a cushion of rollover minutes so we wouldn't generate any additional charges.

We did opt for the phone insurance for now until she gets used to carrying and caring for the phone.

Of course, while we were there, DW started looking at all the nice new phones. Her phone is almost 3 years old. I upgraded last year after losing my phone. The clerk said she was eligible for a free upgrade - just had to pay for the new phone. She looked at the options and liked one that was $29.99. We decided that would be her Mother's Day gift. She's been wanting a new phone for quite a while. We rarely splurge like that or upgrade things that are still working okay, so it was actually a hard decision, but she's happy to have a nice new phone with more modern features.