This is part 2 of a three part series where I tell our “origin story.” If you missed part 1, I suggest you read that first. We left off yesterday at the end of medical school, where we'll pick up the story again…
Residency
While we were sad to move on, we were excited to start making the real money in residency. We rented a Uhaul and headed for Arizona. Since we still owned a place in Utah, and realized that was probably a mistake, we decided to rent in Tucson. It was harder than we thought to find a place to rent. The landlord asked for a reference. I asked if she would take one from our mortgage company. She must have really thought I was a weird doctor to be renting a dumpy two bedroom duplex. But it was biking distance from the hospital and we only had one car. Katie took a teaching job at a local middle school and I settled in for an experience. 3 years later, I walked out of the hospital with a child and a wife with a whole set of friends I don't know. The kid cost us $10. That was some good health insurance. We paid off the car loan a couple of months into residency. We decided to hold on to the student loan since it wasn't costing us anything.In the Spring of my intern year, we went to meet with a “financial advisor” we were referred to by a fellow resident. It seemed like a good deal. All we had to do was pay $100 a year during residency and then we'd “pay more” afterwards. I learned a lot of things. I got to learn what a loaded mutual fund was (by sad experience) and how “fee-based” is not the same as “fee-only.” I also developed a lot of anger at the financial services industry and new-found motivation to learn about personal finance and investing. Katie was home with Whitney by the end of my intern year and the three of us were living on my $37K salary. What free time I had was spent perusing the shelves in the finance section at the local used bookstore. I read a lot of terrible finance books. But then I started finding some good ones. And the good ones agreed with each other. Mutual Funds for Dummies. Get Rich Slowly. The Four Pillars of Investing. Maybe something by Swedroe or something by Ferri. I found Morningstar. By this point, I had figured out it was smart to invest at Vanguard, and we'd transferred our Roth IRAs there. I wandered into the Vanguard Diehards forum. It was like I'd come home. These people hated the financial services industry and loved index funds just as much as I did. I finally paid my $5 to register in order to post on the “You might be a diehard if….” thread. We heard about an Investing Policy Statement, and put one in place shortly before finishing residency. At this point, we had both the knowledge and the motivation to do well by doing good.
Military Service
Unfortunately, there was one teensy little problem. I had a commitment. And the military wanted their pound of flesh. They had paid that $922 a month faithfully. They'd bought me a stethoscope. I even made them pay out of state tuition for me. They gave me a civilian deferment in the military match (which the recruiter had somehow failed to mention) so I could match at my # 1 in the regular match. It was time to pay the piper. When I signed on with the military in 1999, we were still years away from 9/11 and nobody was deploying anywhere. By the time I came on active duty in 2006, every commander in all three services wanted an emergency doc to deploy with their unit. Air Force docs were going for 4 month deployments, then 6 months deployments every 20 months. The Navy guys were going for 9 months. Army docs were going for 15 months at a time. Bagram, Balad, Fallujah. It sounded exciting. Katie and I were excited about the prospect of being stationed overseas. Wouldn't it be fun to spend four years in Germany or Japan? We carefully made a rank list of the 15 places the Air Force had emergency docs and turned it in. A few weeks later, we got a call that we were going to Keesler AFB in Mississippi, the last choice on my list. What was the point of making the list at all? Then a call and an offer- go to Langley, work in a glorified urgent care part-time, and be faculty in a Navy EM residency program part-time. I covered the phone and asked Katie,“Where's Langley?”
“Virginia. Take it. Take it!”
