Marriage & Children

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 from 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 – Rebecca.

Tell us about yourself:

I’m an Internal Medicine physician turned Stay-At-Home/Homeschooling Mom. I met my husband the first day of intern orientation, and we are celebrating ten years of marriage (and four children) this year. Since we met while we were both in the military, we move where the military sends us, which included eight years in one of the most expensive cities in the country and now the past three years in a Southern coastal city with a moderate cost-of-living. I graduated from residency eight years ago, but I only practiced clinical medicine for five years after residency. I trained in the military and served my three-year military commitment practicing general Internal Medicine, during which period my first two children were born. At that point, I got out of the military and took a part-time civilian job for two years, until the military moved my husband (and the rest of us) cross-country when my third child was five weeks old. I planned to take an extended maternity leave to get settled and enjoy this time with my kids, but I enjoyed it so much that I never wanted to go back. We then added one last child to the mix and started homeschooling. This was not my original plan when I started my medical training, but being debt free has given us the freedom to make this choice. When I’m not making lunch, reading Charlotte’s Web, making salt dough maps, and exploring fractions, I read, knit, visit historical sites, and volunteer for far too many community organizations.

Did you graduate with student loans? How much & what are the interest rates?

I had about $50k worth of loans from my first year of medical school (before I joined the military) that were consolidated at around 2%. My husband had no loans. I paid them off as quickly as I could, and finished paying them sometime before I graduated from residency. That may have been a financial mistake, given the low interest rate, but I wanted to be free of them.

Financial aspects of kids 

When did you have them?  

We have four kids, ages 4 mos to 7 years. My first child was born about seven months into my first attending job, and the second child less than two years after that. I was active duty military and only entitled to six weeks of maternity leave, but it was fully paid at my usual salary. I had my third child at the end of my part-time work, with no benefits, and my fourth child while I was already a SAHM.

Are you planning to fund their college expenses?

We feel strongly that we want to pay for four years of undergrad education for our four children because our respective parents did that for us. The finances on 16 years of college are daunting. We have 529 funds for each kid in each of the two states where we have a state income tax obligation and get a tax break. My husband transferred his post-9/11 GI Bill, which would cover the full cost of state school for one kid or about half the cost of private school for one kid, although that benefit is subject to political maneuvering and we are not counting on it. Knowing that we hoped for multiple children, we started funding the 529 account for my oldest as much as we could when he was born, and have been able to slightly increase the total amount saved with each kid, but our current contributions are only about double what we started, not quadruple. We currently save a little more than 10% of our take-home income for college and that puts us on track to be able to fully pay for all four kids for state schools. All the money in the 529s belongs to me, not to the child, and we treat it as a single pot of money to move among children as needed. We will reassess as they get closer to college and see if we will be able to pay for private schools as well, maybe via our taxable account, cash flowing from income, if grandparents offer any money – we’ll see, but even if we can just offer a state school, that would be fine.

What are your child care expenses?

Childcare for the first two was initially on the order of $1800/mo for center-based infant care, until we were able to get them off the waitlist into the subsidized center on base. That was about $1000/mo for two kids, so a significant savings. Childcare once we had kids #3 and #4 is either really cheap (free!) or really expensive (the entire amount of my potential wages). We decided on center-based care because we were more comfortable with a group of caregivers instead of a single caregiver, cost, and the availability of on-base care with hours that worked well for our usual schedules.

