[Editor’s Note: In honor of our nation’s independence — and our mission for those “wearing the white coat” to become financially independent — purchase Fire Your Financial Advisor: The Online Course at 15% off for the next 7 days using code “INDEPENDENCE” at check out. Click here to buy.
The following is a republished post from Physician on FIRE, a member of The White Coat Investor Network. The original post ran here, but if you missed it the first time, it’s new to you! Enjoy!]
With ten years of real-world experience as a physician anesthesiologist, there are a few things I wish I would have known as a young buck just starting out.
Presenting, The Top 5 Things I’d Tell My Younger Self
1) You don’t need to build a 4,000 square foot home.
There’s a reason really nice homes are called “dream homes.” We long to own one someday. We can’t wait to be able to afford the home we’ve dreamed of for years. When you sign your first contract as a physician, the dream home can be yours.
Hindsight is 20 / 20 in this case, but I am one of many young physicians who made the mistake of building or buying too much home too soon.
Renting is not “throwing money away,” but that is a common misconception. While you don’t have to be a renter for life like Jim Collins or Jeremy, you’re not obligated to sign up for a mortgage two or three times your salary as soon as you can afford it.
You can buy a house. But wait until you’re settled and satisfied in your first job. Wait until you’ve made partner. Wait until you know the neighborhoods, the schools, and the local real estate market. Take your time. There will always be homes for sale. Even dream homes.
2) Take some time off.
For the first five years of my career, I was paid as an independent contractor, with a daily and sometimes hourly rate. Such an arrangement presents as a bit of a double-edged sword. On one hand, I was rewarded for every day worked, and long days often meant extra pay.
On the other hand, a day off was a day without pay. I found myself refusing to take a day off here and there. I’d ask the question, “Would I pay X number of dollars for a day off?” Of course not.
What I failed to realize is that a long weekend to rest and recuperate is worth every penny. Not earning money for a day isn’t the same as spending. Financially, I did well in those early years. What I failed to realize is that my free time was more limited than my future earning power.
3) There’s a site called Bogleheads. Become familiar.
Less than a year after I finished residency, Bogleheads.org was created and populated by members of the Morningstar Vanguard Diehards forum. If I would have discovered the site back then, I would have been off to a very advantageous head start in my personal finance knowledge.
Fortunately, thanks to books like The Only Investment Guide You’ll Ever Need, I avoided most of the major investing mistakes that are common among young professionals.
By the time I discovered Bogleheads, and really got my financial house in order, the site had been around for six or seven years. On the plus side, there was now a wealth of information, and most questions I could dream up had been asked and answered time and time again.
4) It’s OK to say No and “regretfully decline” invitations to serve the hospital’s administration.
In my first full-time job, I never said No. I served on the medical staff quality committee, the medical executive committee, and eventually served as the medical staff president-elect which came with a position on the Board of Trustees.
I spent many hours in committee meetings on post-call days, evenings, and even weekends. How was I compensated? An occasional free meal, usually catered by the hospital cafeteria.
At the time, we were just starting a family at home, which gave me a much better place to be, but I felt I was obligated to say Yes when asked to serve. I was relieved of all my duties when the hospital was facing bankruptcy, and ultimately shut down. My involvement with the Board led to some future unpleasantness that included being personally sued for millions of dollars.
If I could go back to advise my younger self, I would recommend channeling my inner Nancy Reagan to Just Say No.
5) Buy AAPL. And the Giants will upset the undefeated Patriots.
It’s easy to look back at past performance with a woulda, coulda, shoulda. Seeing outsized gains and upset picks makes you wonder What If?
It would be tempting to give myself some hot stock tips or slip myself a Sports Almanac a la Marty McFly. Of course, that would give me a ridiculously unfair advantage. I might as just give my younger Self the winning Powerball numbers.
Then again, lottery winners don’t end up all that happy, and even without the almanac, I find myself in a rather enviable position 10 years later by taking the returns the market has given me. I won’t need to find a shortcut to financial independence. I can blaze my own trail.
If you could time travel back to the beginning of your career, what one thing would you tell your younger Self?
