Who wants to reduce their taxes? The first step requires educating yourself on the basics. 

In this episode of the Finance For Physicians Podcast, Daniel Wrenne talks to David Glenn, a Certified Public Accountant (CPA) and founder of Glenn Advisory and the basics of how income taxes work.  They also chat about some of the most common tax savings strategies that begin to appear when you start to understand how this all works.  

Topics Discussed:

Baseline Knowledge:

How does the federal tax return work?

What are progressive taxes?

How does income flow through the tax return?

What are itemized deductions and credits?

How do tax withholdings, deductions and credits affect tax refund or payment?

Form 1040: Main section of your income tax return where everything comes together

Why compensation doesn’t always equal federal taxable wages

Qualified dividends are preferred over nonqualified dividends

What to look for to avoid back-door Roth IRA taxation mistakes

Social Security: Can be taxed up to 85%

Capital Gains/Losses: Recognize sale of stocks, real estate, other capital assets

Adjusted Gross Income (AGI) Adjustments: HSA, self-employment, and others

Tax Deductions: Itemized or standard deduction(s) based on filing status

Use taxable income and tax tables to determine total tax due

Tax Credits are great because they directly offset tax due dollar for dollar

Links:

David Glenn on LinkedIn

Glenn Advisory

IRS Tax Forms, Instructions, and Publications

Schedules for Form 1040

Schedule D (Form 1040), Capital Gains and Losses

Schedule 1 - Additional Income and Adjustments to Income

Form W-2 Wage and Tax Statement

Form W-4 Employee Withholding Certificate

Tax Cuts and Jobs Act (TCJA)

State and Local Tax Deduction (SALT)

Child Tax Credit

Schedule K-1 Form

Schedule K-2 Form

Finance For Physicians

Why should physicians in practice consider a Backdoor Roth IRA? Make sure to do it correctly and efficiently to get the greatest benefits.

 

In this episode of the Finance For Physicians Podcast, Daniel Wrenne talks to Jennifer Quire about the Backdoor Roth IRA. Jennifer is Daniel’s colleague at Wrenne Financial Planning and a fellow Certified Financial Planner CFP®. 

 

Topics Discussed:

When to consider the “back-door” Roth IRA instead of the normal Roth IRA

Steps to take to go through the “Back-door”

Common mistakes to avoid

Step Transaction Doctrine: No multiple steps allowed to circumvent IRS’s rules

What is the pro-rata rule and why is it important to watch out for?

Why is the Roth IRA beneficial to physicians and others?

Serves as additional option for tax favored retirement savings

Provides tax diversification (future tax-free withdrawals)

No Required Minimum Distributions “RMD”s required on Roth IRAs

Often provides additional creditor protection

Verify Form 8606 is included in your federal tax return

Verify that line 4b is correct on your Form 1040 (main form in federal tax return)

Verbally notify your accountant that you’re funding the back-door Roth IRA

Save the Form 5498 (verifies funding) and Form 1099-R (verifies Roth Conversion)

 

Links & Bonus Content:

Backdoor Roth: A Complete How-To

Backdoor Roth IRA 2020: A Step by Step Guide with Vanguard

Backdoor Roth IRA Ultimate Guide and Tutorial

17 Ways To Screw Up A Backdoor Roth IRA

Step Transaction Doctrine - IRS

Pro-rata Rule - IRS

Finance For Physicians

Money isn’t always the key to happiness. What are the key financial planning processes for using your money to live a better life? 

In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks with his colleague, Jennifer Quire, a fellow Certified Financial Planner CFP®. As financial planners, Daniel and Jennifer’s goal is to help physicians use their money to live better lives.  This starts with working through the financial planning process.  Listen in to find out what this looks like. 

Topics Discussed:

What is a financial plan? Roadmap of where you are and want to be

How to create a financial plan?

Organize financial affairs

Clarify values and goals

Analyze options

Decide best path forward

Execute next steps

What’s most important to you? Money isn’t always the answer

Life Planning Questions: If financially independent…

I want you to imagine that you are financially secure, that you have enough money to take care of your needs, now and in the future. The question is, how would you live your life? What would you do with the money? Would you change anything? Let yourself go. Don’t hold back your dreams. Describe a life that is complete, that is richly yours.