Financial aspects of marriage

How and why I became a SAHM – I had no flexibility with the length of my maternity leave or my work hours while I was active duty. When we learned that we would be moving cross-country with a 4.5yo, a 2.5yo, and a newborn, I decided to take advantage of the last year before my oldest would start kindergarten and keep everyone home with me and enjoy exploring our new city. It was significantly more satisfying (and more fun) than seeing patients and filling out pre-auths for generic drugs. While I liked practicing medicine before I had kids, I loved staying home with them. Part time work was not the best of both worlds for me; it just made me feel like a bad doctor and a bad mother. Once I paid for taxes and childcare and funded my retirement account, I was only bringing home about $500/month, which we haven’t particularly missed. I’ve managed to replace some of the solo 401(k) contributions by picking up some consulting work. Financially, staying home was a wash when we had three kids; now that we have four, I’m saving money by not working. Since I was already staying home, we decided to homeschool kindergarten to maintain flexibility in our family schedule when my husband was deployed. Homeschooling proved to be a wonderful fit for our whole family, meeting the academic and social needs for our children better than we feel any of our local schools would. At this point, with lots of soul searching, I decided that – barring a major change – I don’t want to return to clinical practice while my kids are young, so for a good decade or so. I maintain my licensure and board certification, but if I return to clinical practice, I plan to do a formal re-entry program. If we don’t need the money, I might become a park ranger instead.

Are you married?

Being married and having finances is the key to our financial lives, especially as a one-income family. This is the only marriage for each of us, and the only children we have are ours together. We met at intern orientation, and married just over a year later. We were both military physicians of the same rank, without significant assets and with only a relatively small amount of debt from medical school and a car loan.

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

We lived in a community property state and did not get a pre-nup or a post-nup, for both religious and practical reasons.

Do you and your husband agree on finances?

We combined all our (non-retirement accounts) since we married and consider all of our money “ours.” Originally we shared responsibility for paying bills and managing money, but I took over all the financial management during my husband’s first deployment, and I have continued to manage all the finances since then. In general, we have similar (but not identical) attitudes towards spending and saving. We used to budget by the method of “pay ourselves first” and then save whatever was left-over at the end of the month, but started formal budgeting prior to my getting out of the military. We use YNAB (You Need a Budget), and now that we account for every penny, we allocate each spouse a personal/hobby budget that rolls over from month-to-month. I do about 80-90% of the spending since I do all the spending for the household and 5/6 of the people in it. My husband likes to complain about his “allowance,” but admits that he is in agreement with the plan and just likes giving me a hard time about it. My husband does not participate in the day-to-day budget reconciling or financial management, but we sit down for budget meetings every 1-2 months.

General Finances

What’s your FI (financial independence) number? 

We haven’t fully determined our number. There are several big unknowns that won’t be determined for the next 4-10 years, such as where we’re going to live when we get to pick instead of the military, and whether or not my husband stays in long enough to qualify for a pension. Our expenses will likely not decrease significantly with retirement, and may even increase. We currently have no health care expenses, we are not yet building equity in our forever home, and a good portion of my husband’s compensation is a tax-free housing allowance. Our annual expenses, after taxes and retirement contributions (but continuing college savings) are right around 100k, so at 25x expenses, our number would be 2.5mil, which does not sound like enough money to me at all. At 40x expenses, the number is 4mil, which sounds more reasonable. I will not consider us FI if we aren’t able to pay for college for the kids, and probably wouldn’t feel FI, regardless of account balances, until all the kids are through college and financially independent themselves. The kids should all be through college a few years before we hit age 60, but we are on track to have the money a good 5-10 years before that. We’ll have to see.

Who handles the finances in your relationship? Are you DIY or do you have a financial advisor? 

We have always done it ourselves. We both started with a solid grounding in the basics of saving and investing from our parents, but I’m more interested in the topic than my husband. Generally, I keep an eye on things and do the research and then we discuss before making any commitments. Because we started young when things were simple, as we’ve added complexity with more marriage, more investments, children, 1099/Schedule C, homeownership, etc., I’ve only had to learn one or two more things per year to manage the finances and do our taxes.

What is your net worth?  

Our net worth, including an estimated $50k of home equity is about $950,000. If I could include the 529 accounts, it’d be a nicer, rounder number with an extra zero.

How are you saving for FI/retirement?

