This is Physician Finance Interview #1 of what I hope will be many Friday “Physician Finance Interviews” where we talk with physicians (or those married to them) about their finances. The focus of the interview is to investigate how other physicians have handled their money, income earning potential, assets, debts, and much more.
Tag along as we discuss success, failures, and advice that I hope will prove useful to many! Please, leave comments below about the answers and your thoughts!
Email me if you are interested in being interviewed and sharing your stories and experiences. The questions below are emailed to the person being interviewed and responses are returned, formatted, and published.
Your Story & Background
1. Take a second to tell us about yourself so that others can see if their story relates.
I am a late 50’s non-interventional cardiologist. I did interventions for 13 years. That ended about 13 years ago, with some neck soreness and an itch to focus on other things. I was our group president for ten years, and now have been developing an interest in obesity. It has kept me interested and engaged to have a few different “careers’ if you will, with a different focus at different times while still staying in one group in one northern midwest town. My wife has two adult children and I have three. I paid my last college tuition bill about 4 years ago!
2. What is your financial background?
My financial story started when my senior partner took me aside after I made partner, and said “These bonus checks are critical to your long term success, go to the local financial advisor office, open an account, and put every bonus check in there. Don’t let it hit your checkbook.”
I tried to follow that advice, and for the most part have done so. Saving and investing a large percent of my income most years. I did not want to end up like many of the physicians I saw who worked hard there whole life, had a lot of money come through their fingers, but nothing to show for it.
3. Were you given a head start in the financial world in anyway? Let us know if the opposite is true, too.
My dad was a small town family MD even before there was such a thing as a “Family MD” He did not really teach finance, but did teach restraint. We drove old cars, camped instead of hotels, and ate home instead of out. We skated and fished on the river in the back yard, with old skates and old boats. So, I think watching that was ahead start.
I did not have some huge lifestyle I learned that I felt I had to maintain. I also graduated college debt free, with a little saving to help with med school tuition. My first wife covered living expenses until our first child my senior year, my second wife received a small inheritance when her parents both died unexpectedly.
The biggest head start or leg up was marrying my wife of the last 12 years. She has a great job, which leads to a 401K and good salary. Also, since she has to work hard for her money she appreciates it and doesn’t spend like crazy.
4. What is your current net worth? List the assets that compromise your net worth.
OK, this always feels a little like a John McCain 2008, “How many houses do you have” type of thing. Also, it sort of depend on how and what you count. The short answer is $7 million or so.
We have some family lake property that has some value, and hunting property also. But these in general are expenses – not assets – and likely will never be sold unless things are really bad. So, I sometimes count them and sometimes don’t. Anyway, let’s leave those out.
So I have a premarital investment account with a standard financial firm (I know FEES, FEES… but it makes life easy, i can focus on fishing instead, and we have enough….so why stress) it is about 60% mutual funds and 40% bonds/municipals, focusing on double tax free when we can get it, in a rolling ladder. That has about 1.5 million.
My wife has her pre-marital inheritance in a separate individual stock and bond account, managed by an advisor, also about $1.5M.
We each have a 403b with a non-profit at about 500K.
We have a joint investment account with a second local firm with about 1.5M in stocks and bonds, and about 1M in various non publicly traded REITS, TIC type deal to give us real estate exposure without real estate work.
We have a few other private real estate funds we are in which brings total to about 7M or so. Complicated I know, but seems to work for us with our situation. It also helps a little with estate planning for my three kids and my wife’s 2 kids.
5. When you finished training how much student loan debt did you have?
Dollars & Debt
1. List your current sources and size of debt.
About 150K on the house we live in. At 3% in no big hurry to pay it off.
(Editor: There will be more questions in this section in other interviews on student loans and mortgages, but they simply didn’t apply to this doc’s situation)
Income & Spending
1. What is your household annual income and will it be changing in the near future?
About 400K for each of us a year in salary and then about 200K a year in our investments. Of course, we keep re-investing that investment income and for now pay those taxes out of our salary so investments can grow.
I am in my late 50’s and slowly working less, and taking no call. So, we are planning for a substantial decrease in income over the next few years, and maybe even retirement in 3 or 4. I still like my work, at least the daytime stuff. Not so much the nights and weekends.
One of the benefits of being a doctor is that there are often slow down paths available, if one is willing to take the lower income. My wife’s job is either fully in or fully out. So, even though I am a few years older, I may end up working longer, because I have a part time option. It is also really fun to work and make money when you have saved enough. You can really sort of relax, have a good time, travel, and spend pretty freely. You jut have to be a little careful.
We spend a good portion of our income on travel, discretionary spending now. We have very few fixed expenses other than property taxes and small mortgage. Just bought a new fly rod and reel the day before I wrote this post!
2. Do you use a monthly budget or track your spending? List your major expense categories for each month in your budget/spending.
