Finances for everything and nothing.

I put my life out there so you can learn from me.  Learn some of the great things and some of the not so great things.  I tell you about my desire to extend my family.  Life is not a solid state and singularly focused.  A financial blog will make it that life has one singular focus of just pay off everything and pay nothing toward anything else... sell everything and know that your life is over. That is not my life.  However...

I have in the past week gone to advocate in Washington DC for our amazing profession!  I have been able to see friends from long ago and meet others that are future colleagues.  I have been able to learn about the political arena in DC and those that work behind the scenes with little to no thanks and with little to no monetary support from our colleagues.  I learned that we are fast attempting to put ourselves out of business by not being active in the community, donating to our own cause and having no interest in helping others understand our profession and differences in providers.  

I have in this time received a decent paycheck to apply to our debt.  So I wanted to update you that the highest interest rate credit card has been paid off!  Thats 22.6% interest that is not being paid!  OK, that means 1/3 of the credit cards are paid off.  I still have a significant amount to go and it'll be weeks before I can make such a significant foray against the debt again as I do have the next check helping to pay taxes, insurance, mortgage, and typical bills.  I would have normally waited on paying down the debt so drastically and saved a bit more just in case I miss something or have a large bill come.  I have a 5K savings backup just in-case and am not going down to my last dollar.  I also put away $9K into my sep IRA for last year which promptly lost 10% of it's value ... freaking stocks.  Also, This week I'm expecting a signed 11 month lease for my college rental home in Kansas.   This will bring rental income up to 2200/month positive cash flow and that will go directly into the improvements of the two newest rentals.  I don't count on the cash flow from the rentals but do make sure they will pay for themselves and the improvements in 5 years.  Granted we did have an unexpected water heater replacement at a property ... that is happening today.  I keep funds in a separate account that is ready for the cost of this expense and won't effect my credit bills or otherwise.... so nice knowing it is covered and not a huge stress.  We also re-bid on the home that needs all plumbing, HVAC, Electric etc... we went from a $14000 bid to a $5500 qualified known quantity bid on doing the bulk of the HVAC and plumbing.  $9000 savings.  I may not have extra money in my pocket but it is keeping it from becoming a sinking ship and money pit.  

This is the current financial picture for this month.  I have given myself until the end of August to get significantly ahead on the finances and save as much as possible for our financial health.  Others are very much ahead of me and to them I would have to say ... AWESOME!  Remember to be active, love family and time home, and enjoy the fruits of your labor!  

I said Finance for everything... because you have to decide what your everything is.  Mine is to not forget family time and what we need for living and someday in building our family.  Nothing, because no matter what you do ... on payday the money goes somewhere and there should be next to nothing left.  REALLY, I mean it.  Your money should go into a trust for your estate, retirement accounts that have an attached succession plan, go into childrens' savings accounts, or pay down the bills so you can set up these accounts.  

Money isn't everything.... but having some available sure helps the world go around.  My ankle is causing me some difficulty and I'm reminded of insurances and disability and all the things that go with this.  I don't think the ankle pain rises to that level but I do know that as life changes and I get older insurance for large things like disability, long-term care, and to cover assets will all be important.  We'll continue to cover things like this as we go.  I hope you like the blog and I know it's all over the place... I'm going to see if I can't get it divided out into sections should someone want to see a specific topic... I have so much to learn.

50% of CRNAs Are Going to Retire Over The Next 10 Years! The Hierarchy of Retirement Needs

Jeremy L. Stanley, CFP®, AIF® | March 23, 2018 (reposted with permission)  

Even though money is fungible, we often categorize our money into different buckets, be it by types of spending or time frame. We also tend to mentally prioritize our income and assets, focusing first on covering our current income needs, then to our existing assets, and lastly to our savings for future needs.

This may help explain why bucketing strategies have long been popular.

The Bucketing Strategy

In this strategy, a retiree household assigns one-third of its savings to equities, one-third of its savings to fixed-income investments, and another third of its savings to cash. Each of these “buckets” has a different function.

While everyone’s buckets will be different because every person’s risk tolerance and needs are different, the bucket approach generally features a bucket for cash and income, a bucket for assets or conservative investments, and a bucket for future income and growth investments.

Why the Bucket Strategy Can Help

Bucket strategies like this may help because they coincide with how our minds like to place our assets into different categorize. Most often, we tend to bucket our wealth into three buckets: current income, current assets, and future income. 

This can be helpful because, even if your money is fungible, you’re still likely to react differently if you feel your wealth decreasing in one of the buckets. For example, if you start to feel your wealth is shrinking, the first and most obvious step may be to cut back on current expenses. Or, one may feel dissatisfied with their wealth if they don’t have a reasonable amount of assets on hand, regardless of the size of their income.

