This is Physician Finance Interview #5. This interview series is meant to explore the situations of different kinds of doctors in various stages of life. Hopefully, we can all learn from these interviews about the personal finances of doctors.
As always, my questions are in bold, and then the responses from the person being interviewed follow.
If you are a doctor, or married to one, and want to discuss your personal finance background, decisions, and future goals; please email me and I can send you over the email interview questions!
Your Story & Background
TPP Introduction: Maybe I should have called it the Doctor Finance Interview series, because today’s interview comes from a dentist over at Debt Free Dr! Take it away DFD!
1. Take a second to tell us about yourself so that others can see if their story relates.
I’m a 44 y/o dental specialist practicing in Louisiana (Geaux Tigers!). I’ve been married to my wife for 17 years and we have two boys ages 13 & 11.
2. What is your financial background?
I’ve always been an entrepreneur as long as I can remember. I worked at the local health club, little league concession stands and eventually started a lawn service when I was 12.
I can remember selling cookie dough to raise money for our school when I was in the 3rd grade. There was a competition and I didn’t know anything about selling but had my dad take me door to door to sell. I came in second place and can still, to this day, remember the girl’s name that beat me in elementary school! Ugh!
Having these jobs helped me to become and stay organized.
During my college days, I began investing in mutual funds. I didn’t know much at all regarding finances and read a few Money magazines to find out the top performing funds. The best ones would get my money. I used this money to pay for some of my dental school and luckily found Dave Ramsey during my residency who completely changed my mindset regarding paying off debt, saving and giving.
3. Were you given a head start in the financial world in anyway? Let us know if the opposite is true, too.
During college, I had a scholarship that paid for the first two years and my parents paid the remaining two years. After that, I was on my own regarding dental school and residency tuition. Our group was NOT paid any money during my residency. We actually had to pay.
4. What is your current net worth? List the assets that compromise your net worth. [401K/403B, HSA, Roth IRA, real estate, taxable account, 529, cash, home value above mortgage, etc].
Current net worth according to my Personal Capital account is 2.3m
- Simple and traditional IRAs – 500K
- Taxable Vanguard accounts (index funds) – 850K
- HSA – 64K
- Bonds – 36K
- 529s – 138K
- Home – 250K
- Emergency fund – 165K
- Real estate syndication, crowdfunding – 212K
- Cash – 70K
5. When you finished training how much student loan debt did you have?
Dollars & Debt
1. List your current sources and size of debt.
This is what inspired me to start a blog, www.DebtFreeDr.com to give back due to the fact that there were so many people that helped us get to where we are today.
2. If you had/have student loans, what is your student loan repayment plan?
I used Dave Ramsey’s debt snowball starting with the smallest student loan and by the time I arrived at paying off the last loan, I was throwing 5-6K each month at it. It took about 10 years to become completely debt-free.
3. If you have a mortgage, do you plan to pay it off early or invest in the market? Why? If you don’t, why did you decide to rent?
I paid it off last year. It’s nice driving up to a house that you own each day. It just feels different.
Income & Spending
1. What is your household annual income and will it be changing in the near future?
I made roughly 680K last year. My spouse recently started selling hair care products, so her income is small but hopefully will grow! My income is based on practice income and about 60K that I earned last year from coaching other business owners regarding growing their practices and marketing.
We are on track for about the same income as of this year.
2. Do you use a monthly budget or track your spending? List your major expense categories for each month in your budget/spending.
I hate to say it but no. We currently spending about 10-12K/month personal. Our biggest expense, by far, is travel. Last year we spent close to 30K in this category. I get much more enjoyment spending money on experiences for my family now while the kiddos are still under our roof.
3. Does giving to charity or causes you believe in play a part in your financial life? If so, what percentage of your annual income goes towards this endeavor?
Yes. We tithe weekly to our church. I plan on volunteering more once our kids move out. I also give away dentistry more to those that I feel really need the work but truly can’t pay for it.
What irks me are those patients that tell us they can’t pay for treatment, yet they are driving a 60K SUV while talking on their iPhone X in the waiting room. Something wrong with that picture?
