Finance for Physicians

Tax-loss harvesting is a tax strategy, but how does it actually affect your tax return and are there any limitations?  In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks about tax-loss harvesting—what it is, why it's beneficial, and how it works on your tax return. Topics Discussed: Tax-loss Harvesting: Only beneficial for those with taxable assets What is tax-loss harvesting? Book losses while staying with similar investments Wash-Sale Rule: Why the IRS won’t let you buy the same security back What are the benefits of tax-loss harvesting? Take up to $3,000 a year of capital losses to offset ordinary income Defer or postpone taxes on normally taxed investment account Give it away to a nonprofit or beneficiary to realize step-up in basis How does tax-loss harvesting work on taxes? Form 1040, Line 7, Schedule D Links: Wash-Sale Rule Step-Up in Basis Form 1040 Schedule D Contact Finance for Physicians Finance for Physicians Full Episode Transcript: Hello, everyone. I hope you're having a great day. Today, I was hoping to cover a question that's come up quite a few times in our work with clients one-on-one. One of you brought up the question specifically, so I wanted to make sure and maybe dig into this a little bit more. The question is about tax-loss harvesting, understanding that a little bit more, how it works into your tax return, and some of the specifics of how that works. I'm going to dig in a little bit today and cover that. For any of you guys that are either doing that or interested in it, I think this will be something to check out and hopefully get a little bit of knowledge on this. We'll jump into that now. Like I said, we're going to talk a little bit more specifically about tax-loss harvesting. I'll start out with just a brief summary of what it is and why it's beneficial, and then we'll talk about how it actually comes into play on your tax return. This is a tax strategy, so that's a really good question. It's like, well, how does this actually affect my tax return? We'll talk about that and any limitations around that. For starters, it's important to clarify that tax-loss harvesting is only beneficial for those of you that have taxable assets. That's an investment account in your name. It could be a brokerage account. It could be cryptocurrency. It could be a baseball card. You could buy and sell baseball cards. That's technically a taxable asset. A taxable asset is anything that's invested not in a tax-sheltered account. A tax-sheltered account is like a Roth IRA, 401(k), 529, those kinds of things. Tax-loss harvesting is only beneficial for taxable assets, typically a brokerage account or a joint investment account—sometimes it's called that—an investment account in your name or you and your spouse's name. That's an important clarification. Also, to clarify, the best tax strategy really that there is is to maximize tax-sheltered vehicles first. Tax-loss harvesting is great, but I've seen on multiple occasions where people are looking into tax-loss harvesting and maybe have taxable assets like I just talked about, but they haven't yet maximized those tax shelters. Oftentimes, it's even more efficient to just go ahead and max out all your tax shelters or make sure that you're not missing out on any tax shelters like work retirement plans, Roth IRAs, backdoor Roth IRAs, and that kind of stuff. We've talked about that a lot before in prior episodes, but I just wanted to point that out today. Preferably, you're using those tax shelters first. What often happens for you guys with higher income or good savers is you max out those tax shelters pretty quick and then your backup option is using taxable assets. That's where tax-loss harvesting comes into play. So what is it? I'm going to throw out a pretty basic example just to make sure the concept is clear. Let's say you buy a mutual fund or ETF, same thing. You buy a Vanguard Total Stock Market Mutual Fund for $100 or buy $100 worth of it. Let's say the market tanks and the value of it drops to $50. Now, it's worth 50. Let's say you decide to sell it at $50. At that point in time—you sell it at 50—you basically booked a loss of $50. That's really all a tax loss is. You've booked that loss. But then the question is, well, what do we do with the $50? Most of the time, you don't need the cash, so we need to get it reinvested. We don't want it to just sit around. The back end of the strategy is you're immediately buying similar security. Maybe you buy the Vanguard 500 Index with the proceeds from that sale immediately so that you're never really out of the market for long and you've basically booked that $50 loss. At the end of the day, you still have a very similar investment as before, but you get that $50 tax loss. As we'll talk about, it can come in handy. It can be beneficial for you to go ahead and take that tax loss. Essentially, what the strategy is is you're booking losses while still staying invested. Some of you might be thinking, okay, well, why didn't you just buy the same thing back? What's up with buying something a little different? There are a few rules. The main one you got to watch out for is called the wash-sale rule. There's an IRS guideline that you can't buy the exact same security back. In this example, you can't just go buy back the same Vanguard Total Stock. You can, but they disallow it. In order to get the loss, you can't buy the exact same security back within 30 