Travel Therapy: The Path to Financial Freedom (Guest Post)

Written by Jared Casazza, PT, DPT

I recently wrote an article that was featured on the Covalent Careers (New Grad Physical Therapy) website, which provides resources for PT, OT, and SLP. The title of my article is “Travel PT: The Path to Financial Freedom,” and I discuss how I have used Travel PT as a means to improve my financial future.

Here is an excerpt from the article:

With tuition prices continuing to increase each year, it’s no surprise that the amount of student debt that therapists are graduating with continues to rise as well. I talk to students and new grads every day through my site that are upset about the logistics involved with paying off six-figure student loan debt, while also doing their best to build a life after grad school. Some services, such as Fitbux, offer assistance with determining a plan to handle this debt as a new grad. Fitbux is a wonderful resource for developing the most optimal plan for getting to the zero debt finish line, and having a plan is a vital part of the process. But besides having a sound financial plan, another vital aspect is optimizing income. There are many ways to increase your income when coming out of school, including working multiple jobs or opening your own cash-based practice, but in my opinion, the easiest (and most fun) path to financial freedom is pursuing travel therapy contracts. …

You can check out the full article at: 

https://covalentcareers.com/resources/travel-pt-path-financial-freedom/

A big thanks to Covalent Careers for featuring me on their site!

If you have questions about getting started on your career in travel therapy, please send us a message and we will be happy to help you along the way!

Is Contributing to a Company 401k Worth it as a Travel Therapist?

Written by: Jared Casazza, PT, DPT

What Makes Travel Therapy Different?

Travel therapists are in a unique position with respect to 401k accounts. When working with most travel healthcare companies, therapists will be eligible to contribute to the company sponsored 401k plan. The 401k benefit eligibility will vary company to company, but most companies provide it in some form. However, since many travelers switch between travel companies pretty frequently, it is a common concern whether contributing to the company 401k plan makes sense for them, or if it would just be additional hassle. Unsurprisingly, since most of my articles on FifthWheelPT are finance related, this is definitely one of the top five most common questions I get asked by current and prospective travelers. In addition to wanting to know if using the 401k plan is worth the hassle if switching between companies, I often hear that there is concern about what happens with account once the individual leaves the company or stops contributing to the account.

I hope to shed some light on my thoughts about 401k plans for travelers in this post, but I do not intend this to be specific advice for any of you. This is just what I’ve done and what works for me, but everyone’s situation is different, so be sure to do your own research on the topic as well.

What is a 401k?

First let’s cover the basics of what a traditional 401k plan is and why one would choose to contribute to it in the first place. Most travel companies don’t offer a Roth 401k option, so we can skip over that for now, but if you’re interested in my thoughts on Roth vs. Traditional accounts, you can check that out here.

A traditional 401k is a retirement account that is offered by an employer and allows the employee to contribute pre-tax money to the account from each pay check. The amount contributed is up to the employee, but it is usually based on a percentage of the employee’s taxable income. Since the money isn’t taxed when it’s contributed, it’s able to grow in the account tax free for however long it remains in the account. When withdrawals are made (usually in retirement), the money withdrawn each year is then taxed along with any other earnings (social security, investment income, rental income, etc.). The big benefit of this account is that it allows you to contribute money while working and earning a lot, therefore in a higher tax bracket, and instead paying taxes on the money in retirement while (hopefully) in a lower tax bracket. The money also grows more quickly in a 401k than in a regular investment (brokerage) account since the amount that would have been taxed is compounded. The maximum that an individual is able to contribute to a 401k in 2018 is $18,500, and for 2019 it will be $19,000. Taking advantage of the tax benefits of a traditional 401k (and additionally, a traditional IRA) is a huge part of what has allowed me to semi-retire and travel around this world this year after only three years of full time work as a travel therapist.

401k Employer Match

A 401k sometimes has the added benefit of employer matching. The amount that is matched, if any at all, is determined by the employer and will usually be somewhere between 3%-6% of the employee’s taxable income. The employer can also include a contingency that it is only matched if the employee contributes a certain amount as well. This is the employer’s way of helping the employee have a more secure retirement by contributing to their retirement account. In many companies, the employer match took the place of a pension that used to be standard but has now disappeared in most public sector jobs. An employer match is in no way equal to a pension since the benefit is comparatively small, but any extra money toward retirement is a great thing!

