The Sunday Best (7/26/2020) – Physician on FIRE

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The Sunday Best is a collection of articles I’ve curated from the furthest reaches of the internet for your reading pleasure.

Every week, I scan hundreds of headlines, read dozens of posts, and bring you the best of the best to save you time and mental energy.

Fidelity FIRE

Financial Independence (FI) is a primary focus, but it’s an awfully broad topic. I tend to approach FI and early retirement from a fatFIRE perspective and through the lens of a physician, so expect to see those biases in the selected articles.

Related topics that have become recurrent themes include early retirement, selective frugality, tax issues, travel, physician issues, and of course, investing.

For more great articles, take a peek at The Sunday Best Archives. Now let’s get to the best… The Sunday Best!

 

 

 

He beat me to it by about 16 months. An update on how one active investor has been managing his life and money during some turbulent times. From Stop Ironing Shirts, a Fifteen Months Into Early Retirement Q&A.

 

We bounced back rapidly and nearly completely from that recent market downturn, but I doubt the heightened volatility is behind us. Fred Leamnson of Your Money Geek helps guide us through the uncertainty. 5 Ways to Protect Your Investment Portfolio in a Downturn.

 

One way to protect a portion of your portfolio is to keep assets in your “security bucket.” Passive Income MD shares a list of assets that qualify. Asset Allocation (Part 1): The Security Bucket

 

If you had $3 Million, how would you invest it? Would real estate be a part of that portfolio? Leif from Five Year Fire Escape says “yes.” How to invest 3 million dollars – The BEST phase of your life.

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Our friend living A Purple Life (think red pill and blue pill) has nowhere near $5 Million, but living frugally, she feels she’s got all she needs. Congrats are in order! $500,000 at 30: I Hit My FIRE Number!

 

She saves money in a lot of different ways. Patients and physicians alike have found that they can save money by utilizing telehealth services. How Telemedicine Can Save You and Your Practice Money.

 

Are you struggling to save as much money as you’d like to be saving? Wealthy Mom MD has some tips for you in both blog and podcast form. Dr. Bonnie Koo explains How to Stop Overspending.

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Just as you can change your spending habits, you can also change up your career. Dr. B.C. Krygowski dishes on dozens of doctors who have done so. Physicians in Transition: Doctors Who Successfully Reinvented Themselves (A Book Review).

 

Are the physicians who change careers or retiring early to blame for a physician shortage? The Doctor Weighs In with a look at the bottleneck at the beginning of the physicians’ journey. Does the US Have a Physician Shortage or a Physician Training Shortage?

 

You know what almost rhymes with shortage? Mortgage. And Mortgage Rates are Insanely Low, reports Ben Carlson of A Wealth of Common Sense. Now would be a great time to consider refinancing your balance with any of our recommended mortgage lenders in your state.

 

Would you pay down your mortgage if you could with these insanely low rates? One couple at Making Sense of Cents considers the pros and cons and ultimately makes the choice that feels right for them. Pay off our mortgage or not? A glimpse into a couple’s final decision.

 

I was asked for some of my favorite quotes, purchases, hobbies and more in this wide-ranging interview. Band of Bloggers: a Physician on FIRE Q&A.

 

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I’m Still Not Considering a Mortgage

 

Mortgage rates, as outlined above, are incredibly low right now. If one were in the market for a new home, which we now are, it would seem to make a lot of sense to plan on taking a mortgage out for that next home purchase.

Borrow money at 2.5%, keep our money invested at a higher return, and pocket the difference. Sounds pretty straightforward, and for most, it’s the right decision.

Yet, we are planning to pay cash.

Why?

 

Cash is King

One, cash is king. With low supply and high demand, the housing market is very competitive in many markets this year. Back in March, I was certain it would be the opposite, and I’m guessing it will cool off over the next year, but there’s no way to know for sure. I’ve been wrong before, obviously.

A cash offer on a home is obviously going to be preferred by a seller. There’s no risk of the sale falling through due to failure of the buyer to secure a mortgage loan or from a home appraising too low for the bank to accept. Being able to make a cash offer gives us an advantage over most other potential homebuyers.

 

Simplicity

Two, it makes the process simpler. There is a lot of paperwork involved in qualifying for and applying for a mortgage. I’ve gotten several mortgages in the past, and there were a lot of hoops to jump through and fingers to cross when the appraisal comes in.

Now that we’ve had no W-2 income for nearly a year, I can only imagine that the process would be that much more difficult. With cash, you just find out what you owe at closing and pay it.

 

Cost Savings

Three, closing costs will be significantly reduced without a mortgage. The average closing costs range from 2% to 5% of the purchase price of a home, according to Zillow.com.  On a $400,000 home, that’s $8,000 to $20,000, and a number of those costs can be attributed to obtaining a mortgage.

Paying cash, we’ll still pay for a title search and title insurance, and we’ll want a home inspection. However, we can skip the appraisal, application fees, origination fees, and other miscellaneous fees the lenders sometimes tack on.

Yes, there are “no-closing-cost” offers, but someone is paying those costs. Usually, it’s the buyer in the form of a higher interest rate, but it could also be that the seller is paying some or all of the costs in a buyer’s market. We are not in a buyer’s market.

 

Because We Can

Finally, we’ll be paying cash for our next home simply because we can. We’re in a fortunate position now, having saved well and invested wisely. Paying cash isn’t going to hinder our financial future since we’ve already met our investment goals.

In fact, paying cash probably makes our financial future a little brighter. If we were planning on using a mortgage, I might be more inclined to consider the rare home in our market in the $600,000 and up range, which would really be more home than we really want or need right now. We made that mistake once, and I’d rather not make it again. Never say never, though. I’ve made mistakes before, obviously.

 

Long story short, we’re still looking for our lake home, and we’re planning to buy it outright, as we’ve done with our last two home purchases. The math may argue against that plan, but I still think a cash purchase is the better decision for us. I’ll be interested to hear your thoughts below in the comments.

p.s. If I had an existing mortgage with an interest rate of about 3.5% or higher, I would definitely look at refinancing. You could easily save thousands of dollars.

 

A Recommended Insurance Agent

 

PearsonRavitz

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Stephanie Pearson, MD, FACOG, brings the experience of a physician into the disability and life insurance market. Injured in the prime of her career, the Board Certified OB/GYN took an unexpected journey to becoming an advocate and advisor for physician insurance.

Scott Ravitz, a longtime broker and insurance expert to the medical community, was a natural advisor and behind-the-scenes colleague for Stephanie. The partnership of PearsonRavitz wields the duo’s powerful combined skill set — and has made them sought-after experts on the basics and nuances of disability and life insurance for doctors.

PearsonRavitz Vetting Application

 

 

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Start receiving paid survey opportunities in your area of expertise to your email inbox by joining the Curizon community of Physicians and Healthcare Professionals.

Use our link to Join and you’ll also be entered into a drawing for an additional $250 to be awarded to one new registrant referred by Physician on FIRE this month.

 

Have an outstanding week!

-Physician on FIRE

 

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