Student Loans

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 heroine – Sharon .

Tell us about yourself:

Hi! My name is “Sharon”. I am a pediatric subspecialist in a private practice. I like my job, but at times I do feel tired. I feel like I wasn’t as exposed to other specialties in medical school that I might have pursued (like radiology). I am currently married and have one son. I love to draw and cook. I am Hispanic. I live in Central Florida, which in my opinion is very reasonable in terms of cost of living. I am currently an attending 6 years out of fellowship.

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

I graduated with student loans but I was very fortunate to go to a medical school in my native country which was more affordable than in the US. I went to a public university. My loan interest is 2.65%. My loans totaled $72K. I still owe about $16K. I was pretty aggressive initially paying off the higher interest loans and I am planning to pay them off completely this year.

Financial aspects of kids 

When did you have them?  

I had my son 2 years ago, as an attending.

Are you planning to fund their college expenses?

My son is 2 years old. I have a 529 through the state of Utah. I will help him as much as I can, but my goal right now is to have about $150K for college.

What are your child care expenses?

My son has been in daycare since he was 12 weeks old. It was not an easy decision but I didn’t feel comfortable having a stranger in my home all day with my baby. His daycare is very good, close to my office and has cameras that I can monitor.

Financial aspects of marriage

Are you married?

Yes I am married.

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

Maybe it’s a cultural thing? Not common in our culture. I guess I would've like to have one.

Do you and your husband agree on finances?

I am the primary breadwinner and I am the one that makes all of the financial decisions and plans for the future. He just agrees with everything I do. I make about 3 times what he makes. He realizes that and we have found that keeping our accounts separate works best for us.

Have you experienced a financial catastrophe?

No, thank god!

General Finances

What’s your FI (financial independence) number? 

I don’t have a number, but I do have a game plan. I want to pay off my medical school loans (hopefully this year), followed by aggressively paying off my mortgage (hopefully pay it off in 10-12 years).

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

I handle the finances. To be perfectly honest, my husband shows no interest in learning about our finances, so I took complete control. I had a financial advisor and fired her after everything I have learned reading on my own.

What is your net worth?  

Minus $90,000.

How are you saving for FI/retirement?

I am maxing out my 401K and I am in the process of doing a backdoor Roth. Next step – Index funds.

One thing you wish you knew:

More about investing.

Biggest financial failure/regret:

Not getting disability insurance as a resident.

Do you have insurance?

Yes, we have term life and umbrella insurance.

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

I want to be comfortable and still relatively young (late 50’s early 60’s).

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

Yes, to a genetic syndrome foundation about $500 a year.

Any parting words of wisdom?

Read White Coat Investor, follow Bonnie’s blog, follow Bogleheads and ask lots of questions!

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 enjoyed reading Sharon's story and I hope you did too.]]>

Read More

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 – Cecilia.

Tell us about yourself:

