Physician finance tips in the year 2020 [PODCAST]

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Physicians are finding out that their jobs aren’t as secure as they thought. Many have taken salary acts, are furloughed, or worse, laid off completely. It comes as a financial shock to many doctors. In this episode, gastroenterologist and certified financial coach Brent Lacey shares his tips and advice on how physicians can navigate these uncertain financial times.

Brent Lacey is a gastroenterologist and certified financial coach and can be reached at the Scope of Practice.

He shares his story and discusses finance tips for physicians in the year 2020.

This episode is brought to you by Money Insights. Please visit Moneyinsights.net/KevinMD for a unique financial strategy to help physicians across the country grow and protect their wealth. 

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Hosted by Kevin Pho, MD, The Podcast by KevinMD shares the stories of the many who intersect with our health care system but are rarely heard from.

Transcript

Kevin Pho: Hi, and welcome to the show, where we share the stories of the many who intersect with our health care system but are rarely heard from. My name is Kevin Pho, founder and editor of KevinMD. Today on the show, we have Brent Lacey. He’s a full-time gastroenterologist, and he’s also a financial coach. He is the owner of The Scope of Practice, where you can manage your practice and master your personal finances. His resources help you focus on what you love: helping your patients. He’s also the host of The Scope of Practice podcast. And just as important as all of that, he’s a KevinMD contributor. Brent, welcome to the show.

Brent Lacey: Hey, thanks for having me, Kevin. I appreciate it.

Kevin Pho: So you are a gastroenterologist and a certified financial coach. So those are two things that aren’t in combination very often. So I’m interested in hearing your story and your journey to where you are today.

Brent Lacey: Sure. Yeah, so, you know, I was very blessed, I think, more than a lot of people, in that I had parents that really were very good about teaching us personal financial management when I was a kid, and I guess I was smart enough to actually pay attention and listen a little bit. So, you know, when I went away to college, I went away to med school, I really found that I was a lot farther ahead than a lot of my peers. I’d been reading financial books since I was a teenager. And, you know, I just noticed that there were a lot of struggles in this area. A lot of people just don’t know what to do or just don’t know how to make a strong plan.

And so then when I got out of fellowship, you know, this became just an area of passion for me, because I saw how much of a need there was. And I started actually just teaching the Dave Ramsey Financial Peace University class in my church. And over the course of the next couple years, we expanded that to a full-on financial discipleship ministry, where we were doing one-on-one financial coaching and more classes, like teaching parents how to teach financial management strategies to their kids.

And then I started getting asked to do that at my hospital, you know, like for the OR nurses one day, and then for the residents one day. And then I started thinking, you know, it would be great, because I get the same 10 questions all the time, it’d be great if I had like a blog or something where I could just point to someone and go, “Hey, you know, just go read this article that I wrote, because it’ll answer all your questions.” And then I thought, why don’t I just have a blog that does exactly that? And so that’s when The Scope of Practice was born.

And the thing that I had observed over the years is that, you know, physicians, we come out of training really excellent at our craft and really lousy at all the small business stuff, like being able to run a practice, lead a team, and, you know, managing our personal finances. And so that’s what I started The Scope of Practice to do: to teach people how to master their personal finances and how to manage their businesses more successfully.

Kevin Pho: So you said that you had the same 10 questions that you get all the time when it comes to physician personal finance. So what are some of the top issues that you see all the time among physicians?

Brent Lacey: Oh, so the big questions I always get are going to be surrounding, you know, student loans, like, what do I do with my student loans? Should I go for, you know, Public Service Loan Forgiveness, or should I just pay it all off? Should I refinance into private loans? So that’s one sort of sphere: It’s going to be student loans.

The next one is going to be retirement. You know, how do I take advantage of my 401(k)? Do I do a Roth, or do I do a traditional? You know, what’s a mutual fund? Just sort of some basics of investing. It’s all very, very basic questions.

