Frugal ≠ Cheap: Your car

It’s always important to remember that frugality is not the same as cheap. Frugality embraces getting the most out of your money (think: return on investment) while cheapness is all about not spending money. In this edition of Frugal ≠ Cheap I am going to talk about something we rely on nearly every day—your car.

I’m not going to get into a discussion about buying versus leasing a vehicle as that is a topic for another day. I will be discussing the difference between buying a frugal versus cheap car and why I think this is a prime example of getting what you pay for.

If you’re looking to be frugal, a used car is the way to go. Period.

We’ve all seen the used car ad on craigslist—LOW MILAEGE, NEW TIRES, NEW BRAKES, EVERTYHING WROKS, ONLY $1500!!! You might be thinking, “Sure it has a few more miles than the one from the dealer and it’s a couple of years older, but it’s $9,000 cheaper.” With new tires and new brakes, how could you go wrong?

Reliability

This is probably the most important thing you need to know about any used car you own or buy. Although I only have anecdotal data, a $1,500 car is nowhere near as reliable as a $10,000 car. The only car that wasn’t able to get me to work was my $1,500 car. As a pharmacist, we have relatively high paying jobs and that day of lost wages would have been a big chunk of change if I didn’t have another ride. If your car can’t get you to work, you will lose money. Your vehicle is the perfect time to be frugal but not cheap.

If you’re looking to replace that cheap car you have, I recommend using rank lists (like this one) to give you an idea of what to look for. Notice how Toyota, Honda, and Subaru dominate these lists? New cars come with the cost of depreciation while cheap cars come with the cost of repairs. Buy a reliable car in the $8-12,000 range for the most frugal option. One last bit of advice: when buying a used car, $1,000 worth of brakes, tires, and fluid changes does not make a $1,000 car worth $2,000.

Oh, and safety. Don’t forget about safety features.

Quick Tip: Vasopressors in accidental hypothermia

This blog is here to focus on frugality but I'm still a pharmacist and I had a case come in that presented a good opportunity for a post.

With the so-called polar vortex here and brining record low temperatures, it's important to consider the recommendations for vasopressor use in patients presenting with cardiac arrest secondary to accidental hypothermia (remember your H's and T's).

According to the 2015 ACLS guidelines¹

• It may be reasonable to consider administration of a vasopressor during cardiac arrest according to the standard ACLS algorithm concurrent with rewarming strategies

The 2015 ERC guidelines from the other side of the pond are a little different²

• Core temperature <30°C (86°F): withhold epinephrine
• Core temperature 30-35°C (86-95°F): intervals between drug doses should be doubled (i.e. every 6-10 minutes for epinephrine)

I'm not here to tell you which recommendation to follow, just simply summarizing the various recommendations. The discrepancy is the result of insufficient evidence either way. I personally follow the ERC guidelines as I feel it's more important to focus on high quality compressions and rewarming techniques rather than medications that can potentially cause harm. Sure I'm "just a pharmacist" but that doesn't mean I'm too good to walk to the trauma bay to pick up a set of chest tubes.

This information represents my opinion and is not intended to be used as clinical advice for patient care.

References:

1.      Lavonas EJ, Drennan IR, Gabrielli A, et al. Part 10: Special Circumstances of Resuscitation: 2015 American Heart Association Guidelines Update for Cardiopulmonary Resuscitation and Emergency Cardiovascular Care. Circulation. 2015;132(18 Suppl 2):S501-18.

2.      Truhlář A, Deakin CD, Soar J, et al. European Resuscitation Council Guidelines for Resuscitation 2015: Section 4. Cardiac arrest in special circumstances. Resuscitation. 2015;95:148-201.

Must Do: High Yield Savings Account

Stop everything you're doing and open a high yield savings account. Now.

I opened a high-yield savings account almost 1 year ago today and it was something I should have done a long, long time ago. If you need a place to store liquid assets like an emergency fund, this is the place to keep it. Locking your money away in a traditional savings account or your checking account is no better than keeping it under your mattress.