I have been pretty debt-averse my entire life, thanks to hearing my parents argue about money for my whole childhood (my mom, who trusts God and my dad to provide for us, would buy the things her 5 daughters needed, nothing exorbitant, but groceries for 7 are not cheap, and my dad would get mad about how much things cost…while he spent $70k a year keeping the family almond farm going!). My parents to this day have minimal retirement savings other than the land they own (50 acres in the California Central Valley), which is still mortgaged. They never really taught me to manage money, but it was always pretty apparent to me that spending more than you make is a bad plan in general. In any case, being debt averse and interested in many, many things (I changed my major 3 times in college and graduated with political science, psychology, a minor in neuroscience, and decided to go to medical school right before my senior year), it made a lot of sense to do an MD/PhD program (the ultimate decision-delayer for people who can't decide what they want to do!). I was fortunate enough to have my choice of several programs, and since I had been in California for my entire life, I wanted to see what life was like outside the state. I chose the University of Chicago. It was a long road, but I eventually got through my PhD after realizing halfway through that I really did not want to continue in basic science research! But I also did not want to accrue $100,000 in debt for the rest of medical school, so I stuck with the PhD. I finished medical school in 2007 and started a general surgery residency. This did not last long, as my contract was not renewed after my intern year. I was devastated. But it turned out to be the best thing that ever happened to me both personally and professionally. I was not ready to give up the dream of surgery, so I did a second year at the only other residency program in the area. I became very close to a co-resident, and he eventually introduced me to his identical twin, who became my husband. After I finished that second year, I had no residency position at all, so I was forced to evaluate my options and choose another specialty. It was very difficult to get back into a residency program – I spent two years working at an urgent care clinic in the Philadelphia area, and enjoyed it far more than I had thought I would. I knew I wanted a procedure-based but non-surgical specialty, and I hated spending hours and hours rounding on patients – so I considered both anesthesia and emergency medicine. I applied through the Match initially in anesthesia, and when I did not match that year, expanded to emergency medicine and anesthesia the second year. I thought long and hard about what I really wanted from a specialty, and finally chose anesthesia with plans to pursue critical care fellowship, since I really missed having my own patients. I was lucky enough to have made valuable connections in medical school; they helped me secure an anesthesia spot outside the match, which started 4 years after I had completed medical school and 2 years after I'd left surgery. By the time I finally finished my anesthesia residency, I had been out of medical school for 7 years; my peers who had started medical school at the same time as I had (in 1999) had been attending physicians for as long as 8 years. In choosing a specialty, you must decide procedure-based or clinic-based, primarily outpatient or primarily inpatient, flexibility with regard to family demands (although I did not think about this since I was unattached during most of this time), and whether you want to be primarily a consultant or “the” doctor for that patient. It's also very important to consider what life is like beyond residency – this is very hard to do when you have the limited perspective of a 3rd year medical student, but you really need to ask attendings what their lives are like several years out and how they are balancing everything. I have a feeling many medical students make the mistake of not thinking beyond residency. In my case, I knew I wanted to have some ownership of my patients and relationships with them that last longer than a few hours – anesthesia does not really offer this (unless you go into pain medicine). During my two years of surgery I had spent a great deal of time in the ICU, and I really enjoyed the challenges and rewards of caring for critically ill patients. As it turns out, critical care and anesthesia are also fairly well-reimbursed fields compared to primary care. I did not consider this aspect at all when choosing a specialty (I needed a residency, any residency!), but it was a very fortunate choice since it now enables me to work part time. The only caveat to this is that outside academic centers, it is difficult to find positions that allow one to do both critical care and anesthesia. So, I have two totally separate part time jobs at two different hospitals, and no benefits with either job. And in order to be part time, I work in an anesthesia group with very low reimbursement, such that my ICU time actually pays better (for example, the anesthesiologists at the hospital where I do critical care actually make slightly less than double what I make per hour for anesthesia). Nevertheless, I'm currently 1.5 years out of fellowship, working approximately 30 hours a week (in-house time; my actual “work” time involves a great deal of home call too, so I've just given the in-house time) between both jobs.

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

The ordeal of being forced out of residency training and spending time working would have been a financial catastrophe if I had had any loans other than a small amount from my undergraduate time. I went to a private university, graduated in 1998 with about $30K in loans, which were consolidated many years ago at a 2.8% interest rate. I'm not paying them off quickly because I can earn more than 2.8% investing, and I started saving for retirement very, very late. The time out of residency (prior to completing one) was a dark period in my life because there was no job security as a non- board-eligible physician (insurance companies will not reimburse for your care for the most part), and I had no guarantee that I would ever be able to secure another residency spot.

Financial aspects of kids 

When did you have them?  

