Tuesday, June 21, 2016

Monday, January 11, 2016

So you wanna be a Powerballer?

Powerball, for those of you who are even more disciplined about news consumption, is an interstate American lottery that has not had a winner since November and currently has a jackpot of $806 million (reported confusingly as 1.3 billion).  It is literally all that anyone is talking about.

Like millions of other Americans, I have been roped into a pooled buying situation with some friends.  If anything, it allows us a new venue to insult and mock each other for the roughly the same reasons we have done so for the last 30 odd years.  To that end, I have been putting these tickets under the Recreation budget line, as opposed to Investment, as one friend advised.  We played on Saturday and shockingly, we failed to win anything.  So here we go again for Wednesday, slightly bigger pool, more intense discussions on exactly how to divide up and spend our winnings.

But here's the thing about all of lottery madness-- it is winning actually terrifies me.  All I can think about is some dystopian, Hunger-games-Victor-misery type situation. Enough to consider not playing again.  Seriously? Am I that risk averse?  Here are some issues going through my head:

Annuity or Lump Sum?

Classic question.  I have to go lump sum here.  Time value of money, don't trust the solvency of the lottery commission, better return on my own, etc.  About $480 million after taxes can buy a lot of things that can generate a return sufficient for today's expenses.

However, the major advantage of annuity would be that it is much easier to learn how to handle $26,000,000 (rough calculation) at a time than $480 million all at once.  Kind of like not taking out too much cash from the ATM, it is just less to lose.  That sad, after 1-2 years it would be really nice to take out the lump.  Is that an option?

How do I receive the money?

Simply put, where does one put half a million dollars received all at once?  Big mattress?  Several thousand savings accounts? Large brokerage?  I don't even mean an investment strategy, I mean, you get a check tomorrow, where the hell do you cash it?


So everyone complains about their huge tax bill on found money.  Honestly, this is found money, this is not where you complain about over taxation.  Taxing wages on labor is far more cruel than government taking a bite of money you didn't have yesterday and did almost nothing to earn.

Tax consequences of Splitting?

That said, how does splitting work, tax-wise?  If my friends and I do split, do we have to pay taxes on each successive transfer?  That is-- does the winner give Uncle Sam his 40% cut as does each subsequent recipient?  If so, taxes will eat a massive amount of winnings.  Do we incorporate before buying tickets?  How about gifts to friends and family (separate issue)?  Does the "lucky" winner just have to keep to the gift limit and start a bunch of 529s?

Keeping it?

How the hell does one hold on to that much money, acquired that quickly, without having developed any of the financial muscles to hold on to it.  How does one avoid the temptations of travel, frivolous or extravagant purchases, the claims of creditors (real or imagined), long lost relatives and old friends suddenly in need, sycophants, leeches, and hangers on?  How does one avoid the attention of thieves and con artists?

How does a winner spending wisely, take care of friends & family without ruining them?

The most conservative and thoughtful of us assume that we would make a series of rational purchases-- debt reduction, homes, set up financial products to assure the security of our loved ones.  But how does one do this without all of the potential pitfalls of found money-- how to not alienate friends and loved ones through too much or too little generosity?  How to avoid fueling drug, alcohol and gambling addictions in those around you?  How to make every interaction in your life, the way you process every conversation with every person, not entirely about this huge pot of money you effectively found?  How to raise children well, avoid the spoiled-sociopath continuum?  How to disprove the axiom that wealth never lasts more than 3 generations?

Growing it?

This has a little to do with how to receive the money, but one wonders how to effectively grow that much money.  I guess this is why we have really large financial institutions who would line up to "manage" that money for our lucky winners.  (See "Keeping it")

Giving it all (or some) away?

So then people think about to what charities or other causes they ought to contribute?  Whose student loans would you pay off?  For those of you in the Give it away camp, is it just because you don't have really good answers to the questions above?  Is there a responsibility that a lottery winner has to distribute found wealth?  To what end?

So that's what I am thinking about while everyone else is plotting their island escape.  Maybe I'm just boring, I don't know.  So I'll ask again, given all that-- You still wanna be a Powerballer?

UPDATE:  I did not win.

Monday, December 21, 2015

The Work Benefits of Work-Life Balance

Much has been written about the benefits of work-life balance-- more energy, more time spent with family, ability to focus on one thing at a time.  And while I completely agree, most of these benefits tend to accrue to the "life" half of the balance.  Meanwhile, the "work" half of the benefits tend be squishy, intangible things like "more energy" or "not feeling burnt out."  While I agree strongly that these elements are crucial, they are also shockingly hard to quantify and therefore easy to dismiss.

What I write about today (mildly ironically while taking some time off at the end of the year), are clear benefits to a work environment that stresses balance: insight, planning, and revealing weaknesses.