We budget by just watching the checkbook balance, and making sure we have enough coming in to pay what is going out. Not too complicated right now.
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 try to give away at least 5-10 %, and started a DAF last year.
Saving & Investing
1. Do you have an emergency fund? Why or why not? [
Yes, we keep about 50K in a money market, but many of our investments are pretty liquid, too.
2. What percentage of your income do you save towards retirement/investments each year? How did you determine this level of saving?
Used to save a lot, maybe 50%. Now, not so much as we have really hit out goals. We spend it on travel now, and we just got back from New Zealand.
3. You mentioned your assets above. What is your investing philosophy?
My philosophy is to hire professionals, let them worry about it. I know it is expensive, but if they keep me from getting emotional or doing something silly it is worth it (TPP: Without a doubt, this is one of the few very good reasons to have an advisor – they’ll keep you from sellingin a down market, though I am normally a proponent of DIY investing).
I have seen too many of my partners either not save enough, or jump in and out of the market, etc.
Doctors are bright folks. So, my observation is they always think they are the smartest wherever they go. This makes it hard for them to either listen to or take good advice. I try to avoid that.
A cardiac surgeon once told me, ”Now that the market is back up, it might be a good time to put money in.” He was a great cardiac surgeon, but a really bad financial guy. You make money when you put it in low and it goes up… not the opposite.
Also, I look at hiring professionals as buying time. They can do the work, and I can go fishing.
4. If you could tell other doctors about one thing you’ve learned about saving and investing, what would it be?
Start as early as possible, save as much as possible. Don’t worry so much about how – whether mutual funds, index funds, etc. Just do something with the money. If you save in your thirties, it will be huge for you in your 60’s. Just get started.
5. If you have kids, are you saving for their college education? Yes? Then describe where and how. If you have kids, and don’t plan on saving for their college, please tell us why.
We used 529 for all my kids. Really great tool. A tax break that even high earners can use, which is rare!
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 think the whole “number” thing is way over thought, and also sort of over simplified. Life is not about a number. It is about experiences, adventures, service, meaningful work, and unpredictable events (TPP: I don’t disagree there). I am really glad I didn’t quit when I hit my “number.” I have met many great people, learned a lot, and had many great experiences.
Many “numbers” can be made to work. Focus on living life!
2. How much will you be spending annually in retirement? Give us some details.
We will likely spend 5-6% in first few years and then adjust. Sort of silly to think I will need level spending throughout. I want to spend it while I can enjoy it – i.e. while I have good health. If we start to draw down too much, then we can cut back on fun if we must. We will just have to keep fixed expenses low.
Advice & Farewell
1. What advice would you give to The Physician Philosopher readers who may be a younger (or current) version of you?
You don’t need all that you think you do now. Inexpensive clothes and cars are great. Put that money away now, it will be worth a bunch later.
Saving when you are in your 50’s is too late and not very powerful because of lack of growth, and it is a tough time of life to have to work hard for every last dollar. Work and save while you are young!
2. What is the toughest challenge facing physicians who are just finishing training?
Picking a sustainable lifestyle. There is way too much pressure to spend, not save, and actually very few mentors around that provide good examples (TPP: I certainly hope my residents feel differently! There are some of us out there trying to set a good example. But I agree that good examples are far and few between.)
3. What is the top financial mistake you see your colleagues making that you would advise our younger physicians and trainees to avoid?
Buying cars, houses that are too expensive, thinking “I can save later,” and also thinking “I am smarter than everyone else”.
4. What are the top two-three resources you would recommend to a reader outside of The Physician Philosopher website (book, blog, podcast, etc)?
Napoleon Hill “Think and Grow Rich”
The millionaire next dooor
Rich dad, poor dad
5. What questions do you have that TPP readers might be able to answer?
I could really use some advice on how to work part time and stay relevant…
How do I continue to phase out, yet be respectful of my partners and patients. When should I really pull the trigger and bail.
How do I cover health care costs before I turn 65?
Thanks for being willing to take the Physician Finance Interview!
Please, leave some comments below!
I think this interview series will prove wildly helpful to others.
Comments are where that community will grow!
Today’s post strikes deep into the heart of the message on this site. Some people attack doctors who plan to achieve early financial independence and retire early. In fact, I’ve seen some people say that its wrong for doctors to retire early. Them is fighting words to me. Agree? Disagree? Come find out.
Burnout has been a problem looming over the practice of medicine. It has many causes. We will discuss some of those causes and how financial independence directly counteracts some of them. This post ties in exactly why I see wealth and wellness as one big picture.
You’ve made it to your first attending pay check. Great! Now what? Is it really that important to start investing? Surely I can enjoy the big pay bump. Let this Tale of Two Doctors answer the question “What do I do with my first paycheck”? Come join Dr. Jones and Dr. EFI as they tell their tale.