Well, this is an easy one. Really just doing the basics would have put me in a much better position. There’s a lot of things I would tell my younger self though. First and foremost, I would tell him to stay put after residency and pay off student loans asap. The first few years of working could have completely wiped out my debt. Also, I would teach him to maximize all tax advantaged retirement savings each year starting from year one. For me, this would have meant putting a lot of money in the stock market in 2011 when it was still recovering…in other words, I would have had nice returns over the last 8 years.
Additionally, I would TRY to convince him not to buy that big old house in need of total restoration and instead wait, save, and buy something smaller later. I honestly don’t know if my younger self would listen to my older self on this one though. For some reason we had an itch to buy an old house and fix it up. It wasn’t a total bad decision in the end. We now have a lot of equity in a pretty nice house downtown that generates income via airbnb while we live in it. But, I now feel like I’d be happier if I were debt free and had more money in the bank. Grass is always greener I guess. I’d probably be wishing we had the house if I hadn’t bought it when we did.
paying off loans is so variable – I’m at 3.5%
I’m hr focused on passive income via cash flowing real estate
Paying off med loans pays you nothing!
Invest in yourself to grow your top line – period
Your debt is the past – focus on future too many waste nearly a decade of investing paying down loans
If you spent a few years growing top line then the debt would be easy to deal with
Just Sayin
It pays you the interest rate on the loan, guaranteed.
Post – tax also
Thanks for the reminder about Bogleheads.org. I think I will explore it more. For whatever reason, I never really got into that. I know it was influential for you PoF and also for WCI. I suppose I have been a Boglehead without knowing the term for a long time. I started investing in index funds in the 1980’s . People thought I was quite foolish. I remember having to explain why I would voluntarily settle for “average” returns. I didn’t convince anyone but it sure worked out well for me. I hope some younger investors follow this advice.
I learned a lot from both the Bogleheads “wiki” and the forum. I still visit at least weekly and contribute to the conversation fairly regularly, although not as regularly as WCI. Having met you and read your site extensively, I believe you are a Boglehead, whether or not you visit the site much.
Cheers!
-PoF
too much focus on the market
just because it performed in the past doesnt mean it will go up in future
simple analogy – a car has a small rear view mirror and large windshield for a reason – focus on where you are going not what’s behind
cash flowing real estate –
Its simply laughable that doctors say they dont like to gamble yet they toss money to strangers to manage in a frothy market
control your own destiny – buy real estate
Being a Boglehead is about more than just investing in index funds. It’s a whole philosophy and lifestyle built around simplicity in investing and personal finance. I wish I had found Bogleheads years before I did. As awesome as WCI and PoF are, it was the Bogleheads forum that really educated me about investing and personal finance. Of course, it was WCI that lead me to Bogleheads in the first place.
I love the site, but I try not to spend too much time there these days. One forum thread alone can draw me in for a good 30 to 45 minutes. I’ve learned a lot there, though, not just about investing, but about life and what wealthy people truly value.
Cheers!
-PoF
If I could go back I definitely would not have bought 2 houses during residency but rented. I am happy with the 3rd house I have bought and lived in for the past 12 years and know that it is my forever home.
I did wish I took more time off for vacation. Kept delaying it saying when I make more money etc I will be able to do it. But life then throws you unexpected curveballs (family, subsequent divorce, etc) and lo and behold you are in your 40s and really haven’t traveled as much as you should (I am making efforts to counter that).
I was fortunate to stumble on White Coat and then the Bogleheads soon after my finances were destroyed by divorce and subsequent frivolous lawsuit my ex filed against me (and won nothing). My remarkable turnaround is directly attributed to finding these 2 sites.
Having had just one spouse, one house and one job and now living a slightly early retired life with excess resources I can’t think of anything I would want a do over on. I may not have been all that wise but I somehow chose wisely on what mattered! If I could go back the only thing I can think of is I’d tell my friend not to get on that airplane that was going to crash.
Ouch. Small airplanes have been the undoing of far too many people. Just because you can afford it doesn’t make it a great idea. I realize that for every fatal crash, there are thousands of pilots who’ve never had a close call, but for your friend (and a few other people I’ve known), the statistics don’t matter much.
Best,
-PoF
You know pilots who haven’t had a close call? I don’t. And I know a lot of pilots. There are no old, bold pilots.
I was trying to give the benefit of the doubt, but you’re right. Hopefully, most pilots have learned from their first close call or calls and are better at avoiding them now. You know many more pilots than I do, given your Air Force background.