The employer match is great if the company offers one, but for the majority of travelers this will be a moot point. Most travel companies offer a 401k with some sort of employer match, BUT they have a vesting schedule. The vesting schedule determines how much of the employer match you get to keep if you leave the company early, which makes this an incentive for the employee to stay with that employer. Many of the companies require that you have to work between 3-5 years with the company to keep all of the employer match. Some plans will have a tiered vesting schedule: something along the lines of at one year you keep 20% of the matched amount, at two years you keep 40%, etc. However others have a “cliff” vesting schedule: something like if you work three years or more you keep all of the matched amount, but if you leave before three years you don’t keep any of the amount that has been matched. Basically, the 401k employer match is great, but unfortunately it won’t apply to travelers that switch between companies often or that don’t plan to work three years or more as a traveler. In that case, an individual retirement account could make more sense and involve less hassle for the traveler.

Traditional Individual Retirement Account

A traditional IRA (Individual Retirement Account) is another option which has the same benefits as a traditional 401k, and doesn’t require an employer to utilize, and one other big difference, the contribution maximum. A traditional IRA allows a maximum contribution of only $5,500 for 2018 and $6,000 for 2019. If you’re a big saver like me and plan to reach financial independence as quickly as possible and maybe even retire early, then that’s a relatively small maximum each year.

If you plan to switch companies often, and therefore won’t benefit from the employer match, and don’t plan on putting $6,000 or more toward your retirement account each year, then foregoing the 401k and choosing an IRA instead could be the best choice. An IRA does have the added benefit of more flexibility between investment choices. With a 401k, the investment choices are usually limited to 10-20 options chosen by the company, whereas with an IRA the investment options are essentially limitless.

Utilizing a 401k and an IRA

For those, like me, that plan to put more than $6,000 toward retirement each year, then contributing to a 401k account in addition to an IRA will likely be necessary even if the individual won’t benefit from the employer match.

Luckily, having a 401k and an IRA is pretty easy, even if you switch travel companies often. (Keep reading below to learn more about that process if switching companies.) I’ve switched between companies on a few different occasions and have always taken advantage of a 401k account if offered, while also contributing the maximum amount to both the 401k and an IRA.

There are income limits where the benefit of an IRA (the tax savings) starts to diminish if the individual is also contributing to a 401k, but the limit is higher than most traveler therapists will make at $63,000 of adjusted gross income (tax free stipends are not factored into this number).

In my opinion, if you plan to save more than $6,000 toward retirement each year, then it makes the most sense to me to contribute the maximum to an IRA, and then any additional money you wish to save would be invested in the 401k. This is assuming that you wouldn’t benefit from the employer match, but if you would, then it would be foolish to pass up that match.

Here is the general order of operations that I have used and that I think makes the most sense:

  1. 401k contributions up to the amount to get the full employer match (if applicable)
  2. IRA contributions up to the maximum ($6,000 for 2019)
  3. 401k contributions up to the maximum ($19,000 for 2019)
  4. After tax investments (brokerage account, real estate, etc.)

If your company doesn’t offer an employer match on the 401k or if you won’t be able to benefit from it due to the vesting schedule of the company, then skip #1.

What Happens to the Money and 401k Account When Switching Companies?

Let’s say that you follow the order of operations above and stay with the same company for your first year as a travel therapist, but then get a better offer from a different company and decide to switch. You knew that you would probably be changing companies eventually, either for a better paying job or a job that your company may not have, so you assumed you wouldn’t benefit from the employer match. You maxed out your traditional IRA and contributed an extra $10,000 to your 401k. Great job!

Now, since the IRA isn’t associated with the employer, it isn’t affected at all by switching companies. That account belongs to you only. But the 401k is affected by switching companies, so you’ve got a decision to make.

