[Welcome to post #3 of our 2018 CFE Week! Don't forget that our online courses are 15% off until Monday (code CFE2018) and that we're offering bulk WCI book sales at an even larger discount than normal (57% off list, email [email protected]).]
If you have a popular blog and have ever done a book review on it, you will have people give you a couple of dozen books a year in hopes that you will write about them. Unfortunately, doing book reviews is actually a terrible business practice, especially since Amazon reduced their affiliate payment percentage a year or two ago. You spend a day or two reading a book, write about it for a couple of hours, and then, if you're lucky, a dozen people buy the book through your affiliate links. Your 4% commission adds up to less than $10 for a couple of days of work. Plus, I don't actually want to write about 20 financial books a year, much less read them. So now I really only do book reviews during CFE week, with rare exceptions such as this one done as a favor for a friend and an occasional mention like this one if the book inspires me to write a post.50 Shades of Pain. It's actually pretty good (and one of the more interesting books I've been given this year), but not appropriate for a review here (although if you buy it through that link, I get four pennies, it's quite a conflict of interest.) The marketing, or “advisor books” aren't really sold, at least not in any significant quantity. They're used as marketing for the advisor and passed out to potential clients. I guess they make the advisor look smarter as a “published author” or something. They must work or people wouldn't keep writing them. But if you actually dive into the book, there often isn't much meat, sometimes there is bad advice, and there is always a big section about the advisor or why you should use one. I saw one this year with 5 different authors for an 80-page book, 13 pages of which was about the firm and the authors. To be fair, the rest was actually pretty good.
Admittedly, these advisor/authors have a tough job. You see, people who hire financial advisors are not the same people who read investing books. Their potential clients like the idea that the advisor can write a book, but don't actually want to read it. Investors who actually read investing books don't usually hire financial advisors. It always seemed kind of silly to me to write a book for an audience that isn't going to read it. I mean, what if you get them in the habit of reading investment books? They'll probably fire you in a year or two.
In today's post, I'm going to review three physician-specific financial books, all at least partially written by the doctors themselves. Unlike most “advisor books,” they're chock full of useful information for the do-it-yourselfer.
Review of Medical Student Loans: A Comprehensive Guide
Ben White MD has been blogging longer than I have, but only occasionally on financial topics, usually student loans. In some ways, my business competes with his so the entrepreneur in me hates to give him too much publicity. But his stuff is so good it is a disservice to my readers not to share it. Medical Student Loans: A Comprehensive Guide is only available on Kindle for $9.99, but is probably the best book out there right now on this very niche topic. If you have a complicated student loan situation and want to save yourself a few hundred bucks by avoiding paying for WCI recommended student loan specialists, this book is your best chance.
[This book] exists because for some unknown reason the Internet is full of tripe when it comes to student loan management, and most (but not all) of the good stuff isn't tailored to doctors or their unique situation of very high debt, temporarily low income, then relatively high income.
You don't need this book. In fact, no one needs any book on student loans. What you really need is to periodically sit down and think about how to handle your debt and be prepared to Google. But I wrote this book to save the Googling and get all the facts, options, and considerations in one hopefully easy to read package….If the idea of paying a few bucks to read a book full of information you can mostly easily find online bugs you, then don't read this book. I get it; I have student loans too.
Even his disclosure cracks me up:
…Even though this book appears to be full of financial and even tax advice, it isn't. That's a clever optical and semantic illusion. Nothing with in this book should be construed as or serve as a replacement for “real” advice from a “professional,” which honestly you probably don't need and shouldn't buy, because ick.
The first section of the book contains additional warnings about hiring a pro. I like seeing that if it gets you to put on your “business face” and not be a naive idiot doctor when dealing with the financial services industry. I don't like it if it keeps you from hiring good advice at a fair price when you need it. The next section is a glossary. Yup. A glossary at the beginning of the book. It seems silly to discuss the alphabet soup that is student loans if you have no idea what the acronyms stand for.
The next section is “borrow less and save more.” There's far more there than at first glance. Great tips on how to get the right loans in the right amounts (i.e. as little as possible.) Sprinkled throughout the book are lots of great non-student loan related financial tips that actually work.
From there the book gets into the nitty-gritty of what you should actually do with your student loans. Dr. White makes it as interesting as possible, which isn't very interesting, unfortunately. He does a fantastic job though; I wish I had written the book. But more than that, I wish every medical school required it to be read before you could receive your first student loan. You'd think for the $50K that they're charging you in tuition they could give you a copy of The White Coat Investor and Medical Student Loans. Oh well, buy it yourself.
Review of Anyone Can Be Rich
Anyone Can Be Rich, subtitled A Psychiatrist Provides the Mental Tools to Build your Wealth, is written by Mark Tobak MD. It is a little bit unique, almost Bernstein like, in that it is a book written by a doctor, but not necessarily FOR doctors. There is actually little if anything in here that is physician-specific. However, it is under 100 pages and the Kindle version is just $5.95 so you won't waste much time or money here. His premise is found in the introduction:
I realized I was sitting in a room with the one other person [a patient] with whom I spend a lot of time who does not worry about money. We watch over it, of course, but we don't worry about it. I thought how wonderful it would be if more people knew how to get rich. Not quickly, with the winning lottery ticket so many of my patients pine for, but slowly and honestly over a lifetime. My goal in this book is to teach you to do just that with some simple ideas that are old and venerable and others that are new but intuitive once you understand them.
