Bonnie Koo

Welcome to another installment of Interviews with Real Female Physicians. The goal of this series is to share their story so that you, the reader, may learn and be inspired by their experiences – good and bad. We all come from different backgrounds and have different situations. Some of you are married, some are not, some with kids, some with blended families. Let’s show other women that any of these can work financially! 

So let's introduce our next woman physician rockstar – Emily!

Tell us about yourself:

My name is Emily, and I’m a 44-year-old single mother of 5 children. I divorced 1.5 years ago after a 19-year marriage when I found my husband was living a dual life.  I live with my kids in a relatively HCOL area, a city in Northern California on the outskirts of the Bay Area. I am an employed pediatrician at a company with great benefits and I’m relatively happy with my career choice, although obviously, pediatricians have typically the lowest compensation of all physicians. Because I was previously in the military, I had no student loans.

I have been an attending since 2003, and I’m 15 years out from residency now. If I could do one thing to change my past, it would have been to properly educate myself on personal finance much earlier in life. I did not do this until forced to by my divorce. While late is better than never, earlier is obviously better than late. The message I try to give the young physicians I meet is to do the work that it takes to make a financial plan and obtain at least a basic financial education for yourself.

Without this basic education, you are either completely without a financial plan, or you are at the complete mercy of your financial planner. I also think that anyone smart enough to become a doctor is smart enough to learn to manage their own money without an advisor.

Did you graduate with student loans?

I made the decision to join the military and they paid for my medical school in exchange for 7 years of service after my residency. So I was fortunate to have no student loans from medical school. I had small student loans from college (maybe $20K) that I paid off early after residency.  I had completed 6 AP classes in high school which cut down on the number of classes I needed at the college.

I had a combination of scholarships and money earned from working during college that paid for the majority of my undergraduate education. I also lived extremely frugally during college and avoided debt.

Point Reyes

Financial aspects of kids 

When did you have them?  

I had my children just after becoming an attending while I was still in the military.

Are you planning to fund their college expenses?

As for college saving, I have found that is a uniquely personal decision. People believe in funding none of it or all of it regardless of cost, and everything in between. Because I had grown up poor and had no college funding for myself, I wanted to be able to help my kids with their education. I knew that there was going to be a limit on how much I could give them with 5 of them.

My goal had always been to save between $60-80K in 529s for each.  As a veteran, my children can attend the UC and Cal State schools tuition-free also. With $60-80K and free tuition, they can fund all of their undergraduate education with this money if they are smart even if they live on campus.

If they go to a school close enough to live at home, they will even have money left over for graduate school.  This money is my gift to them, which they can spend however they want with maintained good grades. But they know that when this money is gone, they will be financially on their own and will have to take out loans.  I just reached my college savings goals this year!

What are your child care expenses?

We used daycare until we had the 3rd, and then we got a nanny. The daycare costs were still a little bit lower (compared to a nanny) with 3 kids, but the sheer work of getting 3 kids to and from daycare every day on their strict schedules and with their sick rules made having a nanny worth it even if more expensive. The children began attending a local preschool when they were old enough, and for a few years, they attended a private elementary school (relatively low cost, $5k per child per year).  Then I had twins just as my military commitment was ending.  I now had 5 kids under the age of 8 years old.

I could either have used nanny/private school, daycare/private school, nanny/public school, or daycare/public school but no matter how you looked at it, it was going to be very expensive, I estimated starting at $50K per year for the least expensive option. That just didn’t make a lot of sense to me. If was going to work as a pediatrician in my area I could have made about $200K/year working full time. Minimum $60K would have gone to taxes and $50K to the daycare or nanny, and I would have been taking home $90K only and missing out on a lot of my kids’ lives.

I also was not super happy with the private school. The oldest kid was struggling and the next 2 kids were not learning anything at school. It all seemed like a waste of money and time. Plus, I had to get 6 people up, fed, dressed, and to school in a 15-minute window. That was madness. I decided to try homeschooling.  My husband was not initially on board, but we decided to do a trial. We kept the nanny but at slightly reduced hours. She and I worked together to teach and care for the children and I worked part-time. This worked very, very well for our family for about 8 years. I will always cherish those years I was able to spend more at home with my kids when they were young. The last few years I began working more because a great full-time job with hospitalist hours became available in my town. This was fortuitous, as it made the financial impact of my divorce much better than it could have been. Having a solid full-time physician income meant that I did not have huge financial stresses while the rest of my life was falling apart.

After the life-altering discovery that led to my divorce, I knew that I could not afford to homeschool anymore. The extra costs of the nanny just could not be maintained once we were now going to pay for 2 households. No matter how you look at it, divorce means having 2 houses when you used to have 1. You will almost always have less money as a result of divorce.

Obviously with 5 kids, once divorced, private school was out of the question. So my kids began attending the local public schools. I have been pleasantly surprised.  While the academics are not anywhere near what we were doing in homeschooling, they are still adequate. The children have had the typical struggles that come with traditional schooling but learning to navigate those troubles is a great education in itself. The local middle school also has a great music program and one of my kids is really benefiting from that (and it’s totally free!).