days. If you want to keep your investments invested, which is typically a good idea, you have to buy something that's not the exact same thing but is somewhat similar. Some people get hung up on this. Basically, just don't buy the exact same security back if you want to do this. I think as a general rule of thumb, a good safe way to play it is to buy something that is slightly different and attracts a different benchmark maybe. That's always safe. I don't know of anyone that's ever been audited for this. I haven't heard of this being a concern of the IRS. I think it's only an issue when you are buying back that same exact security. In that case, the brokerage firms will typically flag it and disallow it. The IRS has a lot of stuff going on. They have bigger fish to fry, so I'm sure this is a pretty low priority for them. As long as you're buying something that's not the exact same thing and relatively similar, that typically works. I think that's a fair approach. At the end of the day, you get the tax loss and it can help you with your taxes. Why is it beneficial? That's an important question. Now, there are a few different potential benefits. The first big benefit is that you can book up to $3000 a year of capital losses and offset them against ordinary income on your tax return. I'll talk about where it comes through on the tax return in a second, but every year, you can take up to $3000 of capital losses, and then that's going to offset some of your normal income on your taxes. Normally, ordinary income has a higher percentage tax rate than capital gains tax rates. When we're talking about taxable assets, those fall under the capital gains tax rules, so your normal income falls under ordinary income tax rules. Ordinary income taxes are typically a higher percentage rate than capital gains tax rates. If you can take a loss on something that's taxed normally—just throwing out an example—at 20% and you can use that loss to offset something that's normally taxed at 30%, that's a win. Taking at least $3000 of capital losses each year is one of the few tax arbitrage routes you can take. It's not a huge number, but it is definitely very beneficial for a lot of people and it's worthwhile to at least get that $3000 a year. That's the first benefit of tax-loss harvesting. As long as you can harvest at least $3000 a year, that's a great thing because you're able to offset it with something that's more heavily taxed than the asset that you're using to do it. The question that you might think about is okay, well, what if I take more than $3000? Say you have $10,000 of tax losses. You've harvested $10,000 throughout the year of tax losses and you're only able to take $3000 against income, so $7000 is still left over from tax losses. What happens is you can basically stockpile those, carry forward them as what they call it, and use them in the future either to offset the $3000 per year that you at least want to do—which we just talked about—or to offset capital gains that you receive in the future. Basically, the more losses you take, you can defer the taxation on that taxable investment account or asset. It's a way to postpone ultimately getting taxes because inevitably, if you do eventually take the money out of the account yourself, there would be some tax implication. By taking these losses, you can push that forward. This is especially a win if you're in a higher tax bracket now than when you ultimately take it out. It can get technical. It depends. There are some scenarios where this is not quite as beneficial, especially when you're in a low bracket now and higher in the future. This is not a benefit for everyone, but it can be a huge benefit. For most higher-income people that are likely in a high tax bracket now, it is typically a concrete benefit. The end effect of that is it just allows you to further defer or postpone taxes on that normally taxed investment account when you ultimately start to take it out. The third big benefit of tax-loss harvesting is definitely the biggest benefit if you go down either one of these paths. It's extremely beneficial if you ultimately either give it away to a nonprofit 501(c)(3) or you pass away with the account fully in your name. In that case, it's extremely beneficial. I'll talk through a scenario to explain this third benefit and why it's beneficial. Going back to Vanguard Total Stock Market—we'll just stick with that example—let's say you bought $50,000 of the Vanguard Total Stock Market and over the years of owning it, it has doubled. It's turned into $100,000. If you've done nothing, you have $50,000 of unrealized or untaxed gains. Now, if you pass away with that Vanguard Total Stock Market, what happens is whoever your beneficiary receives the $100,000 and they get what's called a step-up in basis. That wipes off that unrealized taxable gain. In other words, if you were alive and had $100,000 of this Vanguard Total Stock Market that had started at $50,000 and you sold it all, you'd have to pay tax on the $50,000 of gains because it has grown and it has not been taxed yet. But if you pass away and your heir receives it, they get the full $100,000 and they get the step-up in basis, which basically means like they bought it for $100,000, so they have a zero taxable gain if they sold it all immediately. If they let it grow to $200,000, they have a $100,000 base, so that's a $100,000 gain. When you pass away with taxable assets, that step-up