Actually it has a lot less to do with the AF than growing up in Alaska. 1/25 people in Alaska is a pilot and 1/10 own a plane!
I’m disappointed in POF for consistently advising MD/DO readers to avoid leadership positions, especially given his chosen field of anesthesia. Anesthesiologists have always done most of their work “behind the scenes” that’s lead to a great amount of misunderstanding and misconception from multiple educational levels in the general public and in the medical field itself (1). The willingness of Anesthesiologists to stay in the background has, in my opinion, been a major factor in the rise of the anesthetist mid-level that started with the Clinton administration and continues today. Maybe most think that is a good think for medicine overall and that there should be more “opt out” states with independently practicing anesthetists.
Insurance companies likely think so as there have been efforts to cut out Anesthesiologists (2). Whether or not you think this adds value or is more efficient it will result in more never events (3).
Additionally, the growth of the administration field has exploded with one site quoting a 3500% increase in healthcare administration in the time-frame of 1975 – 2010 compared with a 150% increase in clinicians (4). This has undoubtedly resulted in an increase in the regulatory burden on physicians and a decrease in direct patient care. Their compensation is as overbalanced for higher placed hospital administrates which has cut into profits for physicians (5).
This is huge challenge for younger docs coming up especially for anesthesiologists because the reality is regulations put in place have a daily impact on our practice. If there is not a strong presence among administration then your legitimate complaints can be easily dismissed. I understand that POF had a really bad experience that changed his career arc but it seems that situation was unstable and the resultant lawsuit maybe unsurprising to someone with knowledge analyzing who could have consulted on it. I certainty wouldn’t have recognized the danger and I don’t know if such a consult exists. This one bad experience should not be held as an example of all administrative experiences for doctors.
This was a long winded, wandering response to essentially say that if physicians (especially anesthesiologists) shun positions of administrative authority then others will dictate how you can work and they may have no clue the challenges you and your particular specialty face. Also, there has been some data suggestive that greater clinical participation on strategic decisions has led to multiple benefits for hospitals (6). POF wasn’t wrong in fulfilling a desire to serve and better his hospital but is wrong to discourage others from doing the same. If you truly want to guide others to avoid history repeating itself then find a someone who will sell that type of liability insurance and a good, trust-worthy contract lawyer who specializes in this. That way you can help individuals, maybe make a little, and improve the field of medicine.
CM, CA3
References:
1) file:///home/chronos/u-8803092e10d0e916001667b677a674b7ad3e4eae/Downloads/ANESTHESIOLOGISTS___THE_PUBLIC_S_PERCEPTION.442.pdf
2) https://www.npr.org/sections/health-shots/2018/02/20/587165668/anthem-says-eye-surgeons-should-monitor-cataract-anesthesia-themselves
3) https://www.omic.com/co-defendant-crna-denies-responsibility-for-failed-resuscitation/
4) https://www.beckershospitalreview.com/hospital-physician-relationships/growth-of-healthcare-administrators-outpaced-physicians-increasing-3-200-between-1975-2010.html
5) https://www.nytimes.com/2014/05/18/sunday-review/doctors-salaries-are-not-the-big-cost.html
6) https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4896259/
I appreciate the comment, CM. I think there is a difference between political advocacy on a regional and national level, which I see as the focus of your comments, and serving on your local hospital’s various committees and / or Board. I do agree that if you’re not at the table, you’re on the menu, but it’s certainly possible to be a vocal participant in state and national politics without the drudgery of updating the med staff bylaws every other year.
I no longer sit on those local committees after being burned so badly, but I do write letters to my state and federal congresspersons on matters specific to anesthesia and medicine, and have been a supporter of the ASA’s political action committee. The ASA Grassroots network does an excellent job of alerting us to important political matters as they arise (http://www.asahq.org/grassroots).
Best,
-PoF
I agree that there is a difference, I honestly have a very skewed perspective as a resident in a larger regional medical center where that difference is likely somewhat blurred. I didn’t mean to be antagonistic, thank you for all of material as I find it to be insightful and helpful.
CM
“If physicians (especially anesthesiologists) shun positions of administrative authority then others will dictate how you can work and they may have no clue the challenges you and your particular specialty face.”