In my area, there are no school buses, so I do either have to take the kids to and from school myself or hire my nanny to do it.  Post-divorce and with the kids in public school, I still need a nanny. My mom also came to live with me and that dramatically cut my costs as she can watch the kids on my overnights and weekend shifts (she’s still working weekdays herself).

My nanny costs went from about $4K a month to $2K a month with these changes. As my children get older (they are 8-15 years old now), I am quickly getting to the end of the days where I will need a nanny. We will be navigating what having a teenager driver and a retired grandma living with us looks like in just another year.

5 kids is a lot of kids, and that is a number outside the typical for American families these days.  It is also unusual to find a single doctor mom who is divorced with 5 kids. Add to that being a pediatrician in a relatively HCOL area and anyone in personal finance would think that’s a lot of bad decision making!  If I had known I would end up a single mother, I might not have had as many children. I also might not have chosen to marry someone if I could have predicted that he would hurt me so spectacularly and our family would implode.

If I had known all these things, maybe I would have also chosen a different specialty (even though pediatrics was my favorite rotation) or even moved to a LCOL after divorce (even though I’m established and have family in the area). BUT, I would not have the wonderful children I do have, I would not have the life experience and education that came from my divorce, I would not have the career I wanted, and I would be living somewhere away from my family just to save money. I’ve learned to not be offended when I read articles about the financial “mistakes” some would say I’ve made. I did the best I could at every step of the way with what I knew at the time.

Financial aspects of marriage

Are you married?

I am now single, divorced after 19 years of marriage.

Did you get a pre-nuptial or post-nuptial agreement?

We met and married in medical school when we were both broke, so no pre-nuptial agreement.

Did you and your husband agree on finances?

We had similar financial education (none) and both grew up poor. Both of us were the first people in either of our families of origin to go to college, let alone medical school. In our families, everyone worked until they could afford to retire or became too old to work (more common) and lived with younger family members. I know I never even considered that we might retire early. I thought because we were saving some in the TSP (military equivalent of a 401K), had no student loan debt thanks to Uncle Sam, and had little debt outside of primary home/modest cars that we were doing great financially. Compared to our family members from both our families of origin, we were in a fantastic position financially.

Compared to FIRE aficionados, we were nowhere near anything resembling a financial house in order. We had no financial plan. We did not live like residents for years after residency. We did not save maximally annually in tax-advantaged accounts. We did not have DI or a trust. We also pulled out of the market in 2008 from fear/lack of education.

Financial advice I would give younger women considering marriage:

1. Understand that while there is a romantic and maybe a religious aspect of marriage, once legally married you are 100% financially tied to this person. If he decides to take out huge debt, you are on the hook for half of it. If he has a gambling problem and loses all “your” money, you have no recourse. If you decide that you don’t want to be married for whatever reason, you will both pay a lot of money and it will take significant time to untangle yourself financially from this person. You can still choose wisely and find yourself somewhere down the road of life in your personal nightmare. I would advise higher earning women to consider not legally marrying, and definitely using a pre-nuptial and post-nuptial if they do legally marry. I have been surprised at the number of marriages I see now where the couple has a religious or formal ceremony and wear rings, maybe even with a legal name change – yet they are not legally married. They don’t want the financial and legal hassle of divorce if their relationship does not work, but they still want to publicly declare their commitment to each other. Financially, this is a much better option than legal marriage for the higher earner. It also makes sense for the dual high earners, who pay quite a bit more in taxes than they would if they were single and legally cohabitating (the so-called marriage penalty). My ex and I paid about $30K extra a year on our taxes while married than we would have if single.
2. Educate yourself on your money. So many otherwise smart and professional women leave all of the finances to their husbands and do not know about their money.  If you want him to do the work and make the decisions, that’s fine. However, you must know the basics yourself.  If he was to die or get sick, you need to be able to take over your finances.  If you were to divorce, having a basic financial education will make the process not quite so terrifying.  It is dangerous to fully trust anyone, including your spouse, with your money and not know your financial status at least peripherally.
3. Do not consider yourself to be divorce or catastrophe proof. So many people think divorce would never happen to them.  But the sad reality is that every divorced person I know did not get married thinking they were going to get divorced. Not a single one of us thought it would happen to us, or we would have obviously made a different decision.  Life catastrophes besides divorce happen as well.  Either spouse could have illness or injury impairing their ability to work.  If one of you is injured or ill, do you have adequate DI to cover your expenses? DI ends at 65, and you have to have enough saved for retirement or else you will be dependent on Social Security from the government and likely the charity of family.  That means that after illness or injury, you need to have MORE money than when you were working so that you can save for your retirement still in a taxable account. You also may need more money if you or your spouse cannot perform household/childcare responsibilities or if one of you needs extra care as a result of your changed life circumstance. I was naive enough to think that my high-earning spouse was my DI while married.  I am so fortunate that I was able to purchase DI at the time of my divorce when I was 42. If I had any medical problems and could not get a DI policy, I would be one illness or injury away from financial ruin as a single mom. Your ability to work and make money as a doctor is your single biggest asset, and you need to have adequate DI, regardless of your age or relationship status, until you are completely financially independent.