This time, you visit your doctor who tells you that you have five to ten years left to live. The good part is that you won’t ever feel sick. The bad news is that you will have no notice of the moment of your death. What will you do in the time you have remaining to live? Will you change your life, and how will you do it?

This time, your doctor shocks you with the news that you have only one day left to live. Notice what feelings arise as you confront your very real mortality. Ask yourself: What dreams will be left unfulfilled? What do I wish I had finished or had been? What do I wish I had done? [Did I miss anything]?

Analysis Paralysis: Focus on one thing at a time to make progress

Deadlines: Time gets in the way and people don’t like change, ask for help

A financial plan becomes worthless if you never execute on it

Links:

Jennifer Quire on LinkedIn

DIY Planning Guide (Free)

Written Financial Plan (Example)

Net Worth Tracker Tool (Free)

Wrenne Financial Planning - Financial Planning Process

Kinder 3 Questions

Lastpass Password Manager

Google Drive

Finance for Physicians

Are you a physician transitioning into practice or facing an employment contract change or renewal?

In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks to Jon Appino, founder of Contract Diagnostics. Jon’s company is dedicated to taking a fun and educational approach to helping physicians negotiate employment agreements and compensation structures.  

Topics Discussed:

 Employment Contracts and Compensation:

What do physicians need to know about contract negotiations?

Why is it important for physicians to understand employment contracts?

How does the contract negotiation process work?

When should physicians engage a third-party’s assistance?

Legal Perspective: Lawyers aren’t always up to date on trends in medicine

Physician Employment Contract: Set clear compensation/benefits expectations

Terminating Agreement: What are financial penalties and career ramifications?

Negotiate or not? Be proactive in job search and site visit; don’t commit yet

Letter of Intent: Let formal discussions begin before signing offer/contract

Employment Decisions: Individualized based on what’s most important

Contracts, agreements, and policies vary depending on different factors

Compensation Structure: Review contract terms regularly to determine relevancy

Renewal Contracts: Ask for what you want, even if it takes difficult conversations

Compensation Data: Understand what the physician/medical market may bare

Predicting Physician Contracts: Continue to be complex and move toward quality

Links:

Jon Appino on LinkedIn

Contract Diagnostics

Contract Diagnostics’s Email

Public Service Loan Forgiveness (PSLF)

Medscape

Medical Group Management Association (MGMA)

Finance for Physicians

Can money buy happiness?  You can have all the money in the world and be completely unhappy.  How can they use money and time to live happier lives.

In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks to Jeff Wenger, a Certified Financial Planner (CFP®), about the science behind using money and time to attain happiness. In the previous episode, Jeff discussed how physicians can better align time and money management with their values. 

Topics Discussed:

Psychology and the Good Life: Laurie Santos’s scientific research on happiness

Laurie’s Lesson 1: Our minds are really bad at predicting happiness

Tangible vs. Intangible Things: What brings you the greatest happiness?

Laurie’s Lesson 2: Circumstances don’t play as big a role as people think they do

What drives happiness? 50% genes, 10% circumstances, 40% thoughts, actions, and attitudes

Laurie’s Lesson 3: Time versus money, which do you value more?

Spare Time: Spend money on things that save time for best return on happiness

Trade Offs: Delegate to make time and gain back time that brings happiness

Links:

Wrenne Financial Planning

The Science of Happiness and How to Improve Your Happiness (Free Course by Dr. Laurie Santos)

How to Be Happy: A Cheat Sheet

Free Tests to Help Measure Happiness

The Happiness Lab Podcast

The GI Joe Fallacy: knowing is not half the battle

How Much of Your Happiness Is Under Your Control?

The How of Happiness: A New Approach to Getting the Life You Want

High income improves evaluation of life but not emotional well-being by Daniel Kahneman and Angus Deaton

Fire Your Financial Advisor (WCI Online Course)

Finance for Physicians

You can have all the money in the world and be completely unhappy. Everybody wants to move closer toward living out their version of an ideal life.  Yet, the daily grind we all face tends to push us away from this. 