in basis is beneficial. I'll talk about why tax-loss harvesting amplifies this in a second, but the same thing happens when you give it to a 501(c)(3) nonprofit organization. In the same example, if you give that $100,000 away to a 501(c)(3), it's a zero tax situation for you, of course, and the organization that receives it gets a step-up in basis essentially. They're not going to pay tax on receiving that at all either. In either of those two scenarios, it's a way to basically sweep that future tax liability off your balance sheet, your heirs', or whomever. For example, if you're going to pass away with the assets or if you already give money, these sorts of things are great ways to do those things. It's great because you're able to sweep that $50,000 unrealized or future tax obligation off the table. Back to tax-loss harvesting, it's even better if you tax-loss harvest. Let's say over the years, you've used this strategy of selling things when they're lower and then buying something back that's somewhat similar. If you've been tax-loss harvesting over the years, let's say you took $20,000 in losses on that same Vanguard Total Stock Market Fund, you pass it on to your heirs, or give it to a 501(c)(3)—either one of those. You basically are sweeping $70,000. It's worth $100,000, you paid $50,000 for it, but then you took losses of $20,000, so the basis as what they call it is $30,000 and the value of it is $100,000. If you're alive and you just sold it, you would be paying taxes on the $70,000, but if you give it away to a 501(c)(3) or you pass away and they get the step-up in basis, the same thing happens. You're sweeping that $70,000 off your plate and it's a way to avoid the tax on that $70,000 gain. First of all, it's very efficient if you're going to give this security away and if you're going to pass away with assets. This is an efficient asset to pass and it's especially beneficial. If you're going to do that, you're going to give these kinds of things away, or you're going to pass it to your heirs, it's especially beneficial. Basically, the more you can tax-loss harvest, the better because you get to use those tax losses while you're alive. You can use it to offset some other investment that went up and sell it without paying tax, or offset $3000 a year on your tax return. That's like a home run tax-wise for those of you that give some—especially the more you give—or for those of you that want to pass an inheritance. That makes the tax-loss harvesting. The first two things I talked about like taking that $3000 loss a year are nice. It's a little gravy on top. It's well worth it, but it's not a home run. The second benefit of deferring tax on that taxable account is pretty good. It can be really good depending on the situation, especially the longer you do it. The third benefit we just talked about is a home run if it fits into your situation. Basically, you're wiping that big tax obligation off your plate and still getting the benefit of those tax losses prior to that, so that works very well. How does it work on your taxes? When you take these losses each year—let's say you've been tax-loss harvesting, you need to go do your taxes, or you're reviewing your tax return to your accountant to put it together for you—where does it come through? If you look at your tax return—1040 is the form, that's the main form on your tax return—it's usually the first two pages of your tax return. If you look at 1040, the line where this all happens is Line 7. Line 7 is capital gain or loss. It says, attach Schedule D if required. If not required, check here. That's where it all comes through. If you've been rocking it out on tax-loss harvesting and you've not had some other gain that wiped them all out, that line is going to show -$3000 because that's the max. When we're working with clients, especially when we start working with them, it's extremely rare that I see -$3000 on that line even when they have taxable accounts. It's just because not many people are doing this, even advisors. We'll see $5000, zero, or whatever all over the place. When you see -$3000, that's a pretty good sign that that individual has been proactively doing tax-loss harvesting. For my return, even for my own stuff, my goal is for it to stay -$3000 every year. That's where it all comes through on Line 7. It says, refer to Schedule D. Schedule D is where the details come through. If you look at Schedule D, that's where you'll see all this spelled out—how much realized capital gains, how much realized capital losses, whether it was short-term or long-term, those offsets, and then this final number is basically the net of all the capital gains and losses. That's what comes through in Section 7. Schedule D is where the details go. Section 7 on the main page is where you're going to see the final number. Now, if you're taking a lot of losses, sometimes, what people will ask or wonder is how long can I just keep stockpiling these things? All of these I'm throwing out there would be good to talk to your accountant about because first of all, this stuff changes. I'm not an accountant. This is my disclaimer section. Talk to your account and refer to them for tax advice. This stuff changes. Also, your circumstances are also important to take into consideration, but as of now, under the current tax laws, these tax losses are indefinite. You can stockpile as many as you want and defer them as long as you want. That's how