Fawcett’s Favorites 3-15-21

Each week I run into a few articles that I feel are especially valuable. Every Monday I would like to share some of the best with you, my readers. I hope you find them helpful.

This week’s favorites include a fatal mistake we are making regarding using the 4% rule for retirement, some doctors are going broke during the pandemic, why ‘can I afford it?’ is a terrible filter for your purchases, the low number of student loans forgiven in government repayment plans is abysmal, and is dollar cost averaging really better than lump sum investing.

Happy reading!

What if you retired after reaching your “Retirement Savings Number” only to find out you calculated it wrong? Retired life might not go as planned if you were 20% short on funds needed to live the life you wanted. Physician on FIRE shares with us a post on how Everyone is Using the 4% Rule Wrong. You certainly don’t want to make this mistake before you retire.

Physicians have traditionally thought of their income as stable. But the pandemic reminded us that no one has a stable income if it is dependent on our ability to work. Disability can also put a crimp on your income production. Some specialties are thriving during the pandemic but others are going broke. Refinery29 shares a story that points this out in Doctors Are Going Broke During the Pandemic. Why is no one Talking About it? How about you? Did the pandemic help or hurt your financial situation? In my case, being retired and traveling a lot, the pandemic increased my wealth as I stayed home and saved the money I would have spent traveling. Can’t wait to start spending it again.

When we contemplate making a purchase, the phrase that naturally pops into our head is “Can I Afford It?” But is this the best way to make the decision? Joshua Becker on Becoming Minimalist has addressed this regard in his article Can I Afford It? is a Terrible Filter. I used this same concept when I wrote about The One Statement Every Doctor Must Learn. How about you? Do you make decisions based on “Can I Afford It?” or do you use a different filter.

As with most government programs, the huge number of rules and red tape that must be cut through are designed to prevent anyone from successfully getting money from the government. They say they will help, but when the rubber meets the road, they make it so difficult that most people give up before completing all the requirements. Yahoo Money shares the Abysmal track record: Few Students Loan Borrowers Received Forgiveness Through Government Repayment Plan. I learned first-hand what dealing with a government assistance program is like as a landlord. Getting assistance should be easy, but it never is. If you are hoping to get loan forgiveness, better be sure all your ducks are in a row and prepare for a drawn-out process to get the money.

Ever sat on a lump sum of money trying to figure out when would be the best time to invest it? Should you invest a little at a time and practice dollar cost averaging? Or should you just invest all of it now and be done with it. Budgets Are Sexy tackled this question by putting it to the math/history test and found the true odds of success in Dollar Cost Averaging vs. Lump Sum Investing (What to do with a Pile of Cash). I was surprised to see just how big the margin was for the winner in this contest. Before you read this article, think about which one you would choose?

I hope you enjoy these articles as much as I did. I look forward to updating you again next week with a few more articles I find especially interesting. If you read an especially good article, send me the link so I can share it with others.

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