Insight, forever associated with a Greek in a bathtub, is a beautiful feature of our minds which allows up, seemingly in a moment of rest, to connect all of the threads of the problems before us.  Like Archimedes, I find insight happens best in the shower, but regardless of your preferred environment, it takes time, space and rest in order to have flashes of insight.  And these moments of insight so often have changed the course of my work.  Effortless and completely, an idea rushes into mind which solves the seemingly unsolvable problems of the day before. One such idea allowed me to convince others restructure the way tens of thousands of patients will receive their care.

Whenever I think about setting up conditions ripe for insight, I recall a tale from one of the many Tony Robbins series I have listened to in life.  No idea if this is original Tony.  He tells the story of attaching a trailer to a car and testing the lights.  First, the brake lights are tested.  Driver in front, passenger standing behind the trailer.  Driver steps on the brakes, the lights go on, and the passenger yells out "It's working!"  Next it is time for the blinkers.  The driver turns on the turn signal and the passenger yells out, "It's working! It's not.  It's working! It's not."

Like the blinker, not working is necessary for our mind to do its work-- to put all of the pieces together to form the as of yet unattainable whole.  Only through true rest, relaxation, disconnection (not just a laundry/groceries/run your children to events day), can we understand the problems we face.


Ah the art of planning.  Deciding what you are going to do ahead of time, reducing options, creating certainty where it ought not exist.  Every tech-enabled, agile, millennial bone in my body rails against planning.  Except for the fact that if you want to move lots of a people to the same way, you need to plan. In the absence of plans, we abuse the illusion of 24/7 availability (I have to sleep, don't know about you), and we throw endless effort at problems instead of trying a little planning.

Think about your own work environment-- does everyone wants to keep everyone on call just in case something bad happens?  Are you constantly attached to your e-mail just in case something comes up?  How often does something truly novel happen, and how often did someone just fail to anticipate the obvious?  I can tell you the times when I am disappointed in the inability to anticipate the future far outweigh the times when I was genuinely shocked by an outcome.

Of course, not everything can be planned, and over-planning may be construed as a high form of procrastination, and of course the words of the great sage, Mike Tyson, ring in my ears: "Everyone has a plan until they get punched in the mouth."

That said, something magical happens every time I go away.  I actually have to anticipate what might happen in the next 1-3 weeks!  I have to communicate with people around me, prioritize what will happen in my absence, develop contingency plans, delegate responsibility and work, and develop cross-coverage plans for things that cannot be deferred.  Here is the amazing thing (at least to me as a young manager)-- the things I delegate, never come back!  People who may not have been "ready" for responsibility, suddenly perform their work with ease.  And it turns out, the longer I am away, the more on edge everyone gets in advance, the better the planning and the more complete the delegation.  At this point, there is probably nothing better for my teams than when I go away!

Revealing Weaknesses

Every organization has weaknesses.  Tons of em. One of the most common weaknesses is the single point of failure.  The one person who absolutely, necessarily, must do what they do in order to keep the proverbial trains moving. This lone hero, unable to take time away (either due to perceived self-importance or actual importance), represents one of the greatest threats to any organization.  Not because they aren't great, they are, but because the organization has built its routines around continued greatness from an lowly, fallible, sleep-requiring, virus-contracting human being.

You know these people in your organization.  Maybe you are one.  You always defer time off because things will break if you do.  My advice?  Take time off NOW.  Break things NOW.  Because at least there is time to plan.  One day you will get sick, have a child, win a vacation, lose a loved one, or as my coach likes to say, get abducted by aliens.  And where will everyone be then?Taking time off exposes under-staffing, opportunities for hiring, cross-training, and promotions that regular operations never do, and crises punish too severely.

On deeper reflection, it turns out that all three of these benefits are basically the same thing-- solutions for the the problems that plague you today, that cannot be solved by any more effort. They can only be solved by rest.   Without some forcing function that causes you to look around at your surroundings, your problems will continue until one day, due to crisis, they can continue no longer. Hopefully each of you can take some time from your work for yourselves and your family. Your work depends on it!  I'll leave you with this if you still are not convinced.

Thursday, December 17, 2015

Iora Health's collaborative care model puts practices in new light

Crosspost today to an article detailing how we are using technology to restore humanity to health care at Iora.

Saturday, October 3, 2015

Personal Finance with Student Loans (Part 2): Loan Management

Student Loans may be the bane of our generation.  Expensive, endless, soul-sucking, predatory, possibly criminal.  At some point you realize you cannot save for your kids because you are still paying for you.  I have heard them described as "paying rent on my job." But for now, they exist, so instead of whining about it, let's get winning about it.

