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The Sunday Best (06/11/2023)

The Sunday Best is a collection of articles I’ve curated from the furthest reaches of the internet for your reading pleasure.

Every week, I scan hundreds of headlines, read dozens of posts, and bring you the best of the best to save you time and mental energy.

Financial Independence (FI) is a primary focus, but it’s an awfully broad topic. I tend to approach FI and early retirement from a fatFIRE perspective and through the lens of a physician, so expect to see those biases in the selected articles.

Related topics that have become recurrent themes include early retirement, selective frugality, tax issues, travel, physician issues, and of course, investing.

For more great articles, take a peek at The Sunday Best Archives. Now let’s get to the best… The Sunday Best! This week’s articles were curated for you by Leif Dahleen, M.D.

 

Conventional wisdom isn’t always wise, and I like to feature posts that challenge some of our commonly held beliefs. The first few in today’s Sunday Best fit the bill. From David Baughier with Fiology, Renting Advantages: Why Renting Forever is the Superior Choice.

 

Our guest author, who first penned FIRE Starter 010: New Attending Practicing Geoarbitrage in the Heartland back in 2021, is a fan of homeownership. He returns with a life update as he checks off one financial milestone after another. Charting My Financial Path: A Physician’s Journey to Wealth.

 

For those that prefer to own a home, how would you feel about borrowing against your investment portfolio to buy one? Dr. David Graham, the FI Physician, contemplates Using a Margin Loan to Purchase Your Home.

 

Dr. Cory S. Fawcett from Financial Success MD would rather not carry any loan on a home. Yes, You Should Pay Off That 3% Home Mortgage.

 

Do you own rental properties? Watch or listen to Coach Carson and Erion Shehaj explain Four Reasons to Pay off Debt on your Rental Properties.

 

Counterarguments can easily be made to the articles above, but it’s good to consider both sides of these questions. The White Coat Investor leads with the disadvantages before diving into 10 Tax Advantages of Real Estate – How Many Can You Name?

 

This particular tax advantage of real estate investing is often misunderstood. The Debt Free Doctor dishes on Understanding Passive Activity Loss Rules And Limitations.

 

Index funds come with tax advantages, too, and there are at least 29 more reasons to like them. Paul Merriman shares 30 Reasons to Fall in Love with Index Funds.

 

One thing index funds are not going to give you are massive short-term gains (or 100% capital losses). Both are possible with startups. Kevin Mercadante with Wallet Hacks shows us How to Invest in Startups & Pre-IPO Private Companies.

 

Is working for a startup or starting one of your own a dream of yours? Dr. Peter Kim with Passive Income MD describes 4 Strategies To Make The Transition From Medicine To Entrepreneurship.

 

The Darwinian Doctor wins this week’s humblebrag award as he reflects on his takeaways from an Ivy League college reunion. When Does This Game Get Good? (Arrival Fallacy and My Yale Reunion).

 

I didn’t go to Yale, but I did go to 20-some different cruise ports on 4 continents over the past 13 month or so (take that!), and I’ve got a lot to tell you about those experiences. 47 Lessons from 47 Days on 3 Repositioning Cruises. Apparently, I have a lot to learn about upside-down pineapples.

 

The Jensen family has been traveling a bit, too, and Mr. 1500 Days is learning the difference between taking a vacation and simply traveling. Thoughts on Slow Travel.

 

The Tic Toc Life Couple has extensive experience in slow traveling; they’re living many other people’s dreams. Visiting Portugal, Spain, and The Netherlands, they report on The Cost of 30 Days Living in Europe (And Our April Budget)

 

Feeling Elation from Grocery Deflation

 

Our chest freezer is filling up.

Last week, the local Meijer store had 80/20 hamburger on sale for $1.99 a pound. I bought a lot of it.

Yesterday, I discovered that boneless skinless chicken breasts were on sale for $1.50 a pound at Walmart. I loaded up.

The sticker shock from 6-12 months ago has subsided, and lately, I’ve been pleasantly surprised by falling prices on a number of our supermarket staples. Milk is now regularly between $2.50 and $3.00 a gallon. A dozen eggs is now routinely under $1.50, and I”ve seen eggs for under a dime apiece at Aldi.

Craft beer hasn’t gotten any cheaper, but I’ve studied the category extensively and have come to the firm conclusion that it’s still totally worth it.

My bargain shopping extends beyond the supermarket aisles, too, as we’re still in the house-building phase, which should be wrapping up in the next 6-8 weeks. I found most of our light fixtures for under $100. Two of the larger chandeliers were a bit more, but still under $200. Our local Habitat for Humanity restore sells new 100w equivalent warm white LED bulbs at 4 for a dollar. Most of our Kohler plumbing fixtures were sourced from eBay at a fraction of the new price.

Unfortunately, lumber hadn’t come down all that much when it was our time to buy, but at least we bought after the peak. I recall seeing standard 2×4 studs at Home Depot for over $8 when things were crazy. When I picked some up the other week, they were $3.18 apiece. It’s nice to see some sanity return in consumer pricing.

