By Dr. James M. Dahle, WCI Founder
Long-term readers of this blog know that it has grown into a successful business. About 20 people are writing articles for The White Coat Investor and there are 15 people, many full-time, behind the scenes running the business of WCI. The income from this business has obviously had a pretty dramatic effect on our financial lives, the lives of our employees, and our favorite charities. From time to time, I get the question, “What would your financial life look like if WCI had never taken off?”
The editorial staff has encouraged me to write this post, because they're convinced you'll like it. I'm not so sure, but let's find out!
Life Before The White Coat Investor
Those who have read the original book, The White Coat Investor: A Doctor's Guide to Personal Finance and Investing, should be familiar with our finances for the first decade out of medical school. Katie taught school during my intern year, and then she was a stay-at-home parent. I made about $37,000 a year as a resident for three years and then about $120,000 as a military physician for about four years (plus a little more from moonlighting). I spent two years in a partnership track of a small, democratic emergency medicine group making about $200,000 a year. Then, I made partner. A year after that, we were millionaires, a total of seven years out of residency on an average income of about $180,000 per year. The WCI blog was begun halfway through that partnership track. However, the business of WCI was still at least a couple of years away.
In 2011, WCI had no profit. In 2012, it had $5,000 in profit. In 2013 (the year we became millionaires), it had $20,000 in profit. Clearly, from a financial perspective, the time I put into WCI those first few years subtracted, not added, to our income and net worth. It took several more years before WCI was making enough to hire anyone to help, much less replace, my physician income. It turns out it takes years to become an overnight success.
More information here:
10 Reasons You Should Own a Business
Hypothetical: WCI Never Got Off the Ground
What would have happened to our finances if we never had that additional income from WCI? Our original financial plan that was drafted during residency projected that we would be financially independent by the time I was 51. However, it also projected that my income as an attending would be only $225,000. By the time I was a millionaire, my full-time physician income was pushing twice that. Clearly, we would have hit our target by my late 40s at least, even if nothing else changed. I probably would have continued to work full-time right up until that point, then cut back to part-time, as was the plan from the very beginning.
Given how we've spent over the years, we probably would have been saving 30%-45% of our gross income every year and we probably would have lived a very similar lifestyle to what we've lived up until the last couple of years (no way could we have traveled as much as we now are while still working 15 shifts a month).
We would have still upgraded our boat, but it might have been a year or two later. We probably would not have done our big home renovation with the fancy new garage and kitchen, the fire pole and climbing wall, and the WCI office space and recording studio. We probably would have done a few smaller renovations, though.
Our portfolio would be smaller, but the make up of it would look pretty much the same. In fact, it hasn't changed much at all in the last 18 years.
More information here:
The 2023 WCI Survey Results: Here’s How Much You Make and What You Like (and Don’t Like)
What About That Entrepreneurial Spirit?
WCI was a for-profit business from day 1. I was trying to make money; I just wasn't very good at it. But I told myself if I wasn't making $1,000 a month from it within two years that I would quit blogging. I barely made it.
You might be wondering what the alternative would have been. It was to build a little real estate empire. That's right, start buying and managing investment properties. I suspect I would have moved over into the short-term rental business a few years ago. I'm still convinced short-term rentals are the fastest, reasonably reliable pathway to financial independence.
Think about it. If you manage them yourself, a 20% cash-on-cash return on a short-term rental is completely reasonable. Yes, it looks a lot like a second job, and that's why it pays so well. But let's say you buy five $400,000 properties with 25% down payments. You've put down $500,000 on $2 million of properties, and you're earning $100,000 per year total on them. That's financial independence for a lot of people. It doesn't take that long to save up $500,000 on a doctor's income. No doctor is ever more than a decade away from financial independence, and with short-term rentals, it could be half that.
But if I had gone that route, of course, you wouldn't be reading this post right now.
What do you think? Do you think most doctors can become financially independent by their early 50s? Why or why not? Comment below!
Congrats on the success. Clearly unplanned but a great thing to happen and gives even more options than your original plan, which also gave you many options by your late 40s!