Whether we realize it or not, this bucketing approach implicitly prioritizes current income followed by current assets and, lastly, future income. Generally speaking, people struggle to feel satisfied with longer-term buckets if the more immediate ones aren’t satisfied.

For anyone who took Psychology 101 in class, this may remind you of Maslow’s hierarchy of needs. Maslow believed people have a motivational hierarchy of needs that must be satisfied in a particular order, starting with physiological and safety needs followed lastly by self-fulfillment needs. 

In a way, the retiree has a similar hierarchy of retirement needs that he or she strives to fulfill in a specific sequence.

Fulfilling the Hierarchy of Retirement Needs

It may be helpful for retirees and pre-retirees to consider how they can tackle each level in this hierarchy. If we look at the figure above, we see that the first need to address is current income. 

It’s difficult to feel confident in your future retirement if you aren’t satisfied with your current income, which includes your spending cash flow, your paycheck, and any passive income. This means that before you can focus on your future retirement income, you need to have a handle on your current income and spending. 

Next, once people believe they have a handle on their current income, many want to feel satisfied with their assets, from their savings account to money market accounts. For many people, this may include their emergency reserve to cover any unexpected expenses they can’t comfortably cover with their paycheck.

It seems that only once people have a handle on their current and short-term expenses can they start to focus on and feel confident in their future income and retirement lifestyle.

What Does This Mean For You?

While everyone’s needs and level of comfort vary, this hierarchy of retirement needs may be a helpful guide as you think about your future retirement. 

When looking at these buckets, which concerns you the most? What is the first step towards greater confidence in your future? At CRNA Financial Planning®, we specialize in helping CRNAs plan for and navigate their retirement. Whichever bucket or hierarchy level is currently concerning you, we encourage you to contact us to see how we may be able to help. Call our office at 855.304.3748 or email inquiry@crnafinancialplanning.com. Or, schedule a free 15-minute introductory phone call now.

About Jeremy Stanley

Jeremy Stanley is the founder of CRNA Financial Planning® as well as CRNA Tax Associates®. He has been providing advice and guidance for Certified Registered Nurse Anesthetists (CRNA) for over two decades. As a CERTIFIED FINANCIAL PLANNER™, Jeremy has met rigorous certification and professional standards set by the CFP®Board. He is committed to adhering to the principles of integrity, objectivity, competence, fairness, confidentiality, professionalism and diligence when dealing with clients. 

Jeremy is also the author of The Wealthy CRNA and A CRNA’s Life After Anesthesia. The Wealthy CRNA features insights into becoming a financially successful CRNA and how to start planning for your financial future, and has been prior approved for up to 4 Class A CE credits by the AANA. A CRNA’s Life After Anesthesia serves as your financial roadmap for a smooth emergence into retirement. It reviews recent changes in the CRNA industry along with the new rules of retirement and the final steps of legacy planning. This book has been prior approved by the AANA for up to 2 Class A CE credits. 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Work a little more

I seem to be one that says... “OK, I’ll just work a little more...”. I think it’s fine to say that once in a while for a one time expense but I have learned that saying that on long term expenses... stinks.  I honestly think I’ve thought about this and am much more attuned to.  It always seems there is something that happens just about the time that you make a little extra.  The dog has a vet visit, a crown is needed at the dentist, or a plumber is needed.  So, FI movement says pay off things rapidly and get 6 months or more in savings etc... I get it, I have to work on this and I know it’s do-able!  This is the first weeks of my 6 month run on this.  I get a paycheck next week and that already has it’s assignment.  But I’m assigning 3/4 of it and leaving 1/4 in the bank account for safety.  I know most emergencies can go on a credit card but I have a tendency to fear over-drawing an account ... it happened once 20 years ago!  Mom would tell me to get a checkbook register and write it all down.  Many people recommend writing down every single expense but I have yet to do this while on the road.  

This week I’m home and I want to go through and make sure I’m not stuck in subscriptions or reoccurring payments for apps or things I don’t need or worse just don’t use.   

I’m so exciting to be sitting in the airport and heading home for the week.  Many people tell me it’s about being home and taking the time to be present.  I totally agree and know that in the coming 6 months I’ll be going against that somewhat but those 6 months will make possible time to be home with the family more often and more in tune with all.  I’m feeling so excited to just be working toward a little freedom from payments ... not to mention the anticipation of the road of financial independence.  I hope all know I appreciate the comments... despite my reluctance to get rid of everything in a fire sale ;).  Have an amazing weekend and I’ll write more while at Mid-year Assembly! 

What about earnings?

What about earnings and potential earnings?  So, many offered the advice of... 