And off we went to Virginia instead of Mississippi. That was the first time in my life I had lived in a city that wasn't surrounded by mountains. It wasn't pleasant. I had to find new hobbies and new friends. Professionally, it had its ups and downs. I loved the teaching and nobody expected me to do research, but the volume was high and the acuity was low. Monday mornings involved 6-8 patient per hour sprints as I tried to write as many “authorization for quarters” for diarrhea, URIs, and hangovers as I could. Over the four years, I was gradually given fewer shifts at the Navy hospital and more at the much less fun AF hospital. I got to be an EMS director and a medical director. I got to make the schedule and try to solve problems. I did some moonlighting at a trauma center to keep skills up, and between those three jobs, figured out what I wanted out of my “forever” job. I knew within a few months that I wasn't going to stay in the AF for a career, but that was information best kept hidden for political reasons. We even considered signing up for another year at one point in exchange for being moved to Germany, but that carrot was snatched away only to be dangled again the next year in exchange for a two-year commitment.

Who IS this guy?
Financially speaking, we were on easy street. I was making $120K a year! We had money coming out of our ears! It felt like when Katie was working as a teacher and I was an intern. We saved anywhere from 26-63% of our income during those four years. It helped that we bought an inexpensive townhouse in a not-so-nice neighborhood. Sure, some people got shot, but we didn't get shot. And people were dealing drugs but they weren't doing it from the townhouse right next door. We had a couple of more kids ($0 each!) I got deployed. It wasn't much of an adventure. I was sent to Al Udeid, in Qatar. I wasn't shot at. In fact, nobody was shot at. My chief enemies were crotch rot, runner's knee, the bench press, and boredom. Our second child didn't know who I was when I came home. At least Whitney was happy to see me. If I wasn't certain I was getting out ASAP before, I was by now. I began to save up my leave for “terminal leave,” i.e. the opportunity to get out a month before my commitment was up by only using half my allotted vacation for a couple of years.
I continued to learn about finance and share what I was learning. We continued to make mistakes. Although we were smart enough to recognize a bubble and avoided buying the $750K house one of my peers bought (on the same salary as me), we still bought a house when we knew we were only going to be there for four years. We were ripped off by the appraiser who colluded with the professional investor who sold it to us too. And of course, any real estate tale that begins with buying a house in 2006 isn't going to end well. We did far more right than we did wrong and somewhere along the way, people started looking to me for financial information. I racked up 10,000 posts on the Bogleheads forum, to which the Diehards migrated mostly due to the color orange. I was making some decent money moonlighting, and socking it away in a SEP-IRA in addition to the TSP, Roth IRAs, and even a taxable account. I even gave a lecture to the residents about finances shortly before getting out of the military. That group of residents and faculty are still, to this day, one of the best groups of doctors, and people for that matter, that I've ever worked with.
By the time I got out, I knew exactly what I wanted- a partner position with a small democratic group in a community hospital in a town surrounded by mountains. We looked for jobs in Reno, Boise, Flagstaff, Denver, Portland, Anchorage, and Salt Lake City. The markets were tight, so I resorted to cold calling. Some phone interviews, and finally a live interview with my current group. They told me they were already looking pretty closely at someone. I told them that if their decision was already made, I wouldn't waste our time, but if they weren't set on the other doc, I'd fly out at my own expense to convince them to take me instead. I did. Then I was deployed again with 24 hours notice and no definite end date. I was supposed to get out in 2 months. I needed to put the townhouse on the market. The housing market was already bad enough. I didn't want to miss the Spring selling season. But off I went to Chile to build a tent hospital. Luckily, what could have been three months turned out to be three weeks, so all I missed was the Puerto Rico vacation we had planned and paid for the week after I deployed. And a better opportunity to sell the house.
We had bought it without an agent in 2006, so we tried to sell it without one in 2010. We even had it under contract for more than we paid for it. But it fell through. I was still more than happy to leave. I haven't had a bad day at work since.