My dad gave kitchen-table lessons about the merits of passive low-cost indexing from the time I was about 10 or 12, and we have continued that trajectory. We essentially have a Bogleheads 3-fund portfolio replicated across 2 TSP accounts (government 401k), 2 Roth IRAs, 2 SEP-IRAs, and 1 solo 401(k). We max out my husband’s TSP at 18k/yr, both Roth IRAs (we are comfortably under the limit for being able to make direct, instead of backdoor, Roth IRA contributions), and have SEP-IRAs from prior 1099 work. I contribute all my consulting money, minus required FICA taxes, as my employee contribution to my solo 401(k), and may max it out this year although I haven’t made enough to do in prior years. We have a decent taxable account, but have only been able to contribute to this irregularly as our family and expenses have grown. All told, depending on how much 1099 income we have in a year, we are saving 38-45k/yr in retirement accounts, which is 25-30% of our pre-tax income and puts us on track to retire between 50 and 60, depending on what we decide our FI number is. Our asset allocation is 60% domestic stock, 30% international stock, 10% bonds, and 0.5% REITs. The REITs are new in my new solo 401(k), and I’m still contemplating whether I think the added diversification is worth the loss of simplicity, which is why I’m not including it in any rebalancing, just adding my solo 401(k) money there. I rebalance annually in March, and generally rebalance by changing the allocations for incoming new money rather than selling and buying, unless there’s a variance of more than 5% from my target asset allocation.

One thing you wish you knew/regret:

We are not interested in real estate investing and have no interest in being absentee landlords, but bought a house when we moved to this duty station. Knowing what I know now . . . houses are expensive. And while it hasn’t been catastrophic, it’s mentally stressful to worry about moving given that we will be on the military’s time frame and not our own. We may end up “diversifying” into real estate whether we like it or not.

Do you have insurance?

We have life insurance on both my husband and myself, although less than many doctors. Our only debt is a mortgage that would be more than covered by the sale of the house. We figure we are self-insured for the first $1 million, and have 30-year policies for another $1 million on my husband and $750k on myself. We made these calculations based on three kids so should probably revisit them now that there is a fourth. Our calculations assume that I would return to work after 1-2 years if we did not have my husband’s income. We do not have disability insurance as my husband is still active duty and it wasn’t on my radar before I stopped working all together. We will have to reexamine that when he’s getting out of the military, but it would be less of a concern if he has a pension. We carry the rest of the usual insurances – auto, home, umbrella.

What does FI/retirement mean to you? What does it look like?

We are not FI, but we are on track. I call my stay-at-home/homeschooling life a “sabbatical” from medicine, but financially I think of it as taking some of my retirement years now, while I am young and while my children are young and at home. Our days are full – but joyful – and I feel very lucky to have this time to raise my children, explore our area, support my husband’s difficult schedule, bake muffins, and read good books. I left clinical practice at age 33, and I anticipate returning to paid employment in some capacity in my mid-to-late 40s and work 10-15 years. Whether or not I’ll return to medicine depends on a number of financial and non-financial factors, but I’m really considering the park ranger idea.

Do you give to charity? If so, where and why?

We give regularly to charities including our church, our almae matres, and various charities that meet basic human needs like food, shelter, and clean drinking water. This is a line item in our budget, about half of which goes to regular contributions to our church and the local food pantry, and the other half we donate in larger sums as we see fit. In December, we take whatever is left and divide it up for the children to decide which charities they would like to support and we help them find and research charities working in areas that interest them. We also observe a Lenten fast where we eat more simple meals and give up treats (like ice cream and Amazon Prime), and donate the extra money that frees up in our budget.

Any parting words of wisdom?

