I'm always impressed when I see a doc doing more than one thing. Sometimes that is practicing medicine full-time while being a single parent. Sometimes it is starting a business while practicing medicine. Likewise, I am impressed when somebody takes their online business into a new medium, mostly because I know just how much work it takes to do so.favorite physician financial bloggers. How many of them also do a podcast? Look at your favorite financial authors. How many of them also blog successfully? How about your favorite podcasters? How many of them do a great job running a Facebook Group or online forum? So when I heard that Jimmy Turner (i.e. The Physician Philosopher) was putting out a book less than a year and a half after starting his blog, I paid attention, especially since he isn't already retired or even about to FIRE. In fact, he's still establishing himself in an academic career working well more than one full-time equivalent.
The Physician Philosopher's Guide to Personal Finance
The first I heard about the book was when Jimmy asked me to write the foreword last November. You may not be aware of this, but it is considered a great honor among authors to be asked to write a foreword. It makes you look like an expert and helps promote your own books and is usually a pretty trivial task since foreword are rarely longer than 2 or 3 pages. Basically, if an author can look through the book and be assured that there is nothing crazy written in it, he will agree to do the foreword.
I was pleasantly surprised to find that not only was there nothing crazy in it, but that it contained a ton of great stuff. There are only so many principles of personal finance and if you're still learning major principles after reading dozens of financial books there is something wrong, so I can't claim that this was a life-changing book. For me. It could very easily be a life-changing book for you, however. In fact, The Physician Philosopher's Guide to Personal Finance could be worth millions of dollars to you over the course of your lifetime.
The subtitle of the book is “The 20% of Personal Finance Doctors Need to Know to Get 80% of the Results.” Early in the book, he explains the “Pareto Principle.”
Navigating personal finance and debt management is just like driving a car. Cars can be complicated, if you want them to be. If you wanted to understand everything there is to know about cars, you would need a keen understanding of fluid hydraulics, friction, gear ratios, piston mechanics, and how to appropriately wire the sound system. It’s certainly possible to learn all of this. There are books on automobile mechanics and physics, not to mention schools that you could attend for a complete education.
I am willing to bet, though, that when you get into your car these areas of expertise do not cross your mind. All that most people really want is to understand the 20% about cars that help them accomplish a car’s purpose: getting from point A to point B safely and in comfort…You could learn everything else there is to know, but it wouldn’t help you get from A to B more safely or in more comfort.
Personal finance is the exact same way. We can make it as complicated as our hearts desire…The truth of the matter is that you need to know 20% of personal finance and debt management to get 80% of the results.
The book includes the following chapters:
- Chapter 1. Introduction
- Chapter 2: Personal Finance Basics
- Chapter 3: Conflicts of Interest
- Chapter 4: Financial Choices in Medical School
- Chapter 5: The Pareto Principle for Residency
- Chapter 6: Student Loan Debt Management Part 1: Income-driven Repayment and Public Service Loan Forgiveness Programs
- Chapter 7: Student Loan Debt Management Part 2: Private Refinancing of Student Loans
- Chapter 8: Personal Finance During Residency
- Chapter 9: Live Like a Resident (AFTER residency)
- Chapter 10: A Tale of Two Doctors
- Chapter 11: Investing After Residency (Vehicles and Portfolios)
- Chapter 12: How much do I need?
- Chapter 13: Asset Protection
- Chapter 14: The Balance
Chapter 2 is a great orientation to concepts like budgeting and compound interest. By the end of it, he's already got you making a written financial plan and telling you what needs to be in it. Chapter 3 contains all of the usual warnings about interacting with the financial services industry that we discuss on this blog all the time. Know how advisors are paid, know how much you're paying, make sure you're getting good advice, and don't buy whole life insurance. Chapters 4 and 5 are aimed at specific time periods in the financial life of a doctor–medical school and residency. We also discover that Jimmy spent the first two years of medical school at the bottom of his class before becoming the student body president and eventually a chief resident. He gives solid advice to minimize debt:
Let’s look at a different example: say you are trying to decide whether to split an apartment with a classmate using medical school debt to pay the expense. On your own, the apartment would cost $1,000, and with a roommate it’s only $500. That’s a potential savings of $6,000 per year. It would cost you $24,000 over the four years ($6,000 x 4 years) of medical school to live alone. However, we are forgetting something we introduced earlier: the interest on the debt. From the day you make your decision, the loaned money you use for living expenses will accumulate interest. If the loans are at 6.5% interest, how much will your choice to live alone cost by the time you start paying off loans as an attending? The answer is that the $24,000 initial cost will grow into just under $38,000. All because you wanted to live alone during medical school. That’s an expensive decision.