[TPP: While not a main focus on this blog, I’ve come to learn a lot about people in impoverished cultures. It’s really interesting to hear things from their perspective. Doesn’t make it right, but certainly helps me use the doctrine of charity on these people a little more often]
Saving & Investing
1. Do you have an emergency fund? Why or why not?
Yes, I like a large cushion so we have about 175K saved which is about a year and a half of expenses. I also have the appropriate insurance policies in place to cover any major issues with running the practice in case of an injury.
2. What percentage of your income do you save towards retirement/investments each year? How did you determine this level of saving?
I’m currently saving around 50% of the after tax income. I didn’t realize this, but once you become debt free and you have no more deductions (because everything has been written off and/or depreciated), your taxes are sky high. We saved more a few years ago when I had some debt but was able to take additional deductions than now. I still wouldn’t trade being debt free for anything.
3. You mentioned your assets above. What is your investing philosophy?
I typically save everything I can save each year and hold it in an account until December. Next, I fly to Vegas, First Class of course, and play craps and roulette until I either double my money OR lose it….
Just Kidding!!! ?
I’m a strong believer in boring Vanguard index funds. I use the Bogle and Buffet principles.
My investing is on automatic pilot with weekly amounts withdrawn from my accounts going into several different funds. I have a Simple IRA for my office but am looking at possibly moving to a 401K with a cash balance plan next year to help lower the tax burden.
It wasn’t until about 2 years ago that I decided to begin diversifying a bit into real estate crowd funding and apartment syndication deals in Dallas, TX.
4. If you could tell other doctors about one thing you’ve learned about saving and investing, what would it be?
Simple, work your tail off initially, pay off debts within 3-5 years of your training. Start investing Day one in index funds (preferably the Vanguard Total Stock Market Index Admiral Fund). Be consistent with it, and NEVER touch it. You’ll be amazed at the magic of compound interest after a few years.
5. If you have kids, are you saving for their college education? Describe where and how. If you have kids, and don’t plan on saving for their college, please tell us why.
We utilize our state’s 529 plan. Within the plan, we are able to invest in Vanguard funds. Both have done well. We started them when our kids were born.
Retirement Goals & Gaffes (Mistakes)
1. What is “your number” and your age that you feel will allow you to retire? How’d you arrive at this number; give us some details.
I don’t have a “magic” number. If I were to guess what I’d like to shoot for, it would be 5 million. Why? I don’t know, it just sounds good. If things keep going like they are, we should hit this “number” in about 10 years. I’m contemplating working until my mid to late 50s in the practice and then will see where the blogging, writing and coaching takes me.
2. How much will you be spending annually in retirement? Give us some details.
I think it’s fair to say that we should be spending about what we’re spending now, around 10K/month. I’m not one of these people that save, want to retire super early and live like a miser for 40 years. What’s the fun in that?
3. If you plan on retiring early (before age 65), how do you anticipate handling health care costs?
We dropped our health insurance recently and joined Medi-Share. If it continues to work out and we are happy with it as years pass, we plan on sticking with it.
Advice & Farewell
1. What advice would you give to The Physician Philosopher readers who may be a younger (or current) version of you?
Again, work hard, pay off debts aggressively, invest in index funds monthly and never, ever touch it.
2. What is the toughest challenge facing physicians who are just finishing training?
Without a doubt, what Dave Ramsey calls “Doc-it is”. We’ve delayed and put off gratification for so long that we want what everyone else already has NOW. We live in a world of “instant gratification.” Continue living like you’ve been in residency until you are debt free which shouldn’t take too long. Unfortunately, most don’t take this advice.
3. What is the top financial mistake you see your colleagues making that you would advise our younger physicians and trainees to avoid?
#1, buying a “Doctor house” straight out of residency with huge student loan payments that they haven’t even started to pay down. Don’t do this. Avoid the peer pressure.
“Live like no one else so that one day, you too, will live like no one else.” Dave Ramsey
[TPP: I think this is great advice, and I give an example in my post on A Tale of Two Doctors… be more like Dr. EFI]
4. What are the top two-three resources you would recommend to a reader outside of The Physician Philosopher website (book, blog, podcast, etc)?
- This page is constantly being updated as I continue to come across and read good books. If you’re going to start off with one book, go with JL Collins’s “Simple Path to Wealth.” You should get about 90% of what you need to get going from that one book. Great stuff.
Thanks for being willing to take the
Physician Finance Interview!
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