Here are your options:

  1. You can have the money paid out to you.
    • This is almost never a good idea since you will not only pay taxes on the money, but also penalties!
  2. You can keep the money in the 401k account of the employer
    • This will occasionally involve additional fees since you no longer work for them.
  3. You can roll the 401k over from your previous employer’s 401k account to your new employer’s 401k account.
    • This could also be a hassle if you don’t plan to stay with the next company very long.
  4. You can roll over the 401k into your already existing traditional IRA account.
    • In most cases, and what I’ve always chosen to do. It makes sense to roll the 401k balance over into your traditional IRA. This gives you the increased flexibility with investment options mentioned above, which usually means lower fees on the investments as well which is a wonderful thing. The account is also yours and not associated with any employer, so you don’t have to worry about moving it around again at a later time. And the accounts work the same way with taxes, and you won’t have to pay penalties.

401k Rollover to Traditional IRA

By rolling the money over into your traditional IRA account, you have essentially contributed the full $16,000 (investment in the IRA to the maximum plus the investment in the prior 401k plan that is now rolled over) to your traditional IRA. This is an easy way to effectively contribute more than the maximum amount to an IRA when switching companies. This simplifies your finances (less accounts to keep track of) and gives you more investment options which are both great things. The rollover process is very simple and can be repeated every time you leave an employer and have a 401k balance with them. I have rolled my 401k balance into a traditional IRA several times and it has never taken more than 30 minutes.

For those travel therapists that are saving a significant amount toward retirement each year, I think that this is the best option with all things considered. I max out my IRA, contribute as much as possible to my 401k, and then roll the 401k into the IRA each time I leave a travel company to give myself the most investment options and to keep my financial life as simple as possible, while still contributing over $20,000/year to the accounts that wouldn’t be possible with a traditional IRA alone.

If you do this as well then you’ll want to make sure that it is a direct rollover. More information on the different types of rollover can be found here.

Conclusion

I know that for those of you that aren’t very familiar with saving and investing, this can all sound intimidating, but it really isn’t very difficult and takes minimal time to figure out and implement.

For those travel therapists that don’t plan to save more than $6,000 toward retirement each year, then just foregoing the 401k and choosing an IRA instead is the most simple option. For those that want to save more than $6,000 per year and also switch companies often, it’s worth the extra effort to contribute to the company’s 401k plan once you’ve maxed out your IRA for the year and roll that 401k over each time you leave a company. Once you’ve done it once it’s a piece of cake and will take you no time.

Above all else, make sure that you’re saving for retirement in some capacity no matter what account(s) you choose to utilize!

Remember to do your own due diligence before implementing anything that I talk about, since this is not intended to be specific advice for you. Thanks for reading and I hope that this post helped to clarify things for you.

If you have any questions about this post or anything else travel therapy related then contact us and we’ll do our best to help you out. If you need assistance finding a good travel therapy company or recruiter then reach out to us and we can help you there as well.

How do you currently handle your retirement accounts as a travel therapist? Let us know in the comments!

 

Opportunity Cost: Passing on a Travel Job and Having Unplanned Time Off

Written by Travis Kemper, PT, DPT

What is Opportunity Cost?

Opportunity cost is an important economic term that most of us rarely think about. An opportunity cost is quite simply a lost benefit from choosing one option instead of another.

Opportunity Cost and Travel Therapy

Why is this important and what does it have to do with travel therapy? We’ve seen a number of travelers post about a potential job opportunity that they were passing on due to the pay being too low for them by $100 or $200 per week. They say if the pay was higher they would take the position because everything else sounded great!

So let’s analyze the opportunity cost of passing on a position without a replacement position readily available:

  • John is a new grad traveler and receives an offer of $1500 per week that starts 10/1.  John turns down the position, stating that his minimum acceptable pay is $1650 per week because he wants to pay down his loans as fast as possible.  Good news, John finds a position paying $1650 per week that starts just 2 weeks later on 10/15, and he takes this position.
  • Sally also is traveling with the goal of paying down her loans quickly.  Sally takes the position for $1500 per week and starts 10/1.

Who makes out better financially?

  • Sally makes $1500 x 13 weeks= $19,500 net pay, 13 weeks after 10/1
  • John took 2 weeks off waiting for that bigger paycheck. 13 weeks after 13/1, John earns $1650 X 11= $18,150.

