One of the lessons frequently taught to me growing up was that I was free to choose anything I like, but that I wasn’t free to choose the consequences of my choices. Those were attached to the choices, like two ends of a stick. Lately I’ve been thinking a lot about the consequences of financial choices made relatively early (both time-wise and financial education-wise) in our lives and careers.

For example, when I was 23 and single and signed up with the Air Force I thought traveling around the world and deploying sounded like a lot of fun, a great adventure. When the consequences of my choices presented themselves 9 years later (when I was married with children living in a state far from any family support), it turned out that I wished I had made a different choice. Future Me simply cared about different things than Young Me and was a lot more experienced and educated. Traveling the world didn’t mean as much to me as having my child recognize me when I came in the door.

Likewise, I now see many physicians reaping the harvest they have sown. The classic example is the new attending with a big fat loan burden. When you make these choices:

  1. Go to an expensive med school with no savings or family support
  2. Have kids as an undergrad/med student
  3. Have your spouse stay at home
  4. Pay all your tuition, fees, and living expenses for four years using borrowed money
  5. Pick a low-paying specialty
  6. Pick a high cost of living area to settle in
  7. Choose a below average paying job

There are some financial consequences that inevitably result, no matter how much you wish they had not. Those choices affect the length of your career, whether or not you can send those kids to private school, when you will have your education finally paid for, when you can buy the dream house (if ever), what kind of vacations you will have, what you will drive, and what your retirement will look like. Two ends of the same stick.

You can choose where to get on the sled, but not what it hits on the way down

Docs in Trouble

20 years ago, perhaps 5% of doctors were in financial trouble. We see the results in the net worth surveys given to groups of physicians today. Among doctors in their sixties, about 1 out of 9 has a net worth of under $500K, despite 30 years of physician paychecks. Half of them are worth over $2 Million. But half of them aren’t.

Now, among young physicians, I suspect the number of docs in financial trouble has reached something like 25% and that number will continue to rise. A commenter asked “When will people stop applying to medical and dental school as a result of these monstrous student loan burdens?” Well, the fact remains that 75% of people who choose to go to med school are still doing okay. The reason why is they didn’t make a string of bad decisions. Perhaps they went to a cheaper school. Perhaps their spouse had a career as well. Maybe they chose to be an anesthesiologist instead of a pediatrician. Maybe they chose to live in the Midwest. Or delayed kids. Or chose a high paying job and did a second one on the side for a few years after residency. Whatever the case, they made different choices and the end of that stick had a different consequence attached to it. If you only made 2 or 3 “bad” choices (perhaps I should say “costly” choices), you’re probably okay. It’s the folks making 6 or 7 of them that are getting crushed.

Your Second Job

One choice that gets a lot of doctors in trouble is ignoring the fact that they have a second job. Your second job in our increasingly financially complex “401(k) world” is a pension fund manager, whether you want it or not, whether you do it or not, and whether you know how to do it or not. You, along with any “consultants” you hire, are 100% responsible for the performance of your retirement pension. You get to decide how much to contribute to it, how to invest it, and how to spend it down in retirement. But choices have consequences. If you choose to invest only in low risk investments, you will have less to spend (or work longer.) If you get burned with speculative investments (or buying high and selling low), you will face the financial catastrophe. If you mistake a commissioned salesman for a financial advisor, you know who is going to bear the pain. If you inadequately fund it, or wait too long to do so, YOU will reap the consequences.

A lot of times when someone finds this blog, or reads my book, or listens to me speak they get really anxious. Usually it is for a good reason. They come up to me after the talk (or send me an email) and we chat about their financial advisor, or their savings rate, or their investments or goals. The light has gone off in their head and they’ve realized that their past choices will have consequences, and they want to make some changes. Most of us have felt that anxiety at some point. Maybe some of you are feeling it now as you read this. Let that provide the motivation to get out there and get the education you need and make the changes that need to be made to secure your financial future. You can do this. Others have done it before you. While you cannot change the consequences of the choices you have made in the past, you are certainly in control of your future going forward from here.

What do you think? How have you felt about facing the consequences of the financial choices you have made in life? How did you avoid making “a string of bad choices?” What should be done by someone who is in financial trouble? Comment below!