Although we are a dual-doctor couple, our finances more closely resemble those of non-doctor professionals than those of most doctors. We didn’t have significant loans, we started earning a decent salary at age 26 right out of medical school, and has increased more-or-less linearly to a low six-figure salary. We paid off our debt and started saving and investing within a few years. We did not max out all out of retirement accounts every year (hindsight!), but we were at that point by about age 30. Like many non-doctor professionals, we have benefitted significantly from income smoothing, earning the same amount of money across a longer time period. There was one year we were (barely) in the 28% tax bracket, but every other year of our married lives we’ve been in the 25% tax bracket. Our annual income is a fraction of many of our peers, but this does two things: 1) it prevents lifestyle inflation so it keeps our FI number lower (as a multiple of lower expenses) and 2) we got an 8-10-year head start. We live (and enjoy) a decidedly middle-class lifestyle rather than a “doctor” lifestyle – We have a nice house with a nice yard, but it’s 30 years old. I drive a new Honda Odyssey, my husband drives the 11yo Volvo sedan that I bought when I graduated from medical school and only has air-conditioning sometimes. We get our movies from the library and occasionally Redbox. I’m still wearing several pairs of shoes I bought over ten years ago. I sew patches over the torn knees of my boys’ pants and hand them down to the next kid. I even wash and reuse Ziploc bags. We are frugal and aim to keep expenses down so that we can spend our money on things that matter to us – date night, all the books we want, swim and piano lessons, at least one nice family vacation a year, a few long weekends, and several other trips to visit family. The power of compounding: Here’s my Vanguard balances graph (numbers removed) over the past 10 years. This is our taxable account, but our Roth IRAs show a similar graph. We married in 2007, finished paying off our loans, and started investing in 2008. The green is contributions, the blue is investment returns. We have now hit the tipping point where our compounding is really compounding on itself – you can see that we’ve continued to make contributions at a much slower rate than before (4 kids!), but that the investment returns keep going up.

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

I loved reading Rebecca's story and I hope you did too. Definitely a different life than most women physicians.]]>

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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 from 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 – Stella.

Tell us about yourself:

I am a gastroenterologist working for Kaiser Permanente in the Bay Area but originally from Dallas, TX. My husband is a facial plastic surgeon in private practice. We’ve been out of training for ~7 years and both turning 40 this year. We live in San Francisco and have a 4 year old daughter and a son on the way this November. We are both avid travelers and foodies. I often hear the advice to move out of a HCOL area but to us, we love the city and all it has to offer and feel it’s worth it.

Did you graduate with student loans? 

I had ~$120k in student loans following med school. I went to The University of Texas at Austin for undergrad and a public in-state med school. I’m the youngest of 6 kids and my family was not wealthy so I received grants and loans to get through my education, including Pell grants. I paid off the highest interest private loan (~$20k) when I worked as a hospitalist in between residency and fellowship but otherwise deferred my loans during training. I consolidated the loans with ACS. Luckily the interest on the remainder of my loans were relatively low at ~3%, and I paid them off in one fell swoop 5 years out of training. I would have done it sooner, but my then FA discouraged me from doing so stating it was “good debt” that helps my credit score and I’d be better off investing in the market w/ better returns. Glad I didn’t listen to that advice as it feels good to be almost debt free.

Financial aspects of kids 

When did you have them?

We had our daughter 3 years after becoming an attending.

Are you planning to fund their college expenses?

My husband and I had completely different experiences in this regard growing up. As I mentioned earlier, my parents didn’t have much so I got through school with loans and work study programs in college. Even though this made me independent and resilient, I did feel limited in the options of where to attend school. I didn’t bother applying out of state or to expensive private universities. I think in retrospect I did fine for myself, but it must be refreshing to not have finances hinder the “the sky’s the limit” mentality. My husband’s family in contrast paid for 4 years at Stanford undergrad and out of state medical school including living expenses. Not only that but they also set up a modest trust fund for him that matured in his late 20’s to get a jump start on life. Despite this, he is incredibly grounded and rational with money. In fact, between the 2 of us, I tend to be the spendthrift. I often have to convince him to loosen up the pursestrings. We plan on fully funding for 4 year private school and grad school if need be. Partly this is cultural and partly this stems from both of our experiences. I think the most important factor is that we try to instill in our children a sense of hard work and empathy for others. We are front loading $140k for each kid early on in the Utah 529 and leaving it alone to let compound interest work its magic. We’ll bankroll the rest if that isn’t enough to cover the costs by the time they’re in school. If we’ve overfunded then I’ll transfer the beneficiary to nieces/nephews or perhaps grandkids. After 5 years out from front loading the 529, I’m considering funding an irrevocable trust for our kids that matures around age 30 similar to what my husband had as a starter fund. I know this is controversial and may engender “economic outpatient care” per the millionaire next door, but it was such a huge benefit for us starting out. We can fund the annual gift limit of $28k per couple without running into estate tax issues.

