I started doing a new series at QuantiaMD recently. If you'll recall, a couple of years ago I did a series of eight presentations on the basics of physician personal finance. These are audiovisual presentations, usually 10-15 minutes long, with powerpoint slides and my voice. If you want to sign-up for QuantiaMD, I think that's great. Please note that I referred you as it gives me some “Q-points” some of which I can convert to Amazon gift cards and use for Christmas presents. You have to be a health care professional of some type to sign-up. However, if you are not, don't let that stop you from watching the presentations since you won't be asked to sign in until the end of the presentation. Some people have even listened to them in their car as podcasts.
The first of three presentations that I've done this Spring is on finding Happiness Through Proper Financial Management. I basically took the idea that perhaps there are ways we can earn, save, investing, and spend that will make us happier than other ways to do those activities and explored it more fully using the “happiness literature.” Happiness is surprisingly well studied. Now don't get me wrong, there are much more important factors than financial management when it comes to happiness, but if your goal in life is to be happy, then you might as well take a look at every way there is to do that.
If you are a relatively new reader of this site, you may have missed the previous series. Here are the links:
#2 Student Loan Management (This one is probably outdated thanks to RePAYE, but there is still some good stuff in there.)
# 6 How Much Do You Need To Retire
# 7 Estate Planning, What You Need To Know
# 8 Asset Protection
Now, enjoy the latest presentation, Increasing Happiness Through Financial Management and then come back and let me know what you thought. For an extra treat, read the comments below the presentation! Different audience there than here for sure!
What do you think? How you do increase your happiness by earning, saving, investing and spending? What tips do you have for readers? Comment below!
384 Comments! I’ll have to revisit those when I have a liitle more time, but I hear you on the different audience. I posted on KevinMD recently about living an evidence-based life and shared a little of my story and philosophy.
One of the comments was “Any doc who is out of debt by age 40 has not had to take out medical school loans.” I had to politely set him straight. Sheesh.
You could have really blown his/her mind by linking this WCI blog entry:
How We Borrowed Money from the IRS to Pay off a Quarter-Million Dollar Debt in Six Months
https://www.whitecoatinvestor.com/how-we-borrowed-money-from-the-irs-to-pay-off-a-quarter-million-dollar-debt-in-six-months/
Too many comments to wade through right now but very thoughtful article. I think avoiding the hedonic treadmill is very hard for new docs. Retail therapy only works for brief periods in life. 75k in passive income is a nice retirement and very doable.
Being completely debt-free has given me peace of mind. Knowing that I have substantial passive income has taken significant stress of my work life. I am free to say no anytime I like.
There are several ways spending money can improve one’s happiness. My thoughts on this are’s inspired by a book called Happy Money.
I made a mnemonic to remember those:
POETT
Pre-pay anything you can. You will enjoy it and feel that it is “free” think of a prepaid all inclusive vacation or trip to Disney for example.
Others. Help others. Mentor. Give to charity. Lend a helping hand.
Experiences. If you’re choosing between a trip to South America with your family versus a new high-end sports car you’ll get more bang for your buck With the trip.
Treats. Having a Starbucks cappuccino every day can be nice but saving it for a rare occasion or once a week or once a month will bring you even more enjoyment.
Timesavers. Dry cleaning is expensive. So is paying your neighborhood teenager to mow your lawn, but if those activities are dreadful to you then spending money on them will improve your subjective well-being.
Excellent comment! I wholeheartedly agree on prepaying vacations wherever you go. I know it helps me enjoy our beach trips more knowing a big bill isn’t awaiting me on check in and then a month later on a credit card. Please keep posting. I enjoy your perspective.
Thank you for the mnemonic – saving for future client illustrations.
You have to find the “joy in the pain” and embrace it. Holding off and living like a resident doesn’t have to punishment, there is joy in the little things and I think focusing on keeping the perspective that this is the life you have may as enjoy it and put in the work upfront to maximize what the saving, investing and earning will bring.
I enjoyed your presentation very much although I listened for technical purposes (quality, length, content delivered). You are especially good at packing a lot of information into a very brief presentation (only 12 minutes in this case). I really enjoyed the interactivity near the beginning.
Nice presentation. I would stress following net worth annually. It kept us motivated to watch how and why it increased annually. We learned how paying down debt, increasing savings, and our investment returns mattered at different stages of our lives. It also helped us make big picture decisions about how much of a salary increase to take to live on versus apply to our other goals like retirement, college savings for kids, paying off house, etc. It also helped us focus on how and when to make big purchases like cars and boats. Different people will tell you what does or doesn’t belong in your net worth calculation. What matters is that you do it the same each year so you can follow your own personal financial trajectory.
One thought to leave you with about money buying happiness… While more money over the years has not increased our happiness directly, it sure has indirectly. I enjoy watching how our giving can make others happy. One of my favorite little ways is leaving a big tip when we eat out. I recall one waitress who was obviously having a bad day. It was one of our favorite restaurants so we knew it was not the norm for the place. Instead of stiffing her or complaining to the management, we left a large tip. She actually chased us down on our way out and with tears in her eyes, gave me a big hug. I don’t know her story but her response touched me. My husband who thought the whole big tip thing was silly, now does the same. Best wishes.
Very nice talk. True to the philosophical bend I feel your thinking is turning towards.
Agree with Johanna how succinctly you pack information in your words.
DrMom, heartwarming tale 🙂
The tip thing I do helps me remember that amounts that now seem minuscule to me are not to many people. And, it helps me stay financially focused by remembering when an extra $50-100 was huge to us too.
I like tipping well also, especially at cheaper places, its easy to do and fun.
Excellent overview, as usual. However, Kitces and Pfau (Accelerating The Rising Equity Glidepath, With Treasury Bills As Portfolio Ballast?”) recommend reducing equity exposure at the start of retirement to 30%, as opposed to your suggested 50%, to reduce poor sequence of return risks at the start of retirement. This is the pathway I have adopted.
We’ll see if that approach is still popular in 20 or 30 years when I need it.
Rick Ferri recommends a similar starting point, but for the entire retirement glide path :
“I propose the center of gravity for those who have accumulated enough for retirement to be 30% stocks and 70% bonds. This is a conservative mix that has enough equity to growth with inflation and enough fixed income to keep portfolio volatility at bay. Historically, a 30/70 allocation has earned the highest Sharpe ratio. This is the point on the efficient frontier that has earned the best risk-adjusted return…” (“The Center of Gravity For Retirees”)
We dont know for sure the path of rates for now, but its very highly likely that the huge risk adjusted out performance of bonds will not be the same as 1982-2014. It had something like 330 bp out performance. This strategy would have worked great then. Maybe they meander with 200 bp around today, stay low, go high, who knows for sure.
It would feel a little scary if I were retiring right now if I had 70% bonds, depending on duration, etc…its not a linear relationship and with rates this close to zero you could lose a good bit of value quickly. That could be mitigated somewhat by having a range of durations, etc…
Otoh, if you’ve built up a solid nest egg, its really about preservation for a portion of your net worth and this will certainly do that.
As long as the duration of the portfolio is shorter than your time horizon, higher rates are a good thing for bond investors.