During these challenging times it's easy to find yourself worrying about the future. Many of you may be working fewer hours or no hours at all depending on your specialty. In a recent survey, over 40% of medical professionals stated they were working fewer hours and were worried about their economic future.
While there is reason to be concerned, there is only so much you can do about it. This has some similarities to the social distancing we're being asked to implement into our lives by staying at least 6 feet from one another. We can help limit the spread of the virus, but we can't totally control it.
In a similar perspective, we can look at our lives in aspects we can control and others we have no control over. We call it the Circle of Control, which is illustrated below.
If you were to draw circles around your life they'd look something like this illustration.
The first circle, at which you stand in the center, is your circle of control. There...
There's no getting around it. The COVID-19 pandemic has, or will if it hasn't yet, transform our lives. Hopefully, you won't be affected physically by the virus, but there is a chance that even as physicians in high demand you might be infected financially.
When one is in a state of panic mistakes are more likely to happen, especially if you spend too much time watching cable news!
In this blog we'll share five common mistakes people make during a financial scare like the one many are now going through or heading into.
5 financial mistakes to avoid.
Mistake #1: Going deeper into debt.
This is by far the most common mistake people make. It's all too easy to get out your credit cards when you need help during a challenging time. The bigger problem is not the short term problem of using credit, but is instead the long term effect this will have on your goal of getting out of debt and becoming a DFMD.
Many of you probably have cash on hand to weather the storm,...
Right now amidst the Coronavirus pandemic there are three groups of people, financially speaking. The first group, the group you want to be in, are those who have a solid financial position and are not worried about money, despite the uncertain future - even if it leads to being unemployed.
The second group are the ignorant. They don't know what they don't know and have no savings, but despite their lack of savings they have no concerns regarding their financial future. They're partying on the beach without a care in the world, at least for now.
Then there are those in the third group, which is probably the largest of the groups. These are people who are living paycheck-to-paycheck and were broke even before the pandemic hit. If you think there are no doctors or other high income professionals in this group think again!
Just because you have a high income doesn't mean you have money to weather a storm such as this. The latest Medscape...
With all the chaos taking place around the world due to the COVID-19 pandemic, many people are worried about the future, worried they might get sick, and / or worried about their financial future as markets plunge around the world into bear market territory.
What should you do?
What should you NOT do?
We certainly don't have all the answers (although you may want to stock up on toilet paper:-), but we can offer some practical suggestions on making it through these challenging times with as little stress as possible.
1. Leave your investments alone!
You haven't lost any money yet, technically speaking. A loss is only guaranteed if you sell now. Instead, hold your positions in the market and ride the roller coaster to a better place in the future.
The only people who get hurt riding a roller coaster are those who jump off!
It might be hard to stay the course seeing your portfolios down double digits in just a few short days, but the market has always...
Have you ever wondered how you stack up financially against other physicians?
Maybe you've wondered how your net worth compares to other doctors your age.
Perhaps you wonder who's still paying off student loans, or maybe how big a mortgage a typical physician might have.
Regardless of the questions or curiosity you might have, what we aim to share in this blog is not a competition of you against other doc's, but instead a look inside the thoughts and numbers of other physicians to see how your problems may not be unique to you, but instead how your financial struggles are likely similar to other physicians.
First, let's look at who responded to this survey so you can get some insight into the sample size and method used.
Next, let's look at net worth by age. Remember, net worth is what you own minus what you owe. For example, if you have $600,000 in debt (i.e. mortgage, student loans, cars, credit cards) and you have $400,000 in assets (i.e. home...
Temptation to make bad financial decisions is all around us.
The Internet, radio, television, newspapers, even our friends and families can have a negative influence on our purchasing decisions. So how does one who is deeply in debt and wants to be free from their debt deal with all these temptations?
Dream of a life without debt, and then put it on paper to remind yourself daily why you're temporarily sacrificing in the short term to gain in the long term.
In this blog we'll discuss how to create your debt-free dream and put it into action to help you win with your money.
What's in a dream?
A dream is a positive vision of what could become reality if you focus and take control of your life and money. We recommend thinking about what your life might look like if you were watching it play out on the big screen.
What would be happening in your life if your debt-free dream came to life? There are a number of areas of your life that might...
In 1972 researcher Walter Mischel, a professor at Stanford University, wanted to study delayed gratification so he and his fellow researchers created a study that has become known as the Marchmallow Experiments.
In his experiments Mischel wanted to learn more about delayed gratification and its effects over time, so he brought in children aged three to five years old and gave them two options.
A child was placed in a room and a research assistant came in with a treat for them, a marshmallow or a cookie. The research assistant told the child they could eat the treat if they wanted, but if they could wait until they returned they would be rewarded with a second treat.
Get an instant reward or wait and get double the prize - which one would they choose?
If you have children this might be a fun exercise to test on them. What would your kids do? What would you have done when you were a child?
Many gobbled up the treat even before the assistant left the room,...
Yes, I'm sure many of you are thinking, "If only I had more money my problems would be solved!", which in the short term could be true, but over time if your money habits didn't change you might be right back where you started.
Think of all the lottery winners who have gone broke. They had lots of money, but poor financial habits, and more money can't fix that!
This is one of the reasons why we refer to ourselves as behavior change coaches instead of financial coaches. Performing better with your finances is mostly about changing the behaviors that may have got you in trouble in the first place.
The challenge is changing your behavior / habits related to money. Change is difficult, but necessary because if you keep doing what you've always done, you'll get what you've always got!
Our prescription never starts with big radical change. We've seen too many people make drastic changes in their finances that almost...
Legend has it that Spanish conquistador Hernán Cortés issued a challenging order to his men as they sought to overtake the Aztec empire in 1519. His order was actually rather simple, but not so easy:
Burn the boats!
He ordered his men to burn the boats they had sailed from Spain in because they had to be all in to win the battle they faced. He proposed that after they won the battle they would use the boats of the Aztecs to sail back home.
According to the legend they won the battle. They really had no choice. Win the battle or die trying.
While becoming a DFMD doesn't require dying, we can learn from Cortés and his approach for going all in to win. Burning your financial "boats" can be a positive step forward toward going all in to win.
So, what are some financial boats you might need to burn?
Here's four boats we suggest you consider burning as you work toward becoming a DFMD.
Boat #1 - Credit Cards
There is no question the monthly budget is the most impactful tool you have in your DFMD toolbox to aid in taking control of your finances. It's hard to build a debt-free dream without a plan, and a budget is simply that - a plan for your money.
Sure, you can build wealth and become debt free without a budget, but it's much harder to do than with a budget.
You can wander into debt, but it's hard to just wander out without a plan.
The challenge is most people tend to struggle with budgeting. In fact, in a recent DFMD survey, budgeting challenges was the number one topic readers wanted to hear more about.
In this blog we'll discuss some of the most common reasons people fail with their budgets and how to be proactive in dealing with these possible failure modes.
What stands out in discussing the topic of budgeting is that when you get right down to it budgeting is simply a behavior, and as we've written about previously, getting out of debt and building wealth is...