I admire your enthusiasm, but hope you’re not too disappointed to learn that no amount of time spent at committee meetings or writing letters to congressional reps will alter the inexorable decline of physician practice autonomy and independence. At best, you’ll find you’re viewed as a ‘team member’ (which mean you’re responsible when others screw up and you’ll be the one named in the suit). Alternatively you’ll be widget expected to meet ever increasing productivity demand or even worse, you’ll simply be viewed as a cost center.
To your credit, you’ve got great insight, “I honestly have a very skewed perspective as a resident in a larger regional medical center”. The real world is far different than residency. You can devote your energies to Sisyphean tasks like bylaws committees and educating admins with online MBAs as to the value of well-trained physicians or you can spend time doing things which are much more likely to leaving you with a sense of satsisfation or accomplishment when you look back years later. There’s a reason for increasing physician interest in FIRE.
You’ll do well though, as you’re taking advantage of resources like this.
If PoF’s Hospital, where he devoted countless hours and energy, decided it would be in their best interest to use a Contract Anesthesia Group, they would unhesitatingly dismiss him. The Hospital will not love you back.
It seems from the responses that most agree with the OP on the committee matter which is fine. I’ll be the first to say that I have no idea how most in my chosen field relate to the hospitals employed or even the specifics of groups. But I can’t accept that the answer is to step away and stick your head in the ground. I’m not advocating for running for Chief of Staff or whatever “The Man” or “The Board” is, I’m saying that other positions that you may be asked to fill on smaller more directed subcommittees or such can go a long way for your field and clinicians in general (may be just another skewed opinion as there are multiple of these where I am and don’t know how that true that is elsewhere). One of the articles above suggests that there is indeed an improvement when clinicians are involved in strategic decision making.
I’m more than likely being naive and will scoff at my past self in years to come. Or, I’ll get an online MBA myself and one of those simple financial certificates so I can have more letters behind my name than fellow committee members, its likely not a Herculean task (that’s right I looked up Sisyphean). Also maybe naively, I think there has to be some specific way to protect yourself outside of your normal asset protection methods specific for this and that’s what I would prefer hearing about. I think if the OP had this protection in place (and I don’t know if it actually exists) then he would be less rigid about his advice on the matter.
CM
CM-
You’re not wrong. I’ve been out in the “real world” of community hospital politics for ten years and I have no doubt that administrative engagement at our hospitals has been a driving factor in keeping our practice independent and expanding into other facilities in the area. It’s true that it is easy to get drawn into useless activities and you’ll need to know when to say “no,” but if you can be selective, about both what to get involved in and what to oppose, you’ll find that you can accomplish a lot. It won’t happen overnight — I took me all ten of those years to see it really pay off — so if you’re a FIRE type who wants to retire in five, it probably isn’t worth it.
I’ve been very impressed by the strength of your convictions. If you’d like to talk more about some of my “lessons learned” so that you can hit the ground running when you get out of residency, perhaps Jim can forward you my email address.
I would like that. Thank you.
Good advice. Unfortunately we are in the process of looking at getting the well over priced and sized house. On the plus side I did follow bogle advice and bought lots of AAPL, as well as apple call offerings with a basis in the 50s.
Yeah, we built our dream home. 4,000 square feet on the water. After the hospital went bankrupt, there weren’t many buyers for such a place in a small town. When we finally did sell it, we took a loss of about a quarter million dollars. It was a tough lesson to learn.
Good call on the AAPL! Fun fact: In 4th grade, I had an Apple sticker on my skateboard. That was 1986. If only I had invested in the stock back then instead of professing my fondness on the board.
Best,
-PoF
Bogle advised you to buy individual stocks? Forgive my skepticism.
Yes I was thinking the same. When people ask I do say I hold it and a bunch of other winners – then I come clean and fess up to them all being in VTI.
No. Bogle didn’t. I basically have a 7 fund portfolio in vanguard admiral index funds. But after totally maxing out 401k, HSA, back door Roth x2, Investing in Utah 529, and then more index funds in a taxable account, then my play money goes into individual stocks, calls /puts options. A high salary affords me the luxury of “playing” in the stock market. It’s basically a hobby. Some people invest in real estate, I like to invest in various stocks
I’ve taken #3, take some time off, to heart. I’ve turned down quite a few moonlighting shifts this year in order to spend more time with my wife and kids. It is the last summer before my oldest goes to kindergarten. I figure these times are worth more than paying off the student loans a year earlier.