Selling off all assets in order to pay off debt and then re-buy assets.  

Selling the houses in a stagnant market that doesn't really go up or down would basically mean selling at a loss and then trying to re-buy them later as they are money making assets vs stocks or retirement which doesn't really make $$$.  Now, if you said take a leverage your IRA for a reduced interest rate that might make sense but I don't have enough in those IRAs to make it worth doing.  

The homes are a life insurance policy that my family would be ok if they had to go and return to a home and I died.  They would have money coming in for life that would ultimately cover the bills.  So, to sell them would give no piece of mind.  The life insurance would more than pay the bills and what's owed and they would be ok.  

The goal in going through all of this is to think about earnings as a 1099 and where the $$ go.  I may not have $200K in student loans but $100K in credit cards is pretty bad but not Rock Bottom as someone mentioned.  I say that because I have never been at the point that I can not pay the bills.  

There are some slow months that came in at about $10K for the month and having 2-3 of those months and not actively paying down the debt is what caused me the point of freaking out a little.  As a locum though, I know that if I'm willing to travel and work hard with a plan... I can wipe out most of this debt over the coming 6 months.  So, that is what I'm writing about.  I'm tired of not wondering if I can pay my bills... I'm just tired of having the bill altogether.  

I figured out the payment of the bills comes to just under 7K/month with the house-payment, rental payments and income not included as those are a long term play.  That doesn't include paying extra or paying much in taxes.  Sounds like a ton to those not sitting in the position that I can work hard and pay down over 100K in just about 6 months and be much more healthy from a balance sheet perspective.  

I have a monthly running total of debts and will be updating all of this over the coming week.  That said, I have paid in 9K to my Sep IRA this month, 10K in tax payments and 10K toward credit card debt.  That is substantial for being 2 weeks into the month.  As I continue down this path to financial independence... I don't expect it to be easy.  I don't expect to be blowing 10K here and there but making a concerted and real effort to be more responsible.  

With that said.  We are holding off on baby number 2.  This process will have to start over in 6 months as it is a 2 year process each time we do it.  We started the process and made a valliant effort with our surrogate without the agency fees etcetra. However, that attempt failed twice.  Had we been successful the $50K would have been well worth it.  Unfortunately, we did not have success and that means we have to stop, regroup, re-fund that savings.  We are not rushing into this and we are not trying to our detriment.  We knew that this was possible but we also discussed that had we failed we would have to take the time before starting over.  

I took the truck to car max and offered to sell it back but they took blue book value and slashed 20% off of that value and then offered that for the truck which would have put us at zero for the truck.  Then when I went back to wanting a truck I would have been paying carmax more for a truck in 6 months than I would have saved in truck payments and that they had offered for a smaller less equipped truck and so it was a better option to keep the truck and just continue the plan to pay it off after the credit cards.  

The house in Virginia.  We like the home and need a place to be.  We have friends in the area and it is central with good community and school for Elizabeth in the coming years.  It's not perfect and hindsight being 20/20.... I'd have done that differently but there isn't a way to sell the house and just go down the street.  We could rent it in a year or two and be just fine or at least break even but the family is happy there and I can hopefully get credentialing done and start locums in the future ... in that area.  Had the credentialing not been delayed for 5 months by ... I don't know exactly whom, I wouldn't have to be traveling away from family so much.  

So, maybe this helps with some insight into the thinking.  Honestly, this is so all can see the flexibility and ability to pay down significantly utilizing locums to do so. This also will show how in the future that debt pay down can then be used to advance my rentals and our savings to a more comfortable place and the same locum job used to bust my butt working.... can become an opportunity to slow down and be with the family as we grow the family.  

Have an amazing weekend and enjoy the journey!  I know we are :)

What's an Asset?

OK, so I told you just how negative my balance is.  Now, let's go through Assets....

1st- Assets are those places income can be derived or held in retirement or trust to earn income for the family.  

2nd-  I have 6 rentals.  2 are full time rented and a 3rd that will be rented in july for 11 months as a college rental.  4th is airbnb style rented and intermediate term rented.  5 and 6 need work one that will take approximately 3 months to get done and one that will take about 6 months.  Overall, rental income now is about 1500/ month but when all 4 are back to rental I'll be about 2500/month and then when 6 are rented It should bring in about 3800/month.  This will flux based on the airbnb rental up and down.  expenses are about 800/month.  This means a cash flow positive situation that can lead to growth of the business.  

3rd-  I have a military Thrift Savings Plan that has some minimal amount that will be for retirement when I'm older... approximately 25 years from now.  I also have a Sep IRA I just started investing into as of the last tax year.  I have a small Roth IRA that is sitting out there waiting

4th-  I'm working on utilizing my GI Bill for education that will also bring in a small housing allowance for three years while I take classes and learn. 