In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks with his colleague Jeff Wenger, about how physicians can better align time and money management with their values.

Topics Discussed:

Where to begin? Start with a plan to align financial actions with values

Two Mindsets: Auto-pilot thinking versus deliberate thinking

Awareness: Start with gaining awareness of your actions

Time and Money Management Exercise: Find ways to track what you’ve done

Awkward Conversations/Characteristics: Plan for success, write your obituary

Life Planning: Kinder’s 3 questions about living out your ideal life

New Day-to-Day Decisions: Say ‘no’ to things that don’t align with your values

Ideal Calendar: Prioritize values by making time and space on your calendar

Should you stay on auto-pilot? No, do something, take action to help your wealth

Links:

Jeff Wenger on LinkedIn

Wrenne Financial Planning

Thinking, Fast and Slow by Daniel Kahneman

Toggl

RescueTime

Mint

Moment

Three Questions - George Kinder

Dad Tired Podcast

Using a Values-Based Lens to Identify Financial Blindspots by Daniel Wrenne

Finance for Physicians

Physicians seeking independent financial planning advice at a fair price should find financial advisors who mitigate conflicts of interest that cause more harm than good.

In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks to Donovan Sanchez, a Certified Financial Planner (CFP) and founder of Skyview Financial Planning. Donovan covers different conflicts of interest that most people are unaware of and the importance of disclosure requirements to find a quality financial advisor.

Topics Discussed:

Financial Advisor Types: Anybody working in the financial services industry

Compensation Models: Pay for services via commission, fee-only, or fee-based

Challenging Conflict: Provide advice in advisor’s and client’s best interest

Teaching/Training: How to make sales and do financial planning to offer advice

Major Manufacturers: Research proprietary products, means of distribution to sell

Learn Language: Talk like a financial advisor to focus on quality or make sales

Clients and Referrals: How many to make sales and create custom plan/advice

Disclosure: Put client’s interests first and disclose/manage conflicts of interest

Space and Stability: Become a good financial advisor before giving advice

Find Financial Advisor: Reach out to identify training, guidance, and get paid

Future of Financial Advice: Take step forward to regulate financial advisor title

Links:

Donovan Sanchez’s Website

Donovan Sanchez’s Articles on Conflicts of Interest:

https://thephysicianphilosopher.com/the-code-conflicts-and-client-interests/

https://www.physicianonfire.com/financial-advisor-confessions/

https://www.whitecoatinvestor.com/confessions-of-a-financial-advisor/

Daniel Wrenne’s Article on Transitioning Away from Northwestern Mutual: https://www.kitces.com/blog/one-northwestern-mutual-insurance-brokers-breakaway-to-fee-only-ria-in-just-months/

Northwestern Mutual CFP Disclosure

Dave Ramsey’s The Total Money Makeover

Finance for Physicians

Why do physicians in training fail to focus on their personal finances? Why aren’t they willing to own their mistakes, learn from them, and teach others how to avoid them?

In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks to Dr. Jordan Frey about his financial journey and how he went from burying his head in the sand to gaining full control over his finances.  Along the way, he created the Prudent Plastic Surgeon blog to help increase financial literacy within the profession and help his colleagues avoid the mistakes he made.  Jordan recently completed his plastic surgery residency and fellowship in microsurgery at NYU. Now, he serves as a plastic surgeon at Erie County Medical Center (ECMC).  He also created the Prudent Plastic Surgeon blog where he shares more on his financial journey. 