The point here isn’t that you should live with a roommate. The point is that if you can save yourself $500 per month, you are saving yourself $38,000 in debt when you finish training. Minimizing debt matters in the end.
He also recommends against investing in residency:
The most common question that I get from residents and attendings alike is whether they should be paying down debt or investing. For many, paying down debt and getting a “guaranteed” 5 – 7% on their money is the best bet.
although he makes exceptions for those with no debt, those going for PSLF, those who are offered an employer match, and those who qualify for the saver's tax credit. Long-term WCI readers won't be surprised by his advice about cars and owning homes.
Chapters 6 and 7 are all about student loan management. Chapter 8 is a little funny, because after he told you not to bother investing during residency, he spends an entire chapter explaining how to do it well!living like a resident for a few years on an attending income in order to build wealth. I think his admonition to focus on the big five expenditures:
Traditionally, the “big three” expenses are housing, transportation (cars), and food. I’d also add in childcare (or private school) and vacations. If people get these five categories right in the first few years after training, they’ll likely have enough money left over to accomplish their goals.
He also introduces his 10% rule and with it an explanation that will please doctors who are turned off by Spartan/Mr. Money Mustache style lifestyle recommendations.
For every increase in pay or bonus that you receive, take 10% of that money and spend it on whatever your heart desires (fancy food, stuff, entertainment, etc.). Put the other 90% towards wealth accumulation (paying down debt or investing)….
For example, when my family’s take home pay went from $5,000 per month in my (non-accredited) regional anesthesia fellowship to making $15,000 as an attending physician, I took 10% of this raise (or $1,000) and I applied this money towards lifestyle creep.
So, how did I spend my 10%? Well, I spent it on the one thing that every financially minded person tells you not to spend your money on … I financed a car. The year I finished training was the last year the car I financed was being made. While I am not a huge believer in financing cars, I couldn’t have taken it home any other way. To make myself feel better, I should say that this isn’t just any car; it’s a Chevrolet SS. A four-door sedan with naturally aspirated V8, which produces 415 horse-power and is controlled with a 6-speed manual transmission. Oh, and it can fit three car seats in the back (“Daddy go faster!”).
I am not done yet, though. The car payment costs us about $650 per month. According to the 10% rule, I still had another $350 to spend, and so my wife and I bought a monthly membership to a country club, which gave us access to a swimming pool, two golf courses, six tennis courts, a driving range, and the clubhouse for food.
Have I committed personal finance blasphemy? Well, since I was following the 10% Rule, I recognized that I was still going to reach my financial goals. Using the other 90%, we increased our net worth by over $250,000 in one year.
. This example also demonstrates the strength of the book. When a financial advisor writes a book, it's not personal. Sure, they might cite a few examples from their clients, but it's just not the same as reading what somebody else that used to be in your situation actually did and why.
The next chapter is heavily influenced by Dr. North and Dr. South of The Millionaire Next Door fame, but these doctors are Dr. Jones (Get it? keeping up with Joneses?) and Dr. EFI (Early Financial Independence.)
Chapter 11 is about investing after residency and contains the usual admonitions to use retirement accounts and index funds, diversify, don't mess with your investments, keep costs down, make it automatic, and rebalance.
Chapter 12 is an introduction to FIRE. The majority of the book clearly aims at early career docs to whom Dr. Turner relates best as the only non-FI member of the WCI Network. It's good for these docs to spend a few minutes thinking about the end of their career and what retirement might look like for them.
Chapter 13 is about asset protection, but not in the traditional sense. It includes an admonition to be good at your job (and not just to avoid being sued) but also includes all the various types of insurance you should have. It also includes reasons to undertake a side hustle and to learn behavioral finance so you don't panic in a bear market. But there's nothing there about learning your state's asset protection laws, LLCs, trusts, or family limited partnerships. Chapter 14 finishes with a recipe for living a balanced life to avoid burnout.
All in all, the book hits all of the highlights to get a physician started on the right foot. It is written by an early career physician and aimed at early career physicians. It is personal and easy to read. I agree with this review:
Overall the book is well written and easy to read. One does not need to be an expert or even be perfect when it comes to financial decisions. The author lays out many different aspects of wise saving and wise spending. Many professionals, not only physicians, receive little to no training in regards to proper money managing. Dr. Turner provides an uncomplicated approach and break down to an otherwise complicated, labyrinth of a subject.
I truly wish I had read this book during my medical training to finish with a game plan….Entire volumes of work can be written about specific financial topics however Dr. Turner is able to provide a wonderful synopsis in this book. This would be a wonderful place to start if you have never read a book about money. Even if you have read multiple books, his fresh insight is uplifting and encouraging. Well done!
It's a great book and will be even better if you just skip over the foreword!
What do you think? Did you read The Physician Philosopher book? What did you like or dislike about it? Comment below!