However, I noticed in your original plan that you wouldn’t cut back at work until fully FI. Why wouldn’t you cut back sooner? Sure something catastrophic could happen before you get to FI and it would delay FI a tiny bit, but if you’re 75% of the way there at a youngish age, you know you’re going to get there quite soon. Why not cut back to enjoy life sooner? Sounds like you could have gone part time in your early 40s even without WCI and still reached your FI goal by 49-53 years old. So what if you reach your number at age 48 rather than 52?
Do I look like I’m not enjoying life? I left Paris this morning and sleep tonight in Bayeux. Toured Monet’s garden, two cathedrals, and the Bayeux Tapestry and had a great time with my family. Tomorrow we do D-day sites. I haven’t quit working because work isn’t keeping me from doing anything I want to do at this point.
Why does anyone work after FI? Usually because work is a meaningful part of their life.
Dr. Dahle,
Do you still work full time between the site and your part-time job as ER doc?
I think I could have said yes as recently as two years ago. But our staff is doing such a great job taking WCI work away from me that I can’t say that any more. Maybe 3/4 time. Maybe not even that. Depends on the month probably. January-April this year I actually did a ton of WCI work. May? Not so much. I spent a week on a river, a week canyoneering, and ten days in Europe. No way did I put in 3/4 time this month. I got my six shifts in and kept the WCI balls in the air. (And here I am in Normandy after 11 pm checking blog comments.) It’s not a vacation, it’s a lifestyle I suppose.
Given all you have accomplished I would guess you are an unusually productive person such that half or three quarters for you is like full-time for others. Have you ever written any essays or articles on your approaches to time management / productivity? Tim Ferris’ books and pocasts have helped me out but I need to still get better.
Not sure I’m any better than anyone else, but when I get really busy I do use a to do list. Mostly I just type fast compared to most so I seem more productive than I am.
Thanks for your reply. Not sure my point got through. Obviously you are enjoy life now. I’m not sure when you loosened the purse strings a bit and hindsight is always 20/20 and I know you’re still working now. But I also know you probably could have cut back those hours sooner than you actually did, even without WCI, because you had such a great savings habit already and knew you’d get there given you know all about compound interest
Not really. It all happened rather quickly to be honest. It takes time to adjust your life and for your group to adjust for you to work fewer shifts etc.
At a certain point, the question is what do you want to do with your life. And for the last 20 years and indefinite future, part of what I want to do with my life involves doing something I happen to get paid to do.
This sounds about right. I provide a real-life case-control. I started my blog before WCI, but it never took off financially.
I had a similar saving and investing philosophy as Jim. I reached FI around age 47 and went part-time at 50.
That is a good case control!
Your success with WCI is very well earned. It is an incredible resource for many.
If you went to part-time work upon being FI what hours and income would that have entailed?
Depends on the work. But the average full time emergency doc is making $375K these days and works 12 twelves or 15 eights. So theoretically one could work half time and make half that.
Congratulations on your success. I hate to say it but I miss those early days. A lot of things were just a tad different but change is inevitable and I wish you continued success and happiness.
Change is the only constant. If WCI hadn’t changed, it would no longer exist.
Congratulations on your success!
Real estate is a great way to FI. I became a millionaire when I got to 5 rental properties (2 quads, 3 duplexes), despite my lowly salary as a PCP. I also became financially independent, 7 years after residency. I still work full time, but I found a job that is low key, not stressful and that I enjoy. I do read your blog and follow the advice on it regularly. I now own 10 rental properties (22 doors) and I think I am done with buying more properties. I mostly focused on the stock market and private equity these days. It can be done! Even on a PCP’S salary!
Congrats on your success! That’s great to hear. What are your plans for managing the properties going forward?
What has FI done to the way you do clinical work and how you feel about it?
I let my property managers manage the properties. I get a report at month’s end and a nice deposit into my account.
FI has been instrumental in my work as a physician. I pick jobs that I enjoy, that are flexible and low stress. I am a single parent, so flexibility is very important. I attend all my daughter’s extracurricular activities and volunteer at her school. I love being a physician, especially when I can pick and choose how I want to work and where I want to work, without much consideration for anything else. Work is so much better, when you don’t HAVE to do it. I am a better physician now, because I have good work/life balance. Ironically, I make more money now from my physician job than ever. I say FI gives you FREEDOM and allows you to create a life you want.
Already have professional management then.
Thanks for sharing your experience.