it works, which is nice. There is one big exception where this strategy, I would stay away from it. It can almost be like you should do the reverse. If you're in a low enough tax bracket, capital gains tax rates actually go to 0%. In some rare cases when your income is low enough—say you're in training and you happen to have a taxable investment account—it's actually better to harvest gains on these kinds of accounts up to a certain level because it's like, shoot, if I'm going to get taxed 0% on the gain, then I'll take it. But this is pretty rare. I've seen it several times before, but it's not the most common situation. Normally, in that situation, when income is lower, it's going to be much better to max out tax shelters. Those are plenty. They will typically do the job on what you want to save. If you're in that situation where you happen to have that taxable investment account and you happen to have low income for one year or multiple years, it might be that it's actually better to call it a tax-gain harvest. Take those gains if you're up to the point where they're in the 0% tax rate. That works out even better. Like I said before, anytime we're talking about tax, it's always good to talk to your advisor or your tax professional because all these things tie into your circumstances and it's important to incorporate that. That's tax-loss harvesting. There's definitely a lot to it. It's somewhat straightforward, but there are a lot of concerns about the IRS, the part about what they require. That wash-sale rule is a little concerning for people. That's probably the number one concern we see with people. It's like, how do I avoid this wash-sale thing? I don't think that should be a huge concern. I think the bigger thing is making sure you incorporate your situation and really understand the cost-benefit of it. For a lot of people, it might not be worth the headache to even mess with that. A lot of people are better off just maxing out these tax shelters that are already available and don't even have to mess with this. In other cases, like I said, maybe you need to tax-gain harvest. But for the right situation—for a lot of you probably—higher income and you already maxed everything out, it can work really well. Kudos to you if you've made it this far. It's good to educate yourself especially on the basics of how this thing works. It's good to know how that works. It'll allow you to better navigate this particular strategy. I hope it's been beneficial. I enjoyed chatting with you as always. We'll look forward to talking next time.

Are you on auto-pilot and susceptible to routines and the rest of the world’s values? What’s most important to you in your life? There are solid steps or ways that you can take to clarify (or re-clarify) your true values.  In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks about three specific exercises to help you clarify and align your values. Topics Discussed: What are values? Undercurrent or true driver to measuring happiness Values Awareness: Day-to-day actions in alignment with what’s most important Results: Better decisions, confidence, happier, and feeling more purpose-driven Symptoms: Feeling lost, lack of confidence in decision making, and stress Value of Values: Believe in, maintain, and reinforce awareness of your values Exercise #1: Values Clarification (highlight/prioritize/summarize what’s important) Exercise #2: Life Map (Reflect on past; visually pointing out life’s ups and downs) Exercise #3: 80th Birthday: Focus on future and purpose (who/what’s important) Links: Values Clarification (List of Values) Jason Waller - Executive Coaching Contact Finance for Physicians Finance for Physicians Full Episode Transcript: Hey, everyone. Today, I wanted to talk about values and throw out some ideas for how to clarify values. I think this is a super important thing, especially for us today; we're all just so busy. Sometimes it's just helpful to have a concrete, quick exercise to take your time out and think through some of these really important things. We'll jump into that and go through that. Hopefully, the takeaway here is you have some concrete steps or exercises you can take to start to either clarify for the first time or reclarify what’s really most important in your life. Before I jump into the exercises, I just want to clarify. I know we’ve covered this before, but values are like the undercurrent or the true driver to measuring happiness and how you're doing. In regards to finances, in an ideal world, you're using your finances and all the decisions around them to propel you towards your values and get you more in alignment with those values. I think values are more important than goals. Or maybe not more important. Maybe that's not the right word. I think values should be the underlying driver to your goals. Values, clarification, or understanding of your values I would consider the most important step before you start to get into financial planning and making decisions in life, especially the big ones, at anything. But for the purpose of our conversation, it's typically finances. Anyway, values are super important. I think the key here is awareness; being aware of your values. Over time, we have a tendency to get into routines and gravitate towards autopilot or sleepwalking, or just doing the thing, and that's where you start to lose touch with values, because values, being aware of them, you have to take your time out and be