I think of student loans in a very specific way--they are bad to have.  They is little to no tax advantages for the interest, practically non-dischargeable in bankruptcy, and now they factor into mortgages thanks to the scumbag mortgage "crisis."  The rates are no longer low like they used to be, lenders buy/sell your loans and the websites generally suck.  Simply put, my goal is to get rid of them as reasonably fast as I can.  Forget that inflation suggests we will be paying with worthless dollars, the margins there are so slim (and the consequences of inflation are so great) that I'd rather not use that as my winning strategy.

So I see pre-paying loans as a very specific type of cash flow investment: Every month, a fixed amount of money leaves my account until some far away total.  By eliminating the loan, I get that cash flow "back."  As far as I know (but you should check), no student loans have pre-payment penalties.

Put differently, putting money towards student loans above the minimum is the equivalent of investing in a non-compounding investment at that interest rate. So if I pay a 5% loan early, I am effectively earning 5% money back (non-compounding) a gain on which I have to pay no taxes.

Therefore, my loan repayment strategy is effectively:

  1. Reduce interest rates however possible
  2. Organize your loans by interest rate, highest to lowest
  3. Order any investment opportunities you have by return rate, highest to lowest
  4. Decide on your "transition rate"
  5. Consult your budget for how much you "extra" you can spend this month and Go!

Step 1: Reduce Interest Rates

There are basically two ways to reduce interest rates, Autopay discount and Refinancing.  If you aren't already set up for Autopay, which usually has a 0.25% discount, do it.  If you can't afford to Autopay, go back to budgeting.  

Refinancing is a relatively new option in the world of student loans.  Basically someone decides to offer you better terms than your existing lender.  There are bunch of folks doing this so check it out.  We went with Earnest and have not been disappointed.  Best rate, most flexibility, great website, great service.  It is worth shopping around, but they are awesome thus far (about 3 months in). Refinancing for us took a chunk of loans around 7.5% and brought them down to 4.5%.  That is an insane amount of interest saved.  Put differently, for $100 more per month in monthly payment (which was a choice we made, not forced), we pay off the loan in 9.5 years instead of 25. 

Steps 2-4: "Transition" Rate

There are two basic strategies to choose which order to pay back multiple loans known as Snowball and Avalanche.  Snowball manages your emotions because you "win" faster and more frequently.  Avalanche requires more emotional discipline and saves you more money.  Avalanche is the superior strategy.

The "transition" rate is the interest rate/return rate at which you ought to invest rather than pay back loans.  This number is personal, there is no right answer.  It incorporates all of your loans, what investments you have available to you, your tolerance for risk on investments, and the fact that winnings both compound but also get taxed.  

So, line up your loans by rate, highest at the top. Tuition.io is REALLY good for this.

In my world we have a small loan at 5%, a big loan at 4.5% and a medium loan at 4.25%.  Based on that, and my risk tolerance, I decided that 4.5% is my transition rate.  Now my job is to pay the 5% loan down, and spend the rest of my time looking for investment options that I believe will return greater than 4.5%. If I can't find them then I just pay more in loans that month.  

Investment options, What investment options?

Everyone has investment options.  A 60 month CD right now returns 2.25% guaranteed.  If you have access to a 401K, just putting the money in tax free starts you at a return of your tax rate. Beyond that there are stocks that pay dividends, stocks that grow, bonds, private investments, etc. If you don't know anything about this, than your transition rate ought to be the annual CD or savings account interest rate.  Whatever it is, it is never 0.  

Step 5: Go!  
Once you have decided where to put whatever extra money you have, go decide on how much extra money you have. Make sure this money is extra (after regular and emergency liquidity planning) and don't look back. Once it is paid to loans, it is gone.  Once it is invested, it may or may not be gone.  


Friday, October 2, 2015

Personal Finance with Student Loans (Part 1): Budgeting

I am often asked by colleagues about how I manage my families money. Or more accurately, I love the discipline of personal finance to be measurably satisfying so I never stop talking about it. I'm the guy that entered receipts into Quicken for 10 years for what appeared to be religious reasons. So, perhaps being exhausted with my line of conversation, (rarely) interested people break down and ask me about it.

First if you need a good framework on what to do with what money you have, Start Here.  

If you notice, Step 0 is Budgeting & Planning.  
Fundamentally, you have to spend less than you earn.  In order to do that you have to first clearly understand how much you spend an how much you earn.  Planning/Budgeting helps you do that with precision (and accuracy).

Think of "Planning" as the words part of the plan: I want a house, I want to pay student loans with interest rates greater than 4%, I want a new gaming computer.  Think of Budgeting as the "Numbers" part of the plan:  I will spend $300 per month towards student loans beyond the minimum.  They are both fluid and mutually reinforcing, and can take your goals and make them real.