And then usually the third centers around sort of the personal aspect of personal finance, you know, combining bank accounts with my spouse. You know, do I really need to budget? What do we do if we have two spousal incomes? You know, how do we do insurance? So things like that. So student loans, investing, and then sort of the personal aspect of personal finance are the three big spheres.

Kevin Pho: So for physicians who are interested in learning more about personal finances and taking charge of their money, what kind of resources do you recommend, aside from talking to you, of course?

Brent Lacey: Well, they can always talk to me and check out my site for sure. But the good news about personal finances is, golly, there are just a million great resources out there. I mean, if you just search personal finance, you’ll be absolutely inundated. If you search physician and personal finance, you’ll still be inundated. But what I usually recommend for folks is it starts really, really simple. I actually put together a reading list for folks that I think is really helpful, that actually has a series of books that are good for, you know, people that are just kind of getting started. So things like, you know, The White Coat Investor, as an example, is a great book. And so if you want, you know, people can get that. It’s free. It’s thescopeofpractice.com/readinglist, and it’s got a lot of great stuff on there.

But I would just encourage people just to Google physician personal finance, and you’ll find things like, you know, my site, Physician on FIRE, White Coat Investor, and just start reading. A lot of us have things that are real simple. It’s like, “If you are new to the process, start here.” You know, we try to keep things really simple for folks.

Kevin Pho: Fantastic. So we are talking in the second week of June, and we’re obviously months into the pandemic, and physicians are realizing that their jobs aren’t as secure as they thought they were. There are physicians who are either partially or completely furloughed. There are physicians who are laid off. There are physicians whose contracts are not renewed. So I read a lot of these stories on private physician Facebook groups, and they’re simply wondering what to do. They’re caught by surprise. So for these physicians who have a sudden loss of salary, who are suddenly laid off, whose contracts aren’t renewed, what kind of advice can you give them to help them get back on their feet?

Brent Lacey: Yeah, that’s a great question. And I never thought I would see the day when I would see physicians filing for unemployment benefits. I mean, that has been blowing my mind. Well, the first thing I would tell people is don’t panic. This too shall pass. And, you know, I find I make the worst decisions when I’m making decisions because I’m scared or because I’m making it out of a lack of knowledge. So that’s the first thing I would say: Don’t panic.

The second thing I would say is get your feet underneath you, OK? Sit down and talk with your spouse, figure out what your long-term plans are, what your goals are, and then figure out a basic plan for what your money is going to look like the next few months. Once you get a little bit of security under you, you can start to make some more calculated, more informed decisions. So if you don’t already have an emergency fund, for example, then one of the things you’re probably going to need to do is take a serious look at what your budget is and start cutting back on expenses so that you can save some money, because if you don’t have income coming in, then you’ve got to cut expenses. It’s the only way to keep from going into debt.

So once you’ve got a little bit of financial security underneath you, then start asking yourself, “What do I want my life to look like?” I mean, you’ve got a million options that are open at this point. And trust me, there’s going to be no shortage of work. And so, you know, do you want to go back to the same kind of role? Do you want to start your own practice? Are you looking into locum tenens? And just, what does life look like in five years? What does life look like in three years? What does life look like in one year? Start asking some of those questions, and that will help, I think, direct you into the right path.

And certainly there are lots of resources out there for folks. I mean, I do a lot of coaching and teaching for people who want to start and run their own practice. I know there are lots of folks out there doing stuff on locum tenens, for example. You mentioned that, and that’s a great resource. But definitely, it all starts with knowing what the long term looks like, and then you can reverse-engineer it back to the short term.

Kevin Pho: Fantastic. I think that is wonderful advice, and thank you so much for sharing that insight. Yesterday, we’re talking again the second week of June, the S&P dropped like 6 percent, and the stock market is really just going up and down by, you know, almost like 5 percent every day, and it’s really a roller coaster ride. So we don’t know the long-term ramifications financially of the pandemic. So what advice and tips can you give to physicians to help manage their finances, both personally and professionally, as the pandemic evolves?