intentional. The further you go away from it, you get into that autopilot world and that's where you're susceptible to the pool of the world's values which can often be surface-level material, and are very likely not in alignment with your true values. We're going for values awareness and what that looks like is your actions day-to-day, especially with big things, are in better alignment with what's really most important. It requires understanding (first of all) what's most important because it kind of seems like you would know that, but a lot of times people aren't just clear on that. The results of having a good awareness of your values will just lead to better decisions, confidence moving towards happiness, feeling more purpose-driven. I would say some of the symptoms of not being aware of values would be feeling on autopilot, not as confident decisions, stress, keeping up with the Joneses, those sorts of things. Feeling kind of lost will typically be the result of pulling away from your values. I'm going to talk through some exercises like I said. There are some general ways to become more aware of your values. First of all, you have to believe in the importance of being aware of your values and maybe admit that you're not aware. That's important. That's part of my hope here is to just kind of reinforce that belief of a value, I guess the value of values, so that's important. You have to be intentional about it. You have to put your mind to it. You have to dedicate time for a lot of this stuff. There are some easy things that you can do like meditation, prayer, reflecting, journaling. Those are always good exercises to get into the habit of doing to help you maintain awareness of values or be more in touch with those. Those are good general habits, but what I want to talk about mainly today is some specific exercises. Before I go through these, I think it's important (ideally) to do these with at least another person. You don't have to do them—you can do them solo—but I think it helps to do them especially if you're married, have a spouse, or partner, someone you really trust. It can be very helpful to include them in this exercise. Or sometimes, people do these in small groups and that sort of thing. I think that helps. As I said, you can completely do this solo and that's fine too. It's just a lot of times, these kind of have to tie things together when you're married. First exercise. This is the most practical foundation exercise. If you've never done any of this stuff, it's probably a good starting point. If you're very logically-oriented, this is a good one to do. The focus on this is just clarifying your values as they say at the end of the day. A lot of people in therapy use this approach. Basically, we'll call it a values clarification exercise. I'll link to a list of values. The first step is you don't want to go with a blank sheet of paper. That makes it pretty hard, at least for me. I like doing it with a prewritten list of all sorts of values. Like I said, I'll link to one. The idea is to skim through the list of all these values and maybe you even write in some that are not listed because everybody's going to have different values. The goal here is to highlight those that potentially would be important to you. First thing is to highlight those top values for you. Before you do this—I should have said this in the beginning—you need to have silence. It has to be quiet. Turn the other stuff off. Put your phone somewhere else. Turn the notifications off. You have to get your mind chilled out. As best as you can turn off the other craziness that's going on in your head. Get in the right mind space. That's important for all of these. You have to focus. Turn off the distractions, lock the kids in the room—just kidding. Get a babysitter or do it on date night. Maybe this doesn't sound cool on date night, but it is helpful. It can be fun with your spouse. You have to get in the right mindset. You're just going to skim through the list and highlight those that are your top values, then just take some time to think about each of them, and think through why this is a value to you. Maybe think about how are you doing following them. Maybe think about which one of those you would like to work on. It seems like for me, when I've done this, there are the ones that are really valuable, important values for me that I'm doing a good job with, and then there are the ones where I'm not doing a good job on. That's a different thing. It's good to take note of all that. Most of the time maybe you're going to have ten or quite a few. I would try to narrow it down to maybe the top five or something and prioritize them. That's important, to prioritize them. It's not that easy to prioritize. It's usually pretty difficult because they're all important. But you want to really drill down what is the most important and then rank them. That's going to be key for applying this in life. I'll circle back on that. Once you prioritize them, ideally summarize what they mean to you, like a description. This is where you can write out your value statement. I think it's good to write this down or put it on a piece of paper to make a visual. Maybe you have a list of your top five values in order, and you have a one-sentence summary of your description of why it's important to you. Then a list of actions that would be in alignment with that particular value. That makes it easier in the future to just