The opportunity cost for John is $19,500 – $18,150 = $1,350 in lost income, due to waiting for the higher paying position.

Conclusion

The moral of the story is that higher pay isn’t always higher pay if you have to wait to start. This is a very simplistic example, but as you can see, continually passing on “low pay” will hurt you financially in the long term if you take extra, unplanned time off.

We recommend you take the right job instead. Pay is important, but sometimes the highest paying positions can also be the least desirable positions.

If you have questions about a travel therapy position, pay packages, or need help in your travel therapy journey, please shoot us a message and we would be happy to help!

Why Choose Travel Therapy?

Written by Travis Kemper, PT, DPT

My “Why” For Travel Therapy

Everyone’s “why” will be very personal and may be very different. My fiancée Julia and I are traveling for the freedom it provides. We enjoy not being tied down to one geographic location and not being obligated to work 50 weeks per year. There are too many things we want to do with our lives to settle down in a permanent position.

We want to travel, not for 2 weeks each year, but long enough to immerse ourselves in the culture of a new place. We would someday like to do international mission trips as well where we can use our skills and training to help others that have tougher challenges and decreased access to appropriate healthcare.

What’s Your “Why”?

You don’t have to want the same things I want, but you should know your why. Maybe it’s to travel, maybe it’s to pay student loans off, maybe it’s for financial independence. It could be that you completed 3-4 internships and have no idea what setting you want to practice in because your profession has too many awesome options (I can relate to this)! Maybe you’re burnt out in your current position and need a change of scenery.

Whatever your why is, you hopefully take it into consideration before embarking on a traveling or permanent career decision.  Your why can, and hopefully will, change as you grow as a person, but your why can always provide you with direction in your career and life.

So, what is your “why” for considering travel therapy? Shoot us a message or leave a comment below. We’d be happy to help you get started on your journey to pursuing travel therapy today.

Travel Therapy: What is a “Tax Home”?

Authors: Travis Kemper, PT, DPT; Jared Casazza, PT, DPT; Whitney Eakin, PT, DPT, ATC

What is a Tax Home?

If you are just starting out in travel therapy you may not be familiar with the concept of a “tax home.”  Basically, a tax home is your primary residence, where you live and/or work. When you’re working as a travel therapist, having a tax home allows you to take housing and per diem stipends provided by travel therapy companies without having to pay taxes on them due to the stipends being a reimbursement for costs incurred at the travel assignment location.

This is a major benefit for you and greatly increases your potential total compensation, if housing costs are kept at a reasonable amount, when compared to a permanent job, where all your income is taxed. This is the main reason why “take-home” pay (otherwise known as your after-tax pay, the money that actually goes into your bank account) as a traveler is higher than pay in permanent jobs.

But, maintaining a proper tax home is a little more complicated than just saying you “have” a permanent residence.

The Basics of Maintaining a Tax Home

To be allowed to take the untaxed stipends, per IRS guidelines, you need to be able to demonstrate at least two of the following three criteria:

  1. You must maintain a place of permanent residence and pay expenses there (i.e. rent, own/mortgage, pay bills, pay taxes, etc.) while ALSO paying expenses at your travel location. This is called “duplicating expenses.”
  2. You must not abandon your tax home. Generally speaking, you should return there at least 30 days per year but these days don’t have to be consecutive.
  3. You must still conduct business in the area of your tax home. For example, you have a PRN job there or maintain some type of other business there.

The third criteria is a little vague, as some interpret “conducting business” as having bank accounts and credit cards, car registration and insurance, and voter registration associated with the tax home, not specifically working in the area.

Without meeting at least 2/3 of these requirements, you would be considered an “itinerant worker,” and all of your income will be taxed.

There is nothing wrong with having all of your income taxed, and you may still come out ahead this way as compared with a regular, permanent job. But, we like to keep as much of our money as possible, so qualifying for the tax free stipends is ideal provided that maintaining your tax home isn’t so expensive that it negates the benefit.

To find out more about tax homes and all things about travel taxes, we recommend you check out the website TravelTax.com/traveler.html. (Specifically, scroll down to the section “how to keep a tax home”). This is a wonderful website where we have all learned a significant amount over the years.