5th-  I have this business as well as side gig in Pampered Chef that brings in a small monthly amount despite doing minimal amounts of work. 

6th-  I am working on the taxes, and revolving debt and have a plan to pay those off over the coming 5-6 months.  

Despite the fact that I work a ton, I tend to pay heavily on my bills so it doesn't get this bad.  I recently moved and just had the embryo failures that spiked my credit card debt which made me freak out.  So, I don't look to sell assets off that have the ability to pay the debt that I have... Granted, I look for opportunities that might allow me to pay off debt and add to the assets.  

I'm looking forward to this journey and know that I can't be the only one looking for Financial Independence or at least getting better in decreasing the debt dependence.  Continue the journey with me over the coming months.  I'll also be continueing to comment on locum work and how to continue this journey.  

When I'm home, I'll be looking at how I can get more comfortable behind the camera to go through these every day things on the journey of Locum Life.  

I'm negative $500K+

It may seem easy to say I'm broke but to say and feel that burden of the debt that I have and the understanding that I am not getting ahead by working my butt off can be depressing.  I look at the FI or Financial Independence/ FIRE Financial Independence Retire Early and wonder if it's possible at 38 years old if this might still be possible.  

Why did I get to this point and what happens?  I have 9 revolving credit accounts.  I have interest rates from 9.99% to 22.5%.  It's when you see that interest per month accounts for easily $3500/month... that means before I decrease me debt I have to make greater than $3500.  Even at a higher level of earning that, I have to make 42K/year.  Granted in the world of advanced practice nursing that pays that amount... it becomes overwhelming.  To have that amount after taxes I have to consider it takes almost $84K to pay that $42,000 if I were W-2.  

This doesn't begin to include my real estate business.  I own 6 homes outright in Kansas.  One completely needing a full rehab and one needing minor rehab.  Two are full time rented, and one is Airbnb rented or long term rented separately.  These start at $6000 to $42K on initial buy price and needed anything from $5000 to $40K in fix-up expenses.  Although these are paid in cash, they don't bring in the cash-flow, at this point, that one might expect.  If you are wondering where the money came to take care of these... I put expenses on the credit cards until I could pay that money back.  Is this what made it all so bad?  Not exactly.

We started a journey of surrogacy.  The surrogacy process was expected to be $48,000 and was going through Mexico ... we started this process just over 3 years ago.  We started out so excited and then two egg donors, multiple surrogates, a miscarriage, and 7 embryo transfers we finally had a pregnancy that resulted in our daughter.  Then I was stuck in Mexico for 7 weeks attempting to get out of the country legally with our daughter.  Over $150,000 in lost wages and fees for surrogacy later we had our daughter back in the US and then started the Legal work that one year later resulted in the 2nd parent adoption for my husband.  More lost wages, and legal expenses later we had everything done.  Is that all... No. 

Given the length of time working for Elizabeth, we decided to start the surrogacy journey for a sibling and decided that the US would be a better option.  We found a surrogate, moved our home to Virginia with the purchase of a new home.  That was $7000 down on 379K in home debt but you have to live somewhere that is good for school, and a safe neighborhood right?  So, one would think we had it all together getting to Virginia and having found the Surrogate, did the legal documentation, found the surrogacy agency and found our egg-donor.  We made four embryos and went through two failed embryo transfers and found ourselves not pregnant... we had effectively lost approximately $51,000 and we have to look to starting over in this.  I had contracts set-up to be able to work and due to inefficiency the contracts didn't start.  They failed to do their due dilligence in making sure I could start work.  

Now I'm traveling states away while the family is in Virginia.  I spend weeks away trying to make sure I'm able to provide for family and bills.  I look to the FI possibilities and the amount lost each month and cringe.  Despite being able to cover the bills... this is not what I anticipated as a Travel independent Nurse Anesthetist.  I always looked at being a highly skilled provider and said I was good for the funds.  I'm looking at the future and wondering how I can dig my way out of this.  

I'm putting this here, not to get sympathy or to get comments.... I put this here so I have the accountability in getting the debts paid down.  Oh, I didn't mention that I have a paid off Jeep, a very high car payment on a truck, and finally I acquired a personal loan to help pay for things at some point along the way.  Did I forget that I didn't pay taxes yet for last year... yup it's tax time and I have only paid in $10,000 in the taxes for last year and have about $40K to come up with over the next few months.  

So, If you are interested in continuing to follow my journey to FI... you're going to notice on this blog that I will also add updates on when I pay off credit or loans and where I'm putting $$ earned each month.  I hope it's ok to use you guys for some accountability and making sure I get my life back to healthy on the financial concepts.