In my post, "Use it Or Lose It," I talked about the awesome benefits of the Roth IRA.  You do have to pay taxes on the money now, but it grows tax-free, and you can withdraw the money after age 59.5 without owing any taxes.  It’s the only way to win the tax game.  It is 100% your money, forever! In comparison, money in a traditional IRA, traditional 401k, ...

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An unusual thing happened to me today; I was awakened by my phone alarm. Ever since I stopped practicing medicine ten months ago, I have rarely needed to set an alarm to get up. Today when my alarm sounded, Carolyn commented that when she woke up, she thought we were in Spain. Last Spring, we were traveling through Spain on a two-week bus tour. Each day we had to have our ...

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Hopefully, you’ve realized when all of your accounts are taxed; if not, here is a quick refresher. On the surface, the taxable account looks like a bad deal compared to the others:

  • You use after-tax money to contribute to these accounts
  • You pay taxes on any dividends you receive each year
  • You pay taxes on any capital gains when you take money out
So basically it’s a lose-lose-lose scenario when it comes ...

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"A hobby is an activity, interest, enthusiasm, or pastime that is undertaken for pleasure or relaxation, typically done during one’s own time." – Wikipedia "A job is often defined as a regular activity pastime performed in exchange for payment." – Wikipedia If you search “hobby” on Wikipedia, you’ll be presented with a lengthy list of the most common ones: everything from magic to beekeeping to vehicle restoration. But if you look at these “hobbies” ...

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You did it! You worked, you saved, you conquered. Your investments add up to 25 times your expenses, or 30 times, or whatever your magic number is. You have achieved financial independence (FI), however you have chosen to define it. What’s that low rumbling sound I hear? Is that a bear coming out of hibernation? I won’t pretend to know when it’s coming, but I promise you I haven’t seen my last bear market. It could start ...

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A common question from readers is what to do about an account that contains a bunch of high expense ratio mutual funds or individual stocks. The reason for having such an account varies from person to person. Maybe it was the only funds available to them in their 401(k) portfolios. Perhaps they collected a bunch of individual stocks and actively-managed mutual funds over the years based on tips from magazines or ...

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Learning to budget is scary.  After all, it means you have to say NO to unnecessary purchases and keep your eye on long-term goals at the expense of short-term pleasure.  There are a variety of ways to budget, ranging from the restrictive and somewhat impractical “envelope system” to the more vague and potentially ineffective “wing it” system.  I’d like to present a balanced approach to budgeting that ...

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With a society living on credit, a government deep in debt, eight years of desensitization during training (something unique to doctors), rising tuition, and falling pay -- it’s no wonder doctors are having a major problem with debt. Where will it end? Debt has become the norm. Will Rogers summed up this pattern of high consumption on borrowed money nicely: "Too many people spend money they haven’t earned to buy ...

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Pop quiz: Fill out the chart above. If this was too easy for you, move along, this isn’t the post you’re looking for.  If you’re slightly unsure, either follow along or skip to the end. I’m going in order. Retirement accounts There are so many to “choose” from it seems slightly overwhelming at first.  You really don’t get that many choices: If you’re self-employed, you ...

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I first heard the term “accredited investor” over coffee with a friend who happened to be a financial advisor. He was excited about a real estate deal he was involved in. My interest piqued, I asked him how he finds access to these deals. He said he’d be happy to introduce me to the operators, but I needed to be an accredited investor first. I had no idea what that meant, ...

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