The book is divided into five sections. The first 1 1/2 sections contain numerous behavioral finance gems that must be understood in order to find financial and investing success. This is where the book really shines, not surprising considering the professional background of the author. The end of section two along with section three contains much more of the practical tips of finance you have likely seen in other locations. Unsurprisingly, it ends with a recommendation to invest in index funds.
The fourth section is all about his favorite money masters, Jack Bogle, Warren Buffett, and Charlie Munger. The final section he doesn't even want you to read, and I don't either. He says:
Part V, for the bold and daring, is a discussion of how one might prosper buying individual stocks, which I cannot recommend as a practice.
I can't quite figure out why he included it at all. Maybe he felt the book needed to be longer or something. It recommends a value approach, a la Warren Buffett.
Overall, a short little book written for a beginning investor. This wouldn't be a bad first financial book, but if you've already read a half dozen, you can probably skip this one.
Review of The Young Physician's Guide to Money and Life
The Young Physician's Guide to Money and Life by Dave Denniston, CFA, and the late Amanda Liu, MD is hard for me to read. You see, although Dave never met Amanda in person, I did. She was a resident at the U of Arizona where I trained. Back when she started blogging about physician finances, there weren't very many of us and most of us had the last name Liu. Back then, The Physician on FIRE didn't even know he was already financially independent and didn't even read blogs, much less write them.
Amanda and I exchanged hundreds of emails over years, including before she ever started blogging. Reading the book and seeing her words and ideas still brings tears to my eyes. So the book has been sitting on my famous dining room table for most of the last year, daring me to open it and read through it and constantly reminding me of our collective loss. I'm glad I finally did.
Frankly, Dave and Amanda aren't awesome writers, not that I can really criticize them for that since I'm not much of a writer either. None of us are Jonathan Clements (who incidentally also had a new book out this year.) But what Dave and Amanda are good at doing is inspiring others and sharing powerful ideas, particularly for young physicians. One of the most unique things that Amanda did was hit a net worth of $0 as an intern. Yes, I did that too, but she did it without selling four years of her life to the US Air Force. In her words:
My family immigrated to the US when I was 16….I will always remember how dreadful it seemed when I learned that the cost of attendance for my first year of medical school was about $90,000….[Thanks to some money from my grandfather and working up to seven jobs at a time] I [finished college at] UC Berkeley with a net worth of zero….started a family…and [promptly ran up] $100,000 in credit card debt, which I spent the following three years before medical school paying off….[I only worked two jobs in medical school but I took advantage of all of that credit I had available on credit cards. By this time] I was so debt averse that I really didn't spend any money beyond the absolute necessities such as food and shelter….I also kept opening new credit cards every 12 months or so as needed to pay for expenses and ride the debt balance on 0% interest for as long as possible before transferring to another card. As a last resort, when I was not able to squeeze out more cash flow, I'd take out the minimum amount of student loans at the latest moment possible….I threw every penny I had towards my student loans. This was my highest interest debt.
A later chapter in the book written by Amanda talks about her goal to become financially independent by 38. I had zero doubt that she was going to pull that off, despite not being a traditional medical student.
I've also known Dave for a long time. He used to advertise on my site as a WCI recommended financial advisor until we both lamented the fact that he was “priced out.” He does a nice podcast called Freedom Formula for Physicians. His area of expertise is obviously in providing low cost, high-quality financial advice to physicians. He has a heavy emphasis on frugality which is easily seen in the third chapter of the book which reads like something out of Millionaire Next Door books. His Chapter 5 is all about The Physician on FIRE and how he can retire early. Hopefully, none of the readers find out he's currently working full-time.
Chapters 7, 8, 9, and 10 are all about student loan management. Not sure I can recommend them over Ben White's comprehensive book on the topic, but they're reasonably well done and hit all the critical information. There are a few more chapters by Amanda about using credit cards to your advantage. Then Dave writes a few chapters about insurance. Unsurprisingly, my favorite was Why Cash Value Insurance Sucks. Most of the last half of the book is by Dave. He does a great job explaining investing, home buying (including doctor mortgage loans), and contracts.
This book excels in its conversational tone. It's really informal and not particularly systematic. At times it feels like you are reading a collection of barely related blog posts. That has its pluses and minuses. It's a lot more interesting than most boring systematic step by step finance books. (They're not just painful to read, they're painful to write I assure you.) Of course, financial planning is probably best done systematically so you're not going to be able to read this book as your only financial book and be able to walk away with a written financial plan. Although, to be fair, Dave does provide an interesting list/plan in the last chapter that I don't think is perfect, but would probably work. I reproduce it here. Steps 1-4 are for residents, the rest are for attendings.
- Save in a cash cushion/rainy day fund
- Grab your free money
- Pay down highest priority consumer debt
- Save more in cash cushion/rainy day fund to fund short-term goals
- Put more in the 401(k)/403(b)
- Fund the Roth IRA or Backdoor Roth IRA
- Consider starting a side hustle
- Pay off all consumer/student debt
- Sock away more non-qualified dollars
- Consider alternative investments
- Max out 401(k) and max out 457(b)
- Sock away more non-qualified dollars
- Pay off your mortgage
- Come see me
The book is unique among physician financial books, for better or for worse. Part memorial, part inspiration, and part practical tips, you will read stuff in this book that you cannot find anywhere else in the library or the blogosphere.
What do you think? Have you read any of these books? What was your opinion of them? What is the best physician-specific financial book you have read this year? Comment below!