Have you made any financial mistakes?

1. Not having DI until I got divorced.
2. Not having basic financial education or a financial plan until divorce forced me to.
3. Not maximally saving for retirement from an early age in tax-advantaged ways.
4. Pulling out of the market in 2008 due to fear/lack of education.

View from East Brothers Lighthouse at sunset

General Finances

What’s your FI (financial independence) number? 

My personal number is 2 million, which will generate a minimum of $60K annually (using a 3% safe withdrawal rate). I have $30K passive income (a combination of VA disability for me and a portion of my ex’s military pension). I am anticipating at least a $60K pension if I retire from my current job (current value is $24K annually). This will give me $150K without social security, which is more than enough.

I think a lot (probably too much) about FI and retirement. I am very much looking forward to the freedom to choose how much to work, and if I want to work at all.  Having to work every month to make a certain amount of money to pay my bills is the opposite of freedom. I am still in the accumulation phase, though.  Part of my dilemma is that my company offers healthcare for life and almost full pension if you work until 60. Although I will likely have enough to retire by 55, choosing to leave before 60 means paying for healthcare until I’m Medicare eligible and losing out on those years of pension. I would still get my pension at 65, but I would miss out on the 5 years of pension payments from 60-65. Given that I am financially risk-averse, I expect that I will stay until 60 but that I will cut down at some point to the 60% FTE needed to keep my eligibility for this early retirement benefit.

Are you DIY or do you have a financial advisor? 

I have never really trusted financial advisors, having heard horror stories. When faced with an impending divorce, I knew that I needed some financial education STAT.   I began reading everything I could get my hands on. I started with Suze Orman and Dave Ramsey, both of whom have excellent basic financial education books.  I started looking at money blogs like MMM, WCI, and POF. I read all the classic books like Rich Dad, Poor Dad; The Millionaire Next Door; Millionaire Teacher; Bogleheads Guide to Investing. I developed a financial plan and educated myself on how to maximally save in tax-advantaged ways. I began working towards FI. I’m too old for FIRE, but not too old for FI. Once I started on the path of financial education, I learned enough to know that not only did I not need a financial advisor, I would get to my goal faster without one.

What is your net worth?  

My net worth without my home is $650K, with my home it is $750K. I know that at 44 I should have a lot more money than that saved. However, I also know that there are people my age with nothing saved also. I try not to be too hard on myself for my later start in saving.

How are you saving for FI/retirement?

I am saving a total $55K per year at work through 401K, employer contribution, and mega backdoor Roth. I am also saving $5500/year in a backdoor Roth. So I am saving the maximum amount I can in tax-advantaged accounts as an employed physician of $60.5K annually. All of my money is in the standard 4 index funds (US stock, US bonds, international stock, international bonds) with an allocation of 20% bonds and 80% stocks. I rebalance annually for the money, not in target retirement funds.  If I have additional money beyond the $60.5K, I have been paying down mortgage debt. If/when the stock market crashes, I will likely put that extra money into the market. But with the market at a current all-time high, paying down debt makes more sense to me than investing with the small amount of extra money I have.

I own stock in my company, as we are required to purchase when making partner after 3 years. The current value of this stock is $105K.  I do not own any other individual stock nor plan to in the future.

Biggest financial failure/regret:

Without a doubt, my biggest regret is not starting sooner.  I know that if I had this knowledge early in my career, I would be FI by now and likely retired.

One thing you wish you knew:

I wish that I had been given a financial education as I was growing up or sought it myself as I became an adult. There is this interesting difference between professional men and women.  Professional women are more likely to lack basic financial education or have a financial plan than professional men, even though they are intellectually capable of it.  We are not taught about money as young girls.  We often have male partners that are in charge of the family finances.  The longer we go without a financial plan or education, the more shame we feel at our financial ignorance.  With this shame, we are then less likely we are to seek financial education, and the vicious cycle continues.

Do you have insurance?

DI – I have 6 months of sick leave through my job and then two DI policies that will almost 100% replace my salary. I have a policy through my work at 60% of pay non-taxable, and a small personal policy up to the max limit I was allowed to insure myself. For about $5K a year, I have no worries about illness or injury causing complete financial devastation for me and my children.

Life insurance – 2 million

Umbrella – 2 million

Do you give to charity?

I give 10% of my income monthly: a combination of tithing to my church, assisting poorer family members (with appropriate boundaries), and various charitable organizations.

Any parting words of wisdom?

Educate yourself about your money. Save as much as you can. Learn from your “mistakes” and move on. Don’t compare yourself to others, as you only know what they want you to know, and that is rarely ever the whole truth.

Tell readers a fun/random fact about you:

I can read a book a day, and would do this every single day if I didn’t have to work to make money!

And … that's a wrap! If you're interested in doing this please send me an email – I'd love to hear from you!

Ummm, Emily is an inspiration!