What Are Some Strategies to Keeping a Tax Home?

Of course if you already own a home/have a mortgage, or rent an apartment, these can be maintained as your tax home. But this method can be more costly and also more complicated since you may not have someone to look after your place while you’re away. You may be thinking you could rent out your house while you are gone, but this is not advisable unless you specifically state in the lease agreement that you would maintain at least one room in the house as your own and you stay in that room while in the area (at least 30 days per year as mentioned above).

Perhaps a better option is renting a room out from your parents or a friend, which in our opinion is great way to maintain your tax home. Go on Craigslist, see what a comparable room rents for, and pay your family/friend to rent the room in their house. It’s also recommended that you have a contract written and signed. They will have to claim it as income on their tax returns, but they can keep the extra income to help around the home. That is the simplest way, and that is what we have been doing since starting to travel. As mentioned by Joseph Smith at Travel Tax, you ideally would also want to work in this new area for a while before traveling in order to solidify this new area as your tax home.

A more unique strategy that Julia and I are considering doing next year is house hacking for our tax home. House hacking is simply performed by purchasing a multi-unit home (duplex, triplex, quadplex), and renting out the other units, while you live in one unit.  Your tenants can effectively pay your rent and pay down your mortgage at the same time, enabling you to live for free or dramatically reducing your housing costs. You can find more information on house hacking here.

Do you have a different creative way of keeping a tax home? Do you have questions about tax homes? Send us a message and we can chat!

The Ultimate Guide to Getting Started as a Travel Therapist

Written by Whitney Eakin, PT, DPT, ATC

Starting Your Travel Therapy Journey

If you are an experienced therapist, you’ve decided to take the leap from a permanent job to a travel job. If you’re a student or a new grad, you’ve determined if travel therapy is the right move for you. Now what?

READ OUR ULTIMATE GUIDE TO GETTING STARTED AS A TRAVEL THERAPIST:

Step 1: Research and find a great recruiter and travel company.

  • Read reviews online and ask around.
  • Reach out to us for our recruiter recommendations!
  • “Interview” a few recruiters, ask them these questions, and find out which ones you like.
  • Find out about the basics of the companies including benefits, reimbursements, and pay packages.
  • Work with 2-3 companies at a time to give yourself the most options for the best jobs.
  • Don’t be afraid to fill out necessary paperwork for a few companies once you’ve decided you like them. This does NOT lock you in to taking a contract with that company. They need this information to be able to submit you quickly to jobs when the time comes (which you definitely want them to be able to do)!

Step 2: Make sure you understand tax homes and have yours squared away.

  • Read our post on tax homes.
  • Don’t skimp on staying within legal guidelines, should you get audited by the IRS!
  • Check out Traveltax.com for the best tax info from tax professionals.

Step 3: Consider in what areas of the country and what settings you would like to work.

  • In many cases, you’ll have a lot of options, and should narrow down your search to a specific state or region, or narrow down by what setting you’d like to work in, or both.
  • Sometimes, you may not have as many options if you’re picky on both setting AND geographical region.
  • For some disciplines during certain times (currently, COTA’s and PTA’s), you may not have as many options across the US, so you’ll have to be less picky to have the best chances of finding a job.

Step 4: Think about how you’re going to tackle housing in each travel location.

Step 5: Consider how you’re going to handle insurance/benefits.

  • Do you need the company provided benefits?
  • Will you get personal insurance through the marketplace?
  • Do you already have benefits from a spouse?

Step 6: Figure out when you can start working.

  • Have an estimated start date in mind.
  • You’ll want to start contacting travel companies/recruiters at least 8 weeks in advance to get the process started with necessary paperwork, and then they can start your job search.

Step 7: Consider getting licensed up front in a couple states.

  • When it’s time to look for jobs, most positions will be “ASAP” start dates from the time you interview. So that normally means 4 weeks or less, which means under most circumstances you’re better off to have license in hand already.
  • Most often, there’s no time to wait for licensing; you’ll lose the job to someone already licensed.
  • Some jobs won’t even accept you for an interview if you’re not licensed in the state.
  • You’re better off to risk eating the cost of an extra license or two to go ahead and have them and make it easier when you’re on the hunt for a job than to risk missing a week or more of work from a delayed license. Your travel company should reimburse you for the cost of your license when you take a contract in that state. Then, you can try to use the other license(s) at a later time.