Life in Private Practice
We arrived in Salt Lake City, finally having learned our lesson about buying houses. This time we rented for a few months and began biking around the neighborhoods looking for houses. Six months later, after a frank chat with my current partners about whether they liked me or not, and some tough negotiations with delusional homeowners, we bought our dream house for a great price. Now we had two mortgages on a below-market pre-partner salary! We gave up on the “for sale by owner” and tried to sell with a realtor for a year before finally giving up and renting it out after two summers trying to sell. It took four more months to get a tenant in. Meanwhile, I had taken out a “bridge loan,” low fees but a fairly high rate, in order to use our equity to put 20% down on the dream house. I had figured the townhouse would be sold soon so the fees mattered more than the rate. We had that bridge loan for 5 more years before finally selling the place. At least the IRS shared the painful loss with us thanks to our converting it to a rental.
We converted the SEP-IRA to a Roth IRA. I isolated the basis from my tax-exempt TSP money and converted that to a Roth IRA. We started doing our Roth IRAs through the Backdoor. We paid off that student loan, 17 years later. When we became eligible for the 401(k) and then the defined benefit/cash balance plan, we maxed them out. When rates dropped, we refinanced the house. Despite numerous financial errors and interactions with financial professionals gone bad, we could see that we were making financial progress and the momentum was building.
Tune in tomorrow for part 3!
What do you think? What financial errors did you make during residency and your first few years out? Did you have a “live like a resident” period? Why or why not? Comment below!
Could be a movie in the making this story WCI!..
Interesting to hear your background. A lot of hard work and courage to make a good life. Thanks for sharing and for all the work you do. Making things easier for other docs including me.
Thanks for sharing your story. Its good to learn a little about the person who has had such an impact on the physician finance community. My wife and I made many of the same mistakes (buying a house too early, listening to a “friend” about whole life insurance). I try not to beat myself up too much about it. Looking back now its easy to see how foolish some of those decisions were, but newlyweds in their twenties, are bound to make some mistakes. All you can do is learn from them and move on.
-Ray
I am in my live like a resident period right now while we pay off 200k in 20 months. It’s been a disciplined time of life, but we don’t feel like we are missing out on anything. We live better than we did as residents despite the student loan situation.
I mentioned the two big errors we made on your post yesterday.
Looking forward to part 3.
TPP
I was sent to Al Udeid, in Qatar. I wasn’t shot at. In fact, nobody was shot at. My chief enemies were crotch rot, runner’s knee, the bench press, and boredom.
Ha! I’ve been to Al Udeid a few times and my chief enemy was being cooked from the inside out. What a miserable place!
How did you get the civilian deferment? I was about to have the Navy send me to med school through the HPSP but backed out at the last minute because I talked to some Navy docs who didn’t get to do the residency (or even specialty) that they wanted, and I was pretty sure I wanted to be a neurologist going into med school (confirmed, decade-and-a-half later). These docs were unable to get civilian deferments, though I didn’t put too much more research into the process and just summarily withdrew from HPSP just before going to Bulldog.
Civilian deferment varies between services and time periods (and specialty). Anecdotally I feel like Navy has a reputation for seemingly screwing people over because they still do more General medical officer tours than the other two services. Air Force I feel like does the most civilian deferments because they have the least in-house training positions available to begin with. The Services wants to keep people in house for training as much as possible, but there are just some things that it makes no sense to try to keep a training program for. Also important to distinguish between civilian deferment, where the government just says “have fun, we will see you in a few years,” and civilian sponsored, where you receive your active duty pay and benefits the whole time and continue to accrue time towards promotion and retirement. Being in training is the only time I can think of where your government salary will be better than a civilian salary, since you are paid for your rank/experience rather than your position. EM residency I was making over $80,000 a year, and in Fellowship I was making around $120,000 because they didn’t care that I was a fellow, I was a board-certified EM doc. Of course, you finish that fellowship and the pay does not go up at all…
I interviewed with both AF programs in my specialty and begged the PDs to agree to give me a civilian deferment. It’s tough to convince them to let you do EM but not put you in their program.
What year were you in Al Udeid? I was there in 2007 at the CAOC.
Fall 2007.
Yup, same time: July to December 2007.