Have you seen any screaming deals lately or been surprised by the direction of prices for the things you routinely buy? Let me know in the comments below.

 

The Backdoor Roth: What Physicians Should Know

 

This section is sponsored by and was written by our friends at Forme Financial, a provider of comprehensive wealth management for physicians.

A common financial challenge for today’s physicians is how to ensure they maximize their savings in an individual retirement account (IRA). Doctors who file jointly with their spouses and have a Modified Adjusted Gross Income (MAGI) of $228,000 or higher in 2023 are not allowed to deduct their traditional IRA contributions — nor are they allowed to make direct contributions to a Roth IRA. Because of these rules, the “Backdoor Roth” has become a popular strategy for physicians looking to make the most of their retirement savings. 

Essentially, the Backdoor Roth allows qualified savers to indirectly fund a Roth IRA by making traditional IRA contributions and then filing a conversion to roll some or all of that money into a Roth IRA account. These conversions work somewhat differently whether you file your taxes jointly or have Married Filing Separately (MFS) status. The timing of these contributions and conversions is also an important consideration, as well.  

Additionally, it’s important to consider the pro-rata rule when filing IRS Form 8606 to make these backdoor Roth conversions worthwhile. Because your traditional IRA can include a mix of pre and after-tax contributions, every conversion amount will be taxed according to the percentage of pre-tax assets present in all non-Roth IRA accounts you may own.  

Why is a Backdoor Roth strategy financially advantageous?

  • Roth IRA distributions to retirees are not taxed
  • Roth IRAs may potentially grow and meet goals, depending on individual circumstances (due to tax-free withdrawals)
  • Having multiple retirement accounts may offer tax diversification benefits
  • Roth IRAs provide significant asset protections (in the event of bankruptcy, etc.)
  • After-tax retirement accounts makes estate planning easier
  • The next generation might benefit from tax-free growth for another 10 years before distributing the assets, depending on individual circumstances.

 

Managing a Backdoor Roth IRA can be complex, and Forme Financial is knowledgeable about the challenges today’s physicians may face when managing their finances. Our advisors have experience working with physicians to assist them in developing strategies for their earnings, considering their individual financial situations — and our mobile app is designed to help you track your financial health anytime, anywhere, from the palm of your hand.

You can learn more about this strategy that can result in tens or hundreds of thousands of additional dollars at retirement with our Physician’s Guide to the Backdoor Roth IRA. If you’d like step-by-step instructions, see the PoF  tutorials with screenshots for Vanguard and Fidelity users.

Reach out to the expert advisors at Forme Financial to learn more.

Advisory services offered through Forme Financial, an SEC-registered investment adviser.  The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.

 

I've got my 2 acres of non-leveraged, crop-producing, cashflowing farmland via AcreTrader. Get yours.

 

We’re Going Streaking

 

Through the quad… and then to the gymnasium. Come on, everybody!

 

YouTube video

Put your clothes back on, people.

Or not. Your choice.

The streaking I’ve been doing started back in my first year of FIRE. Our first slow travel trip was a two-month stint in Mexico. I thought it would be good to expand my Spanish vocabulary, especially with the upcoming two months in Spain on the calendar, so I started doing daily lessons on the free Duolingo app.

Running-in-New-ZealandThat was in October of 2019, and while I’ve used the occasional “streak freeze” to extend the so-called streak another day when I somehow missed a lesson or had no access to internet, that supposed streak is up to 1,297 days as of today.

I started a different steak about five to six months later when quarantined by myself due to a COVID exposure when we knew very little about the disease back in March of 2020. As you may recall, I started doing daily pushups, situps, and squats and worked my way up to 100+ of the pushups and situps (in sets) over the course of a month.

I haven’t missed a day thus far, and it’s been about 1,150 consecutive days of at least a hundred pushups and situps and some number of air squats. I’ve gone through numerous iterations of sets and reps, and my current routine is to do 60 pushups, 30 squats, and 60 situps #notsohumblebrag. I rest while playing a 3-5 minute Angry Birds Journey game on my phone, then do 40 pushups, 20 squats, and 40 situps. It takes 10 to 15 minutes altogether, and I usually get the workout in within about 30 minutes of waking up.

So I’m not running around naked, but I am streaking, and I’ve also been literally running around again, as in jogging for exercise. We ran a family 5k for a fundraiser in town last month, and the four of us will be running another one on the 4th of July.

In six days, my wife and I will be running the half marathon in Duluth as part of the Grandma’s Marathon weekend, and we’re signed up for another half marathon in Michigan four weeks later. I started training back in late February when skiing season wrapped up for us, and it’s fun to look over my Garmin history showing runs all over this great globe of ours.

As someone who was once a busy physician, I know I’m stating the obvious when I say that maintaining any kind of streak or regular healthy habit is much easier when you don’t have a real job. Early retirement has absolutely facilitated my streaking tendencies. I highly recommend it. 😉

If you need help figuring out how to make it happen, we’re here for you.

 



 

Have an outstanding week!

-Physician on FIRE

 

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