Well worth it. You’ll end up with enough money, either way. There’s nothing wrong with forgoing some income to reclaim some time, especially with a young family. Keep making those choices.
Cheers!
-PoF
Perhaps I have watched too much science fiction and read too much on chaos theory but things seem pretty good in my world. Many paths not taken but few true regrets.
I can’t disagree with the recommendation on hospital committee work. Was lucky enough to find Jack Bogle’s devotees and products before I had real money to invest so I have done pretty well there. My advice would likely be to spend more time with family and friends, cultivate more friendships and be less of a perfectionist.
I never turned down opportunities to serve on college boards, hospital boards, chamber of commerce boards, church committees or really anything. I built a huge network that still serves me in my side gigging which in turn, adds to the quality of my slightly early retired life. I am more selective now because the network has less utility since I only side gig part time but I still do my share of non paid board work. Somebody has to do it and I’m very good at building consensus and facilitating groups. If you don’t invest the time while working full time many of these service opportunities likely won’t be available to you after you retire.
My aunt and uncle warned me not to join (too many charitable) boards lest it tie me into town when I want to travel and as they pick board members they hope to be able to touch for money if their efforts at fundraising do not match their needs/ goals in any year. I am a member of a club my nearest and dearest friend here asked me to join after having me speak at or attend some of their meetings. Occasionally I cynically hope she didn’t develop me for my likely wealth. I’ve been with them for ?4 years and a board member and treasurer for 2. If she or I ever move I expect I’ll drop out of the group, but now trying to find ways to spend more money and less work on our annual fundraiser- an awesome International Food Festival I have not been free to enjoy since having responsibilities during it. Don’t mind being treasurer though.
They asked me to join a related board for a group my club supports, but having heard from my friend and experienced first hand as we try to help them how incompetent they can be I declined. Have been hit up for a few $100 emergency donations and end up spending $1-2K for dues and donations to the club’s efforts, will not join any other boards and like my fellow clubmembers hold only 1-2 of their meetings/ events per year as sacred; happy to travel or work during any others. Don’t get as much as I had hoped from the group, and if not for my friend I’d just donate similar funds to the groups we help and attend the food festival as a happy paying guest.
I agree you have to be selective, many groups are just an excuse to shake down their members for donations and Doc’s or former corporate executives like me are favorite targets. I have been able to focus on three or four boards that never ask for donations from members and that have serious governance and mission creation functions. 95% of the board opportunities out there do not really want people who will rock their boats but want a source of easy donation money.
My best advice to my younger self: insist on being paid what you are worth, and do not give your time away for free. I don’t know how much of this is gender, but I know a lot of young docs, especially women, who are willing to take crummy jobs, be abused etc because they think (or have been told!) that “you are lucky to have a job”, “if you care about patents you will come in etc.”.
In other words, I would have grown a backbone a lot earlier 🙂
I wanted to make sure I got the last thing on your list of five, which was to buy AAPL – I didn’t do the intuitive thing but I went and searched and found out you were likely talking about Apple stocks. So I have a couple of questions: were you really serious about advocating for the purchase of single stocks that may blow up? I know you do not go for commodities like Gold which climbed over 1680% in less than 10 years in the early 80’s, but the general principle remains the same: that a single stock could ultimately make you rich.
Is this a good advice for someone not well versed in stock picking and maybe out of their depths, or is this tongue-in-cheek slipped in amongst the more serious advice about not buying too much house? Truth in disclosure: I am a Pharmacist with 24 years experience whose wife swears by your blog in almost all the financial things she does and I am basically forced to also go through your blog carefully and appreciate all you do to educate the physician community in basic and medium level financial planning. I believe she learnt back-door ROTH from your web site, and in turn made me not just aware, but curious enough to study and add it to my own knowledge. Thank you anyway for what you do as I now have a much more astute and financially prepared spouse.