For budgeting, I HIGHLY recommend YNAB. When I got it, I hated it. I thought it was broken, terrible software.  Turns out that my budgeting practices were terrible and broken, the software was phenomenal.  So now I recommend it to everyone.  I awkwardly talk about it at dinner parties. I teach my colleagues when they ask. 

Why is it so great?
First, since YNABing for about 18 months, I now have a laser-like view into our money, and know exactly how much we can afford to spend where.  Pre-YNAB we would let money accumulate in an account and spend it on extra student loans.  Then we would forget about Disability Insurance, or Taxes. Uggh.  

Second, my wife delegated finances to me long ago.  We used to fight about her giving me receipts to enter into Quicken.  After hours of painful work, I still had no clue where we were financially.  Now she can enter expenses on a slick mobile app (or leave them on my desk) and I can show her, at any moment, exactly where we stand financially.  The amount of transparency has made conversations about money painless instead of painful. 

How long does this take?
Months 1-2 are hard.  You don't have enough money, you want too many things, You forget categories, etc.  By month 3, you can spend probably 1 hour a month on your budget and be good to go.  And remember. Earning more money NEVER solves overspending, only a budget does. 

Once you have budgeted, let's talk about Loan management...

Monday, August 17, 2015

Katrina: 10 years hence... Part 1.

10 Years.  It has been 10 years since those flood waters rained in and took away all that was, leaving with us to survive and then build something new.  I've told my stories from Katrina many times.  I even published one once.  But so much of the bravado of the times have washed away.  What has remained is a deep sadness that I could not have predicted.

I have often submitted that Hurricane Katrina, and its aftermath which left us without a school, without a home (well, with a scumbag landlord), and for the first time in this overachiever's life, without a certain future.

The story of my arrival in New Orleans goes back long before 2005.  In 2002, I first arrived in New Orleans to attend Phi Kappa Sigma's 91st biannual Grand Chapter as chapter president-elect.  It was a fantastic trip, 100 similarish dudes sweating their asses off in the August heat and humidity whilst wearing tuxedos on Bourbon Street.

Flash forward a year later when I started applying to Medical School.  My parents were quite generous in supporting my during the shockingly expensive interview process.  Knowing this and having an interest in New Orleans and Tulane as a school, I decided to apply.  At the very least I would get a weekend in New Orleans again.  It started as something as a goof.  I arrived Friday afternoon for my Monday morning interview.  I was picked up at the airport by officers of the local Tulane Chapter.  Upon getting in the car, Matt, the president, tossed me a Walmart bag with a length of fabric.

"What is this?" I asked?

"Your toga, Welcome to New Orleans," he replied flatly.

That night was awesome.

It was a little strange for me to drop in solo on a group of strangers.  To be honest, I'd never felt more welcome.  I distinctly remember starting a conversation with another partygoer who originally hailed from nearby Lafayette, Louisiana.  I confessed that I was not sure that I was ready to take the plunge to move to this strange, strange place.  Besides, I didn't know anyone in Louisiana.  She looked me with complete seriousness and said, "Well, now you know us."

The rest of that weekend was great fun, exploring what would become my new home.  Eating, walking, taking the sites, more eating.  If you've been, you know.  If you haven't been, shame on you.
Monday morning I walked into what I can only describe as a 1950s high school which called itself a medical school.  I met the students in the hallways, who to this day have the distinction of being the happiest medical students.  Think about that, happy medical students.  When I later called my sister (a physician herself) and told her how happy everyone seemed, she did not hesitate to offer advice (she is a Schutzbank).

"Go there."

"What? But it's so far." I replied.

"Andrew, no one is happy in medical school.  If that many people are that happy, they are doing something special.  Go there."

Several interviews later, one with an Episcopalian minister/faculty member with an amazingly raucous laugh who asked me to tell a story about which I was proud.  Keeping in the meathead, fraternity theme, I thought it would be a good idea to tell a story where I physically removed a MUCH LARGER individual from our house who was intoxicated and trying to steal our composite photo.  It wasn't that I enjoyed the physical confrontation.  In fact, as I shared with Father Don, I was scared shitless.  But it had to be done, and I was the person to do it.  When those around me needed me, I stood up to my own fears, to the challenge, and got it done.

Realizing how stupid it was to tell that story, I began to gather my things and conclude my short trip to New Orleans as thugs and fraternity meatheads don't necessarily make great physicians.  Much to my surprise, Father Don turned to me and said simply, "We need more people like you here."

I was hooked.  I called home to tell my parents that I had decided on my new school.  I do this.  Things like geography, distance, or even getting accepted don't seem to factor in once I have made my decision.

My father, always wise and prudent, asked simply, "What happens if the city gets destroyed in a flood?"

"Dad, you worry too much, that's not going to happen."