glance at it and be okay, that's an example. Maybe family is number one so the description might be it's extremely important for me to spend time and really connect relationally with my family and love my family, that kind of thing. Then specific actions might be like saying no to another commitment because that's taking away from my family, or working too many hours. The action will be saying no to working too many hours. Or attending my kid's sporting events, or for me, it's making time to have one-on-one for each of my kids. You can list those actions for each of these top values. Ideally, you have this takeaway here with a sheet of paper. You don't want to get too intense with this stuff. Keep it to one piece of paper. Ideally, you have one piece of paper that you can take away from this. It lists 3–5 values in priority order, you have a summary of what it means to you and why it is important, and then a handful of actions that would be in alignment with it. You print it out and use that. Sometimes, maybe if it's new to you, you can put it in a place where you see it regularly. I have something like this at my desk at work or I'll tuck it in my notebook I use for stuff or journal. I think it's good to have it there visually. Use it and refer to it. That's the key. That's where it starts. Doing these exercises will help you be a little more aware in itself. The key is when you go into life and these decisions come up, especially the big ones, you should be referring to this list. Say you're taking a new job, or maybe there are some sketchy financial opportunities that you have to navigate, or maybe you're feeling you need to upgrade homes, all those sorts of things. The new job is maybe a lot better pay, so your values might be like the classic—family is number one, maybe professional is number three, then wealth is number five. If you're not careful, the world will tell you that a higher-paying job is always better, but you have to pull out those values and remind yourself that family is number one to me. By taking this job, I'm actually going to derail or pull out the rug under my family. They’ve gotten established, so I'm totally going to cause some pain to my family by taking this job. If I'm honest with myself, the only reason I'm doing it is to get more money. If I really look at it, this job actually has a little bit more work commitment which is more hours away from my family, so that's an obvious no. If you're not careful in this, you can get in that autopilot mode and the world is pulling you in that direction. It's so tempting to take more money in a job offer. They maybe are not as obvious as that. There are all kinds of things that come up in life and it's going to be helpful. Some of them are, when you get into the gray zone, they're the ones that are the most helpful. That's why we often make bad decisions as we go with something that is of value but is not really our most important thing. That's pulling us in the wrong direction. That's the first exercise. The second exercise, I'll give credit to Jason Waller. He wrote about this in an article and I think he's a business coach kind of guy. The exercise is called the Life Map Exercise. This is more of a reflection on the past, which can also be a good way to understand how you got where you are today, why, and what's most important. This is pretty simple. You just have a blank sheet of paper and draw out your life from birth to now, life's ups and downs in the journey and you just identify these points in time that we consider the low points and the high points, and that's it. There are some things that we can kind of work on or avoid. Ideally, you're using some visual pictures or illustrations and you're limiting the words. You don't want to write a novel. Ideally, you do a picture of, like a kid playing baseball or something, a dollar bill. Whatever drawing you draw represents maybe one word. An example is a lot of people do a chart of up, down, up, down. They have points and each point is in chronological order like a life experience, maybe draw a picture and put a word. It just needs to be enough to prompt you or remind you what that is about. You want to avoid words and bullet points. You don't want all that stuff. It needs to be visual. With this exercise, you want to stay outside of the future. This is all about the past. Once you're done with that, it's a good thing to tuck away in the journal, sit, and think about it. Before you tuck it away, I think it's good to go through some questions and thought exercises to pull out some stuff from that. Maybe look at different points you've identified and say, why is that so meaningful to me? How does this experience make me who I am today? Another big question to ask is what did I learn from the lows and the highs? Sometimes we have low points that actually end up being huge take-off points, but it's easy to forget that happened, especially the more time that goes on, so thinking about it. Or maybe the reverse. This highpoint actually wasn't as great as I thought it would be. It was the catalyst for bad stuff to start happening because I was getting off-track. The idea here is to start to see these things like maybe, for example, I was not in alignment with values or this is maybe what has gotten me to a point of where I am today and the values I have. I think that is a good exercise for reflection. Reflection is always a good thing to do every once in a while. The