NB: I did a comment and then read your community advice before posting. Number 2 was to state all financial interests which I totally agree with. I would like to amend the post to note I do part time work with World Financial Group (WFG) currently and switching to Primerica. I am not hoping for anyone to do business with me through your forum or anything like that. I work full time as a Pharmacist and rarely go looking for clients but I would be involved hopefully with sitting down with people to help them figure out how they can organize their financial lives and plan for retirements, which is my forte. Thank you for the opportunity to clarify and hope you forgive my not stating this afliation with WFG on the initial post.
Those rules apply to the forum, not necessarily commenting on a blog post, but it’s a good idea here too to state your conflicts of interest.
My original post is in regards to your number 5, to buy AAPL. At first I didn’t recognize it was in reference to Apple stocks and I had to go and check the acronyms online. So my question is this: Was number 5 a tongue-in-check attempt at humor or a real regret? What if you bought tons of Apple stock and it crashed and burned like Enron that went through the stratosphere only to take down dreams? I didn’t think you support individual stocks especially early in an earnings career so I am interested in your answer here.
On my post also, I acknowledged I am here because my Physician spouse went on a tear in learning about finances after I had pushed her for almost 20 years to do so, and now she swears by this website and a few others. How do you stress the point that every advice doesn’t work for everyone enough of is not a one-fit solution for all? I do appreciate she learned about the backdoor ROTH from this site and she is doing the 529 from Utah that I sent her after being hung over the idea of a 529 for a couple of years, which I did not think we needed to do. We have 401K and IRAs worth north of half a million and growing steadily and I have pointed out that you can use the growth funds to pay for tuition in the future if needed. I am expecting well over half a million in growth alone over the next six years and our first child will be entering college 4 years from now while the other four are spaced our three and four years apart.
I am a Pharmacist with 24 years experience and began saving from day one, working two or three jobs consistently for 17 straight years before I finally cut down to go to a Residency program (lasted only 6 months) and come back to my first full time, long-term job with a guaranteed retirement that should reach well over $95k a year if I retire at the very first opportunity there after working 25 years. I am currently also about to get working on getting my series 6, 63 and 65 with my part time financial planner business with Primerica.
# 5 is clearly tongue in cheek.
Primerica “advisors” are generally salesmen masquerading as advisors. Can you really look yourself in the mirror every day doing that? Why not become a fee-only advisor?
https://www.indeed.com/cmp/Primerica/reviews?fjobtitle=Financial+Advisor
I sure do hope that I can transcend the salesmen hype for Primerica agents. I do not have long term experience as an advisor and this gives me the opportunity to learn and get myself situated in the industry. I have a lot of colleagues and friends and referrals for advise pertaining to retirement planning and personal finance. On a personal basis, I bough IULs for myself through WFG (Transamerica) and the switch to Primerica has exposed me to the opposite in terms of approaches to personal finance, where they push the idea of getting a cheap term insurance coverage and invest the rest.
I am an aggressive investor with compound yield of over 14% from my first mutual fund 24 years ago till date. Somehow I believe I can help a bunch of people set up and maintain their investments and retirement portfolios at minimal cost, so I am not really counting on making too much money with the gig or recruiting people – I know these run counter to some of the people going into the business. One day, with more experience, the fee only concept will likely happen, but I work full time as a pharmacist now and the work schedule precludes working in the fee only aspect of the industry which I find require more fixed and free time to be devoted to it.
What do you mean transcend? As I understand it, there are NO fee-only advisors there. The business is set up to sell loaded mutual funds, which are essentially crummy mutual funds. You aren’t doing your clients (colleagues and friends) a favor by working there. If you want to help them, become a fee-only advisor and recommend the best investments to them, you know, the ones that don’t pay commissions. How will you help them set up their portfolios at “minimal cost” when you can’t use the minimal cost investments (i.e. super low cost index funds) without being fired by your employer?
How will you face your friends when they find out what you’ve done to them? Will they say, “Yea, I know he sold me high ER loaded mutual funds, but it was better than what I was doing on my own so I’m good with it?” No, they’ll be angry and feel misled by their “friend.” If you want to keep the friends, go fee-only. If you want to be able to look in the mirror in a decade and be proud of what you’re doing with your life, go fee-only. Be part of the solution, not part of the problem. Starting out doing this the right way will keep you from having to make a painful, embarrassing, costly transition in a few years when you gain more experience. And unfortunately, most of the experience you gain will be sales experience.