Topics Discussed:

Financially Clueless: It’s so easy to bury your head in the sand

Financial Well-being: Climb out of the hole and sort out your personal finances

Success: What is wealth? Financial well-being and focusing on what matters

Culture of Consumerism: You are what you buy versus what makes sense

Narcissism? Jordan got into medicine to be a better doctor, not to make money

Financial Failures: Admit to what you don’t know and learn from your mistakes

Time Constraint: Excuse or reality to find time to focus on personal finances

In Training Paychecks: Start small, avoid lifestyle creep, save rather than spend

Personal and Financial Well-being: Establish ‘why’ to make the ‘how’ easier

Lack of Financial Literacy: Physicians are easy targets for non-fiduciary advisors

Financial Metrics: Check bank accounts to stay on budget and track net worth

Financial Literacy Blind Spots: Continue financial education and take action

Links:

Jordan Frey’s Blog

Jordan Frey’s Email

Jordan Frey’s Work Profile

Jordan Frey’s Journey

The Millionaire Next Door - Thomas Stanley

The Millionaire Real Estate Investor - Gary Keller

White Coat Investor

Finance for Physicians Net Worth Tracking Template

Finance for Physicians

What should physicians do with their federal student loans? How does PSLF work? When should you consider private refinance?

In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks to Travis Hornsby, founder of Student Loan Planner—a website, blog, podcast and planning service focused on everything related to student loans.

Topics Discussed: 

Basics of Public Service Loan Forgiveness (PSLF):

How PSLF works

Key strategies to impact bottom line

Student loan mistakes to avoid

Future of student loans

COVID Forbearance and Consolidation: Don’t lose PSLF-qualifying payments due to bad advice

Student Loan Loopholes: Breadwinner, Biden, Double Debt, and Marriage

PSLF Snowball Effect: Spread knowledge to stop skepticism

PSLF Process: Start by completing certification form to certify income and credit

Repayment Plans:

Income-Driven Repayment (IDR)

Pay As You Earn (PAYE)

Revised Pay As You Earn (RePAYE)

Presidents and Predictions: More generous government funded student loans

Student Loans Stipend: Not-for-profit hospitals’ recruitment efforts hurt, not help

Forgiveness: Save for and invest in other goals to live without debt regret

Links:

Student Loan Planner

When RePAYE and PAYE Clash

St Loan flowchart on repayment options

ECF Form Instructions

IDR Plan Information

PSLF Application Instructions

PSLF Data on Forgiveness vs. Approval

Student Loan Planner's Calculator

NHSC Loan Repayment Program

What You Can Do For Your Country Act

Finance for Physicians

Nobody’s perfect. Everyone needs to take care of their mental health, including physicians. Perfectionism in medicine can spill over into physicians’ personal finances.

In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks to Dr. Michael Myers about physician perfectionism. Michael is professor of clinical psychiatry at SUNY-Downstate Medical Center and author of eight books covering everything from physician suicide and mental health to physician marriages.

Topics Discussed:

Tyranny of Perfectionism: Extreme perfection can affect productivity

Good Enough: Strive for excellence, but find and accept balanced portion

Human Humor: Welcome to medical school, you’re (not) the best and brightest

Imposter Syndrome: Message of perfectionism leads to inferiority

Survive and Thrive: Perfectionism is expected, to err is human

Demographics and Diagnoses: Diverse physician and patient population

Signs: Worry too much, stay too late, struggle with competence and confidence?

House of Medicine Stigma: Should doctors ask for or need help?

Physician Personalities and Psychiatry: Self-resolve or seek help with triggers

Money Management: Most physicians are not gifted in economics/business

Marriage and Money: Keeping up with the Joneses linked to perfectionism

Priviledge or Poverty: Physician’s upbringing is pressure to maintain or do better

Married to Doctors: Say and do something in a loving manner; listen and get help

Co-parenting: Compliment and cut back on child’s activities; time is not unlimited

Links:

Michael F. Myers, MD

Tyranny of Perfectionism

American Association for Marriage and Family Therapy

Imposter Syndrome

Smart Marriages

Gottman (Research Based Approach to Relationships)

Married to Doctors (Lara McDeep)

What My Shrink Would Say Podcast - Perfectionism

Therapy for Black Girls - Perfectionism

Thomas Curran - TED Talk: Our dangerous obsession with perfectionism is getting worse

Thomas Curran - Perfectionism Is Increasing, and That's Not Good News

JAMA

Psychology Today

Finance for Physicians