I went over there one time for a briefing. Maybe we were in the same room that day. Did you go to the clinic while you were there? Watch the boxing match?
I was a vampire, working 2300-0700. Never went to the clinic either. Next time I’m heading through Salt Lake maybe you guys won’t be having a baby!
Well, I’m sure we were in the cafeteria few times together. I was a vampire all four months too. By the way, that baby turns 3 next week!
“Sure, some people got shot, but we didn’t get shot. And people were dealing drugs but they weren’t doing it from the townhouse right next door.”
You sure you don’t have a career in real estate marketing?
Maybe this explains why we had such a hard time selling it…
It is interesting to read about the evolution of a family and the financial decisions. We STILL own our starter home (cost $102K), current value after 24 years…$80K. It’s been a rental with non-usable “passive activity losses” for 15 years.
We still own our “dream home”, but it’s not dreamy. Cost for land and build, $600K, current value after 15 years…$550K. Can’t wait to get rid of it and downsize.
A couple of my professional friends that have done a bit better than me bought and sold houses at the right place and right time, and several inherited a few hundred thousand from their parents. Lucky them.
My three biggest mistakes were: not saving more early on, not saving enough for the kids colleges, and building the McMansion.
One thing is clear. We all make mistakes and can usually change course and correct them.
I think the entire white coat community owes a debt of gratitude to those financial advisors early on that screwed you with advice and made you angry at the industry.
Can you imagine if you had gotten an incredible financial advisor from the start? The impetus for starting White Coat would likely be non-existent and the thousands upon thousands of docs you have subsequently helped would have been left to fend for themselves. Plus you would not have spawned an entire niche in the physician blogs.
So cheers to the horrible financial advisors of your past. I personally thank them for their bad advice.
Want their phone number to thank them personally?
Yes, please.
Not having bought a house yet, and deferring because we will probably move states in a year, I would love to hear more about your tough negotiations with “delusional” home owners. It seems in Northern Virginia a lot of the houses on the market are delusional priced, to the point where we’d rather move to Texas!
Yes. I am in Northern Va. We built a house about a year ago. Some neighbors down the street are selling just a little over a year after building (I am intensely curious about the circumstance here but don’t know them personally). They listed for more than $100k OVER what they had built it for the year before. Purely delusional. It’s still on the market 2 months and a few price drops later
Wow! I had figured out that you were at Langley just before me, but I had no idea you were slated to go to Keesler the same time I went. I didn’t even put Keesler on my preference list and I was still sent there. Great people, but it was only a year after Katrina and 1/3 of my neighbors were living in FEMA trailers or RVs in their driveways. The two years I was at Langley there was no anatomic pathology lab so I got an office and spent all my time working at Portsmouth, only returning to Langley every 2 weeks to do paperwork for the clinical lab.
“Where’s Langley?” That made me laugh. I feel as if almost anywhere would be better than Mississippi, but that’s just me being biased. Sounds like you’ve had quite a ride in the last 20 years or so, but look at you now. We live and we learn.
The South has really grown on me over the years, but I definitely started with the same bias you have. To be fair, that bias also applies to the West Coast, East Coast, MidWest and especially Texas. 🙂 I have a weird thing for mountains it turns out.
I think one of the benefits of your experience was that you had incremental increase in salary over time, rather than the big attending raise. That plus being inherently frugal allowed you to build the wealth appropriately without too many bad mistakes.
I had a four-fold jump in pretax salary into attendinghood (which actually seems little in retrospect), along with friends and family who expected us to exercise our material wealth desires. Not easy to go back to living like a resident.
Absolutely. Huge difference from most docs. I have no doubt it played a role in our success. May our income continue to rise!
I am a HPSP student who is engaged and will be married going into my third year of medical school. She is an elementary school teacher with a heart of gold. Right now our plan is to try to have our first child during or heading into my intern year, and she plans to stay home with the baby for the first year (intern year). Any words of advice? Financially, I think waiting until the military benefits kick in makes sense (a $10 baby sounds nice).