As a blog starting to see traffic and revenue (in the first four months), it is great to know that you set clear expectations (and managed them) as WCI grew. Unfortunately, too many people join the blogging space thinking it’s easy money. In truth, you must have a deep passion for your topic and writing to succeed. If not, your last post will always be a month ago. Congratulations on all of WCI’s (and your portfolio’s) success.
I find a for-profit blog to be an extremely risky business. Not a lot of financial risk, but lots of risk of wasted time. It’s probably best if you feel passionately enough about it that you’d be okay if you ended up doing it all for free for years and never had a financial return. The barrier to entry is very low but the barrier to success in most areas is now pretty high. The first thing I’d do is look at the competition. Why would people read yours or advertise with yours instead of what is already there? No way I’d start a physician financial blog today thinking it would make a profit worthy of my time investment.
You have a fire pole?? Super jealous.
You should be. It came out of a firehouse in MA.
Hahaha I’m so glad I read this post and comments for this exchange. Love it, and that you have a fire pole and climbing wall!
Jim, well done and your staff was right, I enjoyed your speculation of finanical success without WCI. I myself hope me and wifie don’t need any financially successful side gig to reach our goals. Very interesting that you would have done STR to fill the need to be entreprenurial, especially since you hated the long term rental that you had. Would you really have been that passionate about doing STR if WCI didn’t take off? didn’t already being a partner in a successful ER practice kind of scratch that entreprenurial itch? Since you didn’t need to do STR’s given your financial success and having such financial talent, would you have moved to maybe financial coaching or even advising? and even if going away from teaching finance, I would have suspected a more financially risky type venture if financial side gigs didn’t work, like a tour guide business given your outdoor nature!
congrats again man 🙂
No, I doubt I would enjoy being a financial advisor.
He’s basically already a tour guide on many of his adventures, but it’s an unpaid gig!
I achieved financial independence about 2 years ago at 44. Mostly with real estate investments in dialysis units and single family homes. I am a nephrologist. Your blog encouraged me to branch out beyond the dialysis space.
Now for my real question, and I apologize if it’s been asked and answered. Recording studio? Please elaborate.
Sound proofed office with lighting, screen, camera, microphone etc. We do a podcast, videocast, online courses etc.
“let’s say you buy five $400,000 properties with 25% down payments. You’ve put down $500,000 on $2 million of properties, and you’re earning $100,000 per year total on them”
For this to pan out each property would have to earn 20k in profit per year. After mortgage , repair and maintenance , is it possible in today’s environment? I think the rent need to be close to 2.5- 3k/month to generate that kind of profit . On property worth 400k, i think it would be hard to get that much rent
For short term rentals you manage yourself? Absolutely possible. Let’s say you get $200 a night plus another $30 a night in cleaning fees on average and you have it rented 20 days a month. That’s 240 * $230 = $55,200. So if you can keep expenses under $35,200, you’ve got $20K in cash flow. A 30 year, $300K, 5% mortgage is $19,500. Add another $5K in property taxes and $2K in insurance and that leaves you another $8K in other expenses plus $20K in cash flow.
Now, you’ve still got to find a $400K property that you can get $200 a night for and you have to rent it out 20 times a month and you’re going to have to do the management and maybe some of the housecleaning (although that $8K will cover some or all of that). I didn’t say this was all automatic by any means. You might not even be able to do that in the community you live in. But you can probably do it somewhere.
Obviously this also works with more expensive homes, so long as you can rent them for more. For example, a $1.2M home that you rent out for $600 a night would work just as well.
I appreciate thought exercise. However, there are a few assumptions made here that could use a little scrutiny. We are looking at buying our first short term rental. It’s recommended to have any STR as an LLC, which means you aren’t looking at a 30 year traditional fixed second home mortgage, you are looking at a 20 (or 25 if the bank will let you) commercial loan, the rate we were quoted this week was to plan on 8%. The decrease in length of mortgage and increased rate would make a significant difference in your yearly cash flow. Of course you can always refi when rates come down, or skip the LLC and do a traditional loan. But for this thought exercise I thought I’d add my two cents.
Yea, it’s definitely harder as there are more STRs now and rates have gone up. So maybe you have to put more down, but the formula still works.
Great resource for all
What percentage of doctors would you think are financially literate?
Depends on the definition. A very strict one, perhaps 10%. A more broad one, perhaps 75%.