What are your child care expenses?

Our nanny’s take home pay was $40k a year for the first 3 years, then our daughter went to preschool. We still have a part time nanny/housekeeper who picks her up after preschool, and does all the grocery shopping/cooking/cleaning around the house. Her take home pay is ~$30k. With both of our schedules it wasn’t feasible to do daycare since we are often running late and needed the flexibility of a nanny.

Are your kids in private or public school? 

My daughter is currently in a private pre K-8th grade school. It is ~$36k per year including aftercare and summer school which is pretty standard in SF. I would be lying if I said I didn’t have an existential crisis about this ALL the time. I grew up without means, a child of immigrant parents, went to public schools my whole life, and I think that really taught me resilience and how to relate to others. I’m concerned about my kids being around wealth and excess their whole lives, and I worry about how they will learn empathy for others. I’m fascinated by education policy and have read up on it quite a bit. I know all the studies and evidence that cites how diversity (socioeconomic and ethnic) is better for everyone, but when it came down to it I just couldn’t “experiment” with my child. Part of me feels like what is the point of working so hard to get where we are if we aren’t able to provide a better life than we had for our kids? I’m still working on getting clarity on this matter…we’ll see.

Financial aspects of marriage

We are legally married. I had no assets but my husband had a modest trust fund that really helped us get a jump start on life. Unfortunately it matured right after the crash in 2009, but it was still enough to pay for our wedding, start his practice without having to moonlight or take out loans, put a down payment on our home in a very HCOL area, and pay off my student loans. I recognize that I’ve lucked out in marrying someone without debt, and credit this “starter fund” with allowing us to get a headstart on our finances. We did not get a pre-nup. We are both very much of the mindset that what’s mine is yours and vice versa and trust each other inherently. This may sound naive or foolish but it’s worked for us thus far. Some couples have budgets for each other or have to ask permission to spend over a certain amount, but this is unheard of in our relationship. My husband and I agree on finances and speak openly about it–he trusts me to take care of the financial aspects for our family. I have more of an interest in personal finance and find it empowering to be knowledgeable about this stuff. Neither of us stay at home. I work 4 days a week instead of 5 which allows me some breathing room to run errands or self-care. I think the perception however is that I have much more free time so I’ve taken over the financial responsibilities for our household, which I’ve enjoyed anyways. We both are highly compensated, but he does earn more than me by a sizeable margin. However, I have the generous pension and provide our family’s health insurance through my employer. Together we earn >$1M a year. I think we both have mutual respect for each other that we both contribute equally to this relationship and not just in monetary terms.

General Finances

What’s your FI (financial independence) number? 

~$9 million. We will probably need ~$350k/year to cover expenses in retirement, and I multiplied this by 25. I do get a generous pension if I stick w/ my employer at least part time until I’m 60 which I’m not including in this calculation, but it would provide ~$250k/year at retirement until death–it’s hard to pass up that deal. We may get to our FI number in 10 years, but instead of retiring, will probably cut down to 3 days a week at some point until I officially retire at 60. In the meantime, I really need to cultivate some hobbies/interests so that I can look forward to retiring to something.

Who handles the finances in your relationship? Are you DIY or do you have a financial advisor? 

I’m in a transitional period after recently getting rid of our financial advisor and in between a DIY stage and robo-advising. Currently our taxables accounts are in 2 places: I’m investing on my own at Vanguard using a lazy 4 fund portfolio AND using a robo-advisor at Betterment which charges .25% of AUM. It’s my own little experiment and so far the Betterment account has outperformed my DIY account at Vanguard by a few percentage points even including their fee. Plus they tax loss harvest which I don’t have much interest in doing. I’ve easily spoken to an advisor when I’ve needed to and they gave great, unbiased advice. I haven’t quite decided which way I’ll go just yet when I do consolidate my accounts.