Brent Lacey: Yeah, so the number one thing that predicts success for folks in terms of their overall financial success is just having a plan, and certainly a budget is part of that. But more important is: What are your long-term financial goals? People tend to get all caught up in, you know, “Am I in the right mutual fund? Do I have the right asset allocation? What are my fees?” You know, things like that. The truth is, the number one thing that predicts success is your rate of savings. So if you’re saving 25 percent of your income versus saving 5 percent of your income, that’s a huge difference. That is the number one thing that predicts whether you’re going to succeed in investing. So don’t get caught up too much in the analysis. Just, you know, commit to yourself that you’re going to save a lot. That’s the first thing.

The second thing is, with regard to investing, don’t try to time the market. And one of the scariest things I ever hear from someone is when they say, “But this time it’s different.” No, it’s not. It is never different. And, you know, I would say don’t be afraid of investing now, if you have the money to do so. I mean, obviously, if you’re laid off, this is not the best time to invest. This is the time to be conservative and be wise. But if you have money to invest, there’s nothing wrong with investing in the stock market. And don’t try to pick which day is going to be the best. The truth is that nobody can.

Here’s a very interesting stat that I heard earlier this year, and I hadn’t heard this before, but this is totally true: In a 20-year period, if you miss just the 10 best days of growth in the market, it cuts your 20-year returns by half. And six of those 10 days, like 60 percent of the 10 best days, tend to occur within about two weeks of the 10 worst days in the market. So if you try to pop in and out of the market and try to figure it out, you’ll end up failing just every time. So the best day to invest is yesterday. The second-best day to invest is today.

Kevin Pho: Wise words. Let’s take a step back. I was wondering if you could share with my audience something that you’ve been curious about or something you’ve been passionate about recently.

Brent Lacey: Yeah, it’s a great question. You know, an unexplored passion for me actually has been podcasting, and I had not really set out to do this. I mean, I did some broadcast stuff when I was in high school, and it was a lot of fun. I enjoyed it. But it has really been a very joyful experience for me to be able to have these great conversations on the podcast with folks. And I tell you what, if there’s anybody out there interested in starting a podcast, just do it. I mean, I cannot believe the guests that I’m getting that are saying yes to coming on. It’s absolutely amazing.

And the opportunity to get to amplify their voices and be able to spread that out to people and give people hope, just like you’re doing with your podcast, and give people, you know, advice and insight and ideas for how they could make their lives better, their finances better, their careers better, has just been so fun. So I’m just loving this, man. I’m sinking my teeth in. It’s just a good time.

Kevin Pho: No, I completely agree with you. I think we started our podcasts at similar time frames, a few months ago. And just hearing the stories of KevinMD contributors in their own words has been really fascinating for me. And just getting to meet all the people that have written for my site, I’ve learned so much from them. Right, my final question: What is your take-home message for the KevinMD audience?

Brent Lacey: So my take-home message for your audience would be, in the immediate term, in 2020, you know, if you think about all the things that have happened this year, in the last six months, this has been one of the most tumultuous six months that we’ve had in, you know, decades. And I would encourage you to have some kind of an anchor point. Now, for me, that is my faith, and that is my family. And for you, maybe it’s, you know, your spouse. Maybe it is some kind of specific purpose. Maybe it’s your career. Maybe it’s a big goal that you have. But have something that really anchors you.

So that way, when you’re getting pulled in all these different directions and you’re seeing just craziness on the news, and the markets dropping, and, you know, all these people are being laid off, and what’s going to happen with the future of medicine, just recenter and go, “OK, what’s the most important thing to me right now?” Well, for me, it’s my kids, it’s my wife, it’s my faith. If I’ve got those three things, everything else is just side traffic. It’s just noise. So home in on that one thing, whatever that is for you, and let that be the center point for your purpose.

Kevin Pho: Well, thank you so much for sharing your stories, wisdom, and insight. On the show, we have Brent Lacey. He is a gastroenterologist and a financial coach. He is the founder of The Scope of Practice website, at thescopeofpractice.com, and host of The Scope of Practice podcast. Brent, thank you for joining me on the show.

Brent Lacey: Thanks, Kevin. It was a lot of fun.

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