next exercise is kind of more a future-oriented exercise. The exercise is called the 80th Birthday Party Exercise. I'm sure you are trying to guess what this might be. This one comes from the same guy, Jason Waller. He wrote this down pretty solidly in his article. We're focused on the future, we're focused on purpose. With this exercise, as with all these, you're going to take a time out and just get relaxed, be quiet, and you have to be focused. The first thing is once you're all chilled out, really try to start to imagine you're arriving at your 80th birthday party. You're walking in and within your imaginary visualization take a minute to look around, where are you at? What does it look like? What does your life look like? What do you look like? Let that soak in. The next thing is to think through or imagine you're writing a table and it's got all the people in your life that are most important. Imagine the people and take a second to look at each person, thank them for being there, and show a little appreciation. Also, think that they came there to be with you because they care about you. For each person, listen as each person shares gratitude and maybe talks about some of the differences you made in their life, and take in those stories and emotions with each of these people that are most important. Take some time to reflect on what all this meant for you. Let it soak in. As you come back to the real world after you've thought about it for a minute, I think it's good to write it all down, document some of your thoughts, and some of the things in addition to some of the takeaways and maybe who was there. You can list whatever you feel is important, but some of the questions you might document would be like what was it like to be in that experience? What did your guest say about you? Was there a common theme that you took away from that exercise? The goal is to get a little closer to your ideal life, what you want and need to get there. What this exercise, the idea is to envision yourself in that future ideal life. As you see that, it starts to give you that picture of what that looks like. You can start to think about, what do I need to do to get there? Maybe these people were saying you were there for me at the hard point, or your family and you were always supportive and whatnot. The takeaway from this is you really start to see that game changer super important stuff. Sometimes you're going to be I need to get on it. I'm not exactly doing what I needed to do to get there. Other times, in this area I am doing a good job and give yourself a pat in the back. That's the last exercise I wanted to go to. There are a bunch of these out there. There are hundreds of them. You can google it all day long. I think the key is to take a time out and spend 20 minutes or so. Work through something like this and take note of it, start to refer back to it over time, and then adjust it over time because things change. You realize maybe something you thought was important is not as important. It will be adjusted over time. That's where you start moving the needle. When you do this exercise upfront, it will be kind of cool to clarify and maybe emotional. You'll feel good about it. There's not any change instantaneously, but over time, by having that greater awareness and by referring back to it, that's where the change happens. You'll start to slowly move the needle and that's what we are after. That is all I have for today. As always, I hope you enjoyed it, and we’ll look forward to talking to you next time.

Go with eyes wide open or be in for a major financial surprise when your children start college. In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks about you or your children funding their education.  Topics Discussed: Who should pay for college? You, your children, student loans, or scholarships What has changed? Tuition costs, direct student loan cap, and responsibility Little to No Financial Aid: Based on physician’s above-average income Other Options: 529 Plan, investments/cash accounts, income, student loans Links: Net Price Calculator for University of Florida How Much Student Loan Can I Get (NerdWallet) How To Help Your Children Maximize Their College Education Are You Saving Enough For Education Contact Finance for Physicians Finance for Physicians

Are you looking for another job, or are recruiters seeking you out for opportunities? If you were offered a different job, would you think about taking it? Why, or why not? There’s a lot to consider. In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks about whether to accept another job. It can be difficult to make a decision and navigate your priorities as an in-practice physician.  Topics Discussed: Temptations: Financial aspect—try to not first look at the money/compensation Values and Goals: What’s most important? Family, work/life balance, pay? Coworkers: Who will you work with and for? What kind of lives do they live? Position: Is it a job you enjoy? Are the pay/benefits decent? What are the hours? Student Aid: Confirm if the employer is Public Service Loan Forgiveness qualified Insurance Coverage: Are malpractice insurance and tail coverage provided? Employment Law: Hire a consultant or employment attorney to review contracts Links: PSLF Customer Reviews on iTunes Contact Finance for Physicians Finance for Physicians

