HELPING PHYSICIANS ATTAIN FINANCIAL SECURITY
By Robert M. Doroghazi, M.D., F.A.C.C.
I graduated from college a semester early (If I had planned just a little better, I could have graduated a year early). Each summer I would study a subject on my own and then take the test to proficiency (place) out of the course and receive credit. The summer between my freshman and sophomore year; French III. This was my first summer at Granite City Steel. Every day I would take an index card with 10 vocabulary words in my pocket. Sweep the floor 5 minutes; look at card; le canard=duck. Sweep 5 more minutes; look at card; sentir=to smell. Between my sophomore and junior year I studied Physics III (pretty hard as higher math, even algebra, is tough for me). Then between my junior and senior years I studied genetics.
By graduating a semester early I saved about $2K in tuition, fees, room and board. It also allowed me to work 8 months at Granite City Steel, from February until going off to med school in Sept. Because I was an inspector (see more below) I was taking home one thousand dollars a month. Since this was 1973, take that times 5 for 2010 money. It was a financial windfall for me.
I mention this now because a high school senior was telling me about advance placement courses. There is a fee for the test, and if you receive a certain score you are given college credit. I will tell you straightaway the point of this newsletter: If I were in high school, I would be on these advance placement courses like ugly on an ape. I would take every one on the planet. My goal: graduate from college a year early.
I will use round numbers to make things easy. Say you take 10 AP courses that would generate 30 hours college credit=one year. Fee each test=$100. Thus you paid $1,000 to generate a year of college credits.
Total tuition, fees, room, board etc., for one year at the good private schools (where I believe just about everyone who takes this newsletter wants their children to go) is $45K. If you can graduate a year early from college you can save $45,000. AND: Instead of paying out, you can get a job and make money=$30K (at least). That is a turn-around of $75,000 by graduating from college a year early. Consider what that amount will grow to by age 65. Think of it as a down payment on your retirement. AND: considering that only about 38% of students graduate within 4 years, you will look like a real star getting out in only three years. Mind-boggling!!
The only thing is that you have to be willing to work very hard. But that’s how you get ahead in life anyway. It’s no secret; it’s just that most people aren’t willing to do it.
I guess you could take just a few AP courses so you wouldn’t have to take some of the general courses in college. There is something to this argument. Or it would generate room in your schedule to allow you to take other courses to get a second major. This is just my opinion, but a second major and $4.50 with get you a grande, latte, mocha, hazelnut, supremo at Starbucks.
If this sounds like a plan to you; offer your children the following: You will give them half of what is saved by them getting out early. One-half of $22,500 (one semester) is $11,500. That should be some pretty good inducement to get 15 hours of advance placement credits.
Or if you have already put aside money in a 529, or similar plan, whatever is saved is theirs. Note there are rules on withdrawing this money, and they can be state specific, but money is money, and it will be theirs.
RMD
John John is one of the senior real estate agents here in town. Whenever I have a question I call him first. This is from his quarterly newsletter:
Single Family Residential: The real estate market has picked up a little. In the overall market, prices are stable.
Commercial, Investment and Land: Don’t look for marked improvement any time soon…Speculative buys are on hold…These deals will have to be a slam dunk.
CNNMoney, 8/18/10. “About 74% of Social Security filers last year took their benefits early, even though they would receive larger checks if they waited until they were 65”. There were 7 individual histories. The most common scenario was that people needed the money, but at least one said they were concerned that if they didn’t get in now and the rules were changed, they may never be allowed into the system.
RMD comment: As I have said from Day One of my financial writing, I intend to take my benefits as soon as I am eligible. 1) I have no idea how long I will live. 2) Who knows how long SS will be around? 3) I know I can invest my money better than the government. 4) If they institute a means test, my benefits are toast.
8/17/10. Former Illinois Gov. Rod Blagojevich convicted on only 1 of 24 counts; knowingly lying to the FBI.
Did you know that lying to an agent of the Federal Government, even if you are not under oath, is perjury? Perjury is a felony; you will be prosecuted (just ask Roger Clemens), you could go to jail, and you could lose your license.
I mention this in the context that if you should ever have a field audit with the IRS; i.e., the IRS agent meets with you. Just as a doctor’s first question is always “What brought you into the hospital today?” the first question from the IRS agent is always: Have you reported all of your income? If you say yes, and you have not, even on a small amount, they’ve got you, and they will squeeze very hard. This is why you should always have someone, your lawyer or accountant, represent you at such meetings rather than you appear yourself. If you aren’t there, you cannot answer any questions.
This is a true story; it happened to a physician in Columbia about 30 years ago. He underwent a random audit. Drug companies, instrument makers, pollsters; would send you a check for $1, $5, etc (Because I am retired; I don’t know if they still do this). On the back would be a few questions. If you answered the questions you could cash the check. He deposited the checks into his account, but did not report it as income on his tax return. The total was less than 20 lousy bucks.
He got nailed. He was not prosecuted because the amount was so small, but he was subject to future audits, back audits, etc. They had him; he was on their list.
RMD comment: This is the sort of advice you will find nowhere else. If it saves just one of you from a serious run-in with “the Man” it is worth what everyone has paid for their subscription. Note that Martha Stewart went to jail, not directly because of what she did, but because she lied to the FBI.
I mention this now because of an article in The Economist (8/14/10). “Countries (that) are trying to get their finances in order, bringing down rates of tax evasion is a high priority”. I believe Congress will unleash their pit bull, the IRS, to help raise more revenues.
A post on http://www.321gold.com by the Aden Sisters on 8/17/10: “The US is issuing new debt this year that’s nearly equal to the rest of the world combined”.
RMD comment: Governments can’t print gold, and all of the Central Banks are buying it. I suggest you buy some gold.
I worked a total of 15 months at Granite City Steel. I never turned down a second of overtime, and I bid on any job that paid more than what I was doing. My best break was getting to be an inspector (a 10 “point” job. Labor was 2 points. Each point was worth about 10 cents more per hour), which required passing a simple math test. One hundred questions, like 17x21 or 144-87, with a 5 minute time limit.
I mentioned above I am not that good at higher math. But I can do a lot of simple calculations in my head. On the test I got more than 90 correct. The man, who had been there more than 20 years, said I got by far the highest score he could remember.
Last week alone I received 7 new subscriptions. I must be doing something right. Please tell your friends, inside and outside of medicine, about my work. Feel free to forward them a sample newsletter and encourage them to sign up for a free 4 month trial subscription.
I finished Empire of the Summer Moon: Quanah Parker and the Rise and Fall of the Comanches, the Most Powerful Indian Tribe in American History in 3 days.
The Comanches 1) were, at the time, the greatest light cavalry in the world. Riding at full speed; using the body of the horse to protect them, able to shoot, from under the horse’s neck, 20 arrows, accurately, in one minute. 2) Practiced a barbarity that precludes my description here. I strongly recommend this book to you.
I remain bearish on the stock market (and the economy) and bullish on gold.
I think it is almost inevitable that the market will re-test DJIA 9650, the low of early July (see chart, next page). I also think there is a very good chance that this will not hold. If it doesn’t, then I cannot think of a one reason to own common stocks.
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