The $10 baby was in civilian residency. The two in the military were free. You’ll likely be in a military internship so the baby will be cheaper if you can wait until then. But money isn’t everything in life. I mean, financially speaking the best thing to do is never have the baby at all.
I’m curious about how you approached your “frank chat” with your partners. How did you get that conversation started — in the context of an email or a real conversation? Did you have a feel for the books ahead of time? I’m in a partnership position now with a year to go but so far no communication from the partners that they would vote me in.
“Do you see any reason why I shouldn’t buy a house? I just wanted to make sure that you were happy with my performance and don’t see any reason why I’m not on track to become a partner before I buy such an expensive thing.”
Interesting segments. Sounds like you actually won the lottery three or four times. The big one was Katie. That and your military service helped you immensely. You already had your ER practice goal defined.
“1)By the time I got out, I knew exactly what I wanted- a partner position with a small democratic group in a community hospital in a town surrounded by mountains”
To the physicians here. How to be a good father and sounding board?
Different path for my daughter: College, med school, residency, 2 fellowships for ortho peds/sports medicine.
Mentoring has opened windows Boston to DC to Denver to Chicago to Phoenix to Houston to St Louis.
The jump to Attending varies from academic vs private and location for size of population.
Should she focus more on the job fit, location, or building her “brand”? The internal dramas will happen anywhere, at least she knows the pitfalls for places she trained. Should she value the job responsibilities of a new location more than the fit with her colleagues? Building a client base with a teaching facility and moving to private group might be best. LIMITED time available for interview trips.
Is one trip the norm for interviews?
Comments and opinions regarding a good process would be welcome. Avoiding a mistake on the first job would seem to be smart. What pitfalls to avoid?
This is financial since starting base with fellow residents varied from low 300’s to 700k. Substantially different deals.
Should she rely on mentors only?
So far, I told her to pick the best fit job and location.
Thanks and I apologize for going off the series.
I think you gave good advice. I’d suggest you ask your question on the WCI forum to get more responses.
I am in a similar situation of civilian residency and owing military service for joining the HPSP program last year of medical schooling. So now I’ve graduated my civilian Family Medicine program, I am trying to decide if resigning my commission and paying back that last year of medical schooling and the bonus signing would be better than trying to have a JAG lawyer rework the contract because while in the civilian residency I was placed in the Army Reserves without any stipend throughout the duration of residency.
Any thoughts on this because seems like there are significantly more benefits to just resigning my commission instead of staying in.
You can sign up for HPSP for just one year? I didn’t know that could even be done. But if you’re signed up and have a commitment, I don’t see how you can get out of it just by resigning your commission. What made you think you could do that?
I think I was technically a reservist without stipend (or responsibility) during my civilian residency. Why was that an issue?
What am I missing here?
I was able to sign up for the HPSP my final year of Medical school. Initially was going to do a military preliminary year but had to requested to take personal leave for personal and family needs. Upon returning, I was given the option to continue my professional training but I would not be with the HPSP (despite having that initial contract with the HPSP) rather was placed in Reserves with civilian residency training. This happened because of the >1yr to suitably situate family matters (although, I recognize I should have made a better attempt to resume sooner) did not offer nor would offer a spot for residency training.
So now I completed my civilian training and I am wondering if it is in my best interest to continue with the military. I currently am seeking Reservist Legal Counsel on my options. I have a desire to serve but I want to also make sure I am not making a mistake financially long-term goals. Seems like there are some benefits to military but hard to judge given your recent discussion about positives and negatives about your post residency service experience. I was not able to experience some of the benefits that comes with military residency training. So I am hoping to determine if there is any advantages to continuing with the military at this stage. Advice? Hope this clarifies my situation. Thanks.
If you want to serve, then serve. Certainly even a military doc makes enough money to live comfortably barring some massive educational debt. Life isn’t all about the money.