Can more money and stuff really buy happiness? What does the world, science, and Bible teach us about money? Discover what Christianity says about properly managing money. In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks about underlying and non-negotiable values and beliefs regarding money to create more happiness. Topics Discussed: Wrong Direction: If getting rich is driving force, align/understand purpose, values Money: Tool to live good life through your goals, purpose, and values Bible: Covers money and personal finance lessons - lean on your faith Harvard Study: Does spending or giving money away make you happy? Income/Wealth: More money gives good return on happiness but doesn’t last Baseline Needs: After meeting them, why not try giving rather than spending Research: Giving money equals happiness, especially when you have a choice Links: Customer Reviews on iTunes Money spent on others can buy happiness (2008 Harvard Study) What Can We Learn From Jesus About Money with Dr. Ben Witherington III What Does The Bible Teach Us About Money Charitable Giving Strategies To Reduce Taxes with Justin Harvey Contact Finance for Physicians Finance for Physicians

Insurance agents posing as advisors is more common than you may realize and can create conflicts of interest. The key is having better awareness. Don’t get fooled again!  In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks about five ways to identify whether you are working with an insurance person who is posing as a financial advisor. Topics Discussed: Sign #1: Aggressive posers seek you out after making contact or via referrals Sign #2: Posers offer you free or low-cost financial “advice” Sign #3: Posers act as trusted advisors; don’t refer to themselves as salespeople Sign #4: Advice and product solutions offered by posers are similar across clients Sign #5: Agents posing as advisors make it difficult to leave them/their products Links: BrokerCheck National Association of Insurance Commissioners (NAIC) - State Based Systems How Conflicts Of Interest Muddy the Financial Advice Waters with Donovan Sanchez Contact Finance for Physicians Finance for Physicians

Are you struggling with the temptation related to student loan perks? What are the intended consequences of student loans and associated COVID forbearance programs?   In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks about saving money to avoid the COVID-19 forbearance lifestyle creep. Topics Discussed: COVID Forbearance: No payments, no interest on student loans until Aug. 31 Good news? Yes, for PSLF, but what are people doing with the money? Average American Person: Temptation is to spend all or more money in pocket Consumption Effect and Awareness: Student loan payments will begin again Links: Public Service Loan Forgiveness (PSLF) How to Avoid Lifestyle Creep - Finance for Physicians Contact Finance for Physicians Finance for Physicians

New developments continue to be added to the federal student loan generosity trend. Changes will help address administrative complications and failures to provide relief and reduce harm to borrowers.   In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks about recently announced federal student loan changes and how Public Service Loan Forgiveness (PSLF) qualification may affect physicians. Topics Discussed: COVID Forbearance: Extended again until Aug. 31 Change #1: End forbearance steering by not making forbearance easy Change #2: Eliminate the ability to opt-in to forbearance by text or email Links: Department of Education Announces Actions to Fix Longstanding Failures in the Student Loan Programs Federal Student Aid - Submit a Complaint PSLF Limited Waiver Opportunity Huge Benefit For Physicians Contact Finance for Physicians Finance for Physicians

Do you love to save on your taxes? One of the most overlooked or common mistakes is the failure to maximize tax breaks that are available to physicians.   In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks about five of the most overlooked tax breaks for doctors. Personal finance is about avoiding errors or when it comes to filing income taxes with the Internal Revenue Service (IRS). Topics Discussed: 5 of the Most Overlooked Tax Breaks for Doctors: Health Savings Account (HSA): Build wealth and avoid income tax Tax Loss Harvesting: Capital gains and losses are taxable investments Backdoor Roth IRA: Indirectly fund Roth IRA if income is above threshold Business Expenses: For side-hustle or self-employed with 1099 income Work Retirement Plans: Max out 401(k), 403(b), 457(b), and pensions Links: Using Your HSA To Build Wealth Everything You Need To Know About Backdoor Roth IRA Can You Max Out Both Your 403b and 457b Plans? Contact Finance for Physicians Finance for Physicians

More people should be renting rather than buying a home. Why? For some people, renting their home is the key to building wealth.   In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks about the financial benefits of renting over buying a house. Topics Discussed: 5 Big Reasons for Renting vs. Buying: Shorter time horizon for training (5 years or less) Transaction costs of buying and selling real estate Real estate prices can go up or down High-Cost Living Area: Too expensive to buy a home; renting is better Homeownership requires more time, money, and effort than renting Deal or transaction of buying a home is part of lifestyle creep Benefit from having financial flexibility Links: Financial Residency Podcast Contact Finance for Physicians Finance for Physicians