Step 8: Let your recruiter know about your preferences and start date, and have them start the search for your travel job!

  • Once you’ve done all the aforementioned preparations, it’s time to have them be on the hunt for the right job for you!
  • Keep in mind, many companies may have the same jobs. So it’s best to have them tell you about the potential job and ask you before they submit your profile for consideration. It’s best not to let more than one company submit you for the same job.
  • Weigh your options if you’re presented with a bunch of jobs, because once you’re submitted for a job, things move quickly. If they proceed with an interview, then they’ll want a decision within usually 24-48 hours. This means that you generally won’t have time to tell them to wait while you consider a different job. Choose wisely!

Step 9: Once your recruiter(s) have presented you with some good potential job options:

  • Do some research about the facility and the area.
  • Have a phone interview with the facility.
  • Get an idea of whether you’ll be able to find housing in the area.
  • If they offer you a job, look at the contract offered and consider the pay package, cancellation policy, start and end dates, reimbursements specified, and time off requests.
    • You’re welcome to contact us and we’ll review potential pay packages for you and look for red flags for free!
  • Decide whether to accept the job!

Step 10: Begin your travel therapy journey!

  • Once you have a signed contract, it’s time to start making plans to pack up, move to your assignment location, set up housing, and get ready to start your travel job!

Still have more questions about the process to becoming a traveling therapist? Send us a message and we’d be happy to help you!

Travel Therapy: An Alternative Lifestyle

Written by: Whitney Eakin, PT, DPT, ATC

An Amazing Adventure

If you had told me in 2015 when I graduated from physical therapy school that at 3 years into my career I would be working only 6 months out of the year, taking a 5 month long trip around the world, with a couple weeks off at home, while barely touching my savings, I certainly would not have believed you! But here I am, doing just that. And I think my life will look a lot like that for the next few years, not just this year.

Making the choice to pursue traveling physical therapy has been life changing for me. And I’m not alone. Many therapists and other healthcare professionals have tapped into this role and aren’t looking back!

How Is This Possible?

Many know that as a traveling therapist, you make more money. How you choose to spend this extra money can dramatically change your lifestyle.

Personally, my boyfriend Jared and I have chosen to live frugally, and for 3 years we worked back to back to back contracts only on the East Coast of the US, minimizing unpaid time off. We have been saving up to take this amazing 5-month trip to over 10 countries in Europe, Africa, and Asia. Between the additional income we’ve been able to earn as traveling physical therapists, making early investments to produce passive income, as well as utilizing credit card rewards and other travel hacks, we have been able to take this trip with only a small impact on our total net worth.

Other travel therapists choose to take time off between contracts to take shorter trips, perhaps a week or so to explore part of the US while they travel from one contract to the next, or a couple weeks here and there to take trips out of the country. This is also a great option and is all possible with the flexibility and extra income that travel therapy provides.

An Alternative Lifestyle

By choosing to be travel therapists and go out of the country for half the year, we have perhaps “given up” some other things that many of our friends at home have, such as having a house, having kids or pets, or being in close proximity to family. We hope to enjoy those parts of life at a later time, but for now we are so happy with the flexibility and endless adventures that our lifestyle choice has afforded us!

Plus, no two travel therapists are alike. We know travel therapists with homes, and children, and pets, who get to see quite a bit of their family. The best part about being a travel therapist is lifestyle flexibility!

The Bottom Line

If you’ve been considering pursuing travel therapy, all I can say is give it a try! The best part about travel therapy is you can do just one 13-week contract and not be tied down to being a traveler forever. If you try it and it doesn’t work out for you, then you can always take, or return to, a permanent position. But, you may just find that an alternative lifestyle is right for you too. It’s been the best choice of our lives, and I wouldn’t trade it for anything!

Travel therapy may not be for everyone, but if you can make it work for you, it can open the door to financial freedom and unlimited adventure!

If you have questions about starting your travel therapy journey, please reach out to us and we’d be happy to help get you started!