What is your net worth?  

$3.8 million including equity in our home. Without equity it’s ~$2.5M.

How are you saving for FI/retirement?

I contribute the max $18k to my 401k at work plus I get a >$20k match. In addition, I put in ~$15k in post tax money so I can do the mega backdoor Roth IRA conversion. We each do $5,500 in backdoor Roth IRAs every year. He maxes out his 401k + 3% match. I wish he had more tax advantaged space but is limited by his S-Corp safe harbor 401k plan. I have a defined benefit pension plan that will essentially provide half of my max income yearly at retirement until death if I stay with my employer until 60. I’m not including this in my FI number but it would provide the majority of my expenses in retirement. Beyond that we put the rest of our savings in taxable accounts. Our asset allocation is 90/10 stocks/bonds and rebalance by reinvesting dividends or contributing from our savings to the asset class that’s lagging behind about every quarter (as opposed to selling any funds). I place tax-inefficient funds in my Roth IRAs (REITs, emerging market, small cap value funds), and also use low ER target date funds (with the date beyond my expected retirement date to be more aggressive) in my 401k to avoid wash sale issues with my taxable accounts. We save 25-30% of our gross income a year. We basically live off my income and his income goes straight to our savings account so we don’t miss it, which I then transfer to our taxable accounts or other investments once it reaches a certain threshold.

Biggest financial regrets:

1. Using a commissioned broker unknowingly as our first “financial planner” who charged a 6% front loading fee! I realized this when I looked at the paperwork from when he opened our 529 account. Opening a 529 account is super easy to do yourself and here he was skimming 6% off the top. It still makes my blood boil thinking about it, but you live and you learn. This was one of the main motivators I had to educating myself so I consider it a silver lining.
2. Using the financial advisor at my banking institution to open up individual bond funds for me and charging me 0.8% AUM when he wasn’t managing anything–bonds manage themselves.

One thing you wish you knew:

It takes time and a lot of reading to feel really comfortable managing your own finances. I think it took me up to 2 years of extensive reading, and I’m still learning something new things all the time. So in the meantime, it’s okay to use a financial planner if you need one–just pick a fiduciary, fee-only, NOT fee-based FA. Also, target date funds with low expense ratios are okay to use while you’re learning the ropes.

Do you give to charity? If so, where and why?

I’ve always felt strongly about contributing to charities or organizations that empower other women or invest in women owned businesses. We give ~$20k a year (with goals to contribute more in the future) to a variety of charities including Women for Women International, Planned Parenthood, ACLU, and Amnesty International. A major goal for me this year is to set up a donor advised fund (DAF) for tax efficient charitable giving. Another one of my goals this year is to set up a small need based scholarship fund at my high school alma mater in honor of my father who passed away a few years ago that will be awarded to promising females who want to major in STEM fields. And while this isn’t charity, we are investors and hold equity in my sister’s startup tea company which has a social impact component helping female Kenyan tea workers establish financial independence and care for their families.

Any parting words of wisdom?

• Money affords you the opportunity to invest in meaningful projects. Now that we have some expendable income, I’ve felt this burning desire to give back and do something bigger than just practicing medicine. I’m still working on exactly how best to do that, but I’m thankful for the opportunity to explore these options.
• Outsource what you can afford if it gives you more time to spend with family or doing things that bring you joy (or maintain your sanity), and don’t feel guilty about it.
• Focus on gratitude–I struggle with this every day. I know that I have many advantages and am so fortunate in so many ways, but it’s easy to lose sight of this.
• Don’t marry a crazy person–I know that you can’t always control who you fall in love with but if there’s early warning signs that you aren’t going to be financially compatible or they seemed destined to live paycheck to paycheck, run the other way.
• Mo’ money mo’ problems–making more money brings a whole host of other issues to consider like asset protection, estate tax planning, trust funds, buying more insurance, etc. Work as much as you need and consider cutting back when you have enough.

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

I hope you enjoyed reading about Stella and her family.]]>

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