It's not worth my time
Let's do some simple math and then you'll maybe reconsider. Bank of America currently offers 0.06% APR on their "Platinum Honors" savings account. Goldman Sachs, on the other hand, offers 2.25%. Let's say you have $10,000 in savings and contribute $100 per month. Here's the math:

• Bank of America (0.06% APR): $11,206.33 after 1 year
• Goldman Sachs (2.25% APR): $11,439.79 after 1 year

That's $233.46 for less than 30 minutes of your time. If you're making more than this as a pharmacist, let me know if you're hiring.

How do I get my money?
There are a couple of ways to get your money out of your account. Just keep in mind that you are limited to 6 withdrawals per month (Regulation D).

• Transfer to local checking account - Usually takes about 1-2 business days but it's free
• Wire transfer - Use this when you need your money now and can't wait. It will cost you $20 but that's nothing compared to how much you'll be earning in interest
• Money transfer services like Zelle or Venmo

What bank should I use?

I'll leave that choice up to you, but some of the highest rated accounts over at Nerdwallet include Alliant Credit Union, Ally, and Discover Bank.


These views are my opinion and do not reflect professional financial assistance.

Paying it Back: Snowball or Avalanche?

The age-old question: what's the better way to pay back loans, snowball method or avalanche method? If you're not familiar with either method, there's a good summary over at Student Loan Hero.

For the TL;DR:

Snowball method: paying off the lowest dollar amount loans first

Avalanche method: paying off the highest interest rate loans first

Choosing which method is best for you depends on a couple of factors

1. Personal satisfaction paying off loans
2. Discipline

Let's look at each of these factors individually.

Personal satisfaction paying off loans

I am fortunate enough to have a doctorate degree and a high paying job to go with it. However, that comes with a cost; about $140,000 in my case. Although it's a lot of money, it's still below the average of $157,000 back in 2016. Like many student loans, my loans are broken in to multiple smaller loans from each academic year. I have interest rates ranging from 1.26% to 6.55% and balances ranging from $2,500 to over $40,000.

Let me tell you, paying off a loan of any value feels absolutely amazing. However, the penny pincher in me knows that the $2,500 loan at 1.26% is going to cost me much less money than the $40,000 loan at 6.55%. Besides, I can make more money with that $2,500 loan in a high-yield savings account. While it would be nice to get rid of that loan, I'd actually lose money paying it off.

Let's say I unexpectedly come across $2,500 out of the blue. Paying that lower dollar amount loan will gain me personal gratitude instantly but it comes at a cost: $751.96 to be exact (assuming a 10 year repayment). For me, doing this math and realizing how much I would save by throwing it at the 6.55% loan is much more satisfying.

Discipline

It can get very tedious and tiring paying off student loans. It seems insurmountable, daunting, overwhelming, (insert synonym here)...  Going with snowball lets you attain multiple, albeit smaller, goals. It keeps you on track and it makes you feel as though you've accomplished something. However, keep in mind that it will cost you more money. If you're disciplined, you can stick with the avalanche method.

My advice: Go with avalanche but set milestones.

Every time you pay off part of a loan (say $5,000 or $10,000), buy yourself something you've been wanting, go out to dinner, celebrate any way you want (within reason). It allows you to have some satisfaction paying down the loan while still being as economical as possible.

These views are my opinion and do not reflect professional financial assistance.

Hello, world!

Welcome to Penny-wise Pharmacist. The goal of this blog is to help other pharmacists out there live life to it's fullest outside of work while managing the stress the comes with adulthood. Many of us find ourselves facing a pile of debt after pharmacy school and are looking for ways to tackle it. My goal is to help you conquer that mountain and inspire you to enjoy life.

It's not all about the money.
As with life, money isn't everything. I will be including many things in this blog including:

• Pharmacy news
• Cooking
• Home and automobile repairs

So stay tuned as you witness my successes and failures through life, read about everyday topics, and gain hope that once day you'll be debt free, penny-wise, and happy.