My first was born during my fellowship and went to an excellent and very affordable home daycare about a mile from our house ($270/week). I specifically chose a fellowship program that did not have a significant in-house call requirement. The program also offered weekends off. This was extremely important in terms of work/life balance! My second child was born during the first year I was in practice. I knew after having my first child that I wanted to work part time, and I wanted to be in private practice rather than academics since I just do not do well at large academic centers with their combination of killer politics and enormous egos. Spending time with my children is my first priority (although working is sometimes easier!) They are almost 1 and almost 3, and will go to public school (our priority when purchasing a home was excellent public schools, so as a result we are in a half-million-dollar <1,000 sq foot condominium!). We were able to find an excellent sitter for them, who picks them up in the mornings on the days I work and cares for them in her home, with her own children and one other child. She works with my flexible days, and we pay her a guaranteed minimum every week (two days), with a small bonus for more than 3 days a week and an extra $20/day for pickup. We spend an average of $1800 a month for care at the moment. We were also fortunate that my husband's parents came from India for 6 months to help us when each child was born; neither had to go to daycare until age 8 months. We plan to have a 3rd child if we are able (I'm already 40!). We do not plan to fully fund our children's college educations; we are saving for state school for undergrad at the moment, which is $400/month/kid with any additional money from grandparents going in as well. We started each 529 account with the $3,000 gift from paternal uncle and grandparents. This is because we have been cautioned that you cannot borrow money for your retirement, but you can for education.

Financial aspects of marriage

Are you married?

Yes. I married quite late in life as well – during my 3rd year of anesthesia residency, at age 36. We had many in-depth conversations about our goals and plans for life, including finances, before we got married. I tend to spend a bit more money than my husband, and enjoy eating out quite a lot more, but overall we are very much in agreement. He is a PhD trained software engineer, and came to the US in 2002. He has been saving money for retirement or a rainy day ever since then, even when he was a graduate student.

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

My husband and I do not have a pre- or post-nuptial agreement; neither of us cares about money very much, and we trust each other completely. We would both just want the best for our children if we were to separate.  

Do you and your husband agree on finances?

We have full access to each others' accounts, although I do our financial planning. We never really combined accounts; when I was a resident and there was a large discrepancy in our incomes, we split expenses proportionally based on after-tax income. We have a single joint checking account which we use only to deposit checks with both our names on them; otherwise we pay set expenses from our individual accounts (he pays mortgage, property taxes, shared credit card bill; I pay kids' expenses, various insurances other than his life insurance, and transfer money to him if we have large purchases on the credit card, like plane tickets or new furniture).

Are you the breadwinner?

Now, we both earn six figures – he is full time and I am part time at two jobs, and I expect to make somewhat more than he does this year for the first time. Last year I took 3 months of unpaid time off (a month total of vacation, 2 months of maternity leave), so I did not make as much as I will this year.

Have you experienced a financial catastrophe?

My boss at the urgent care clinic (before anesthesia residency) was one of the least honest people I have ever known; the only bona fide financial catastrophe I have experienced was a baseless lawsuit he brought against me during my second year of anesthesia residency (for breach of a contract he'd tricked me into signing without realizing it). Hiring a lawyer for the suit, which dragged on for 6 months, set me back $35,000 – money which my fiance at the time ended up paying off for me.

General Finances

I started my journey of learning about money management in my dark period between residencies, when a friend referred me to the book “I Will Teach You to be Rich”, by Ramit Sethi – I'd never realized personal finance could be so funny! Although it is not specific to physicians, the principles of the book are very accurate and based in how people really live, not how they think they should live or how they think they are living. From there, I worked with a financial adviser who collects residents via free dinners and offers them free advice during training, then wants 1.2% of AUM plus $2,400 to do a “life” plan once done with residency. I broke up with him after I realized the 529 he'd steered us toward for my firstborn cost ~6+% and a state plan I set up myself would cost about 0.3%. But I do credit him with helping me get life and long-term disability insurance, as well as pointing out the need for umbrella (and therefore high-limit home and auto) insurance. I've not yet needed to use my long-term disability coverage, and it is quite expensive ($4800/year for a $7,200 monthly benefit). I just don't want to take the risk of getting rid of it. It is cheaper, incidentally, if you pay for it annually rather than monthly (mine is about $20/month less).

What’s your FI (financial independence) number? 

I am still trying to figure out what our financial independence number is; probably somewhere close to $4 million, assuming we spend about 25-30 years in retirement and need about $150K/year. It is very difficult to know exactly what this number should be, since it depends on how old we are when we retire (husband wants to be done around 60, I am thinking perhaps 65, and we expect to live to be at least 90 since I have two grandparents still living in their early 90s), as well as what happens to Medicare in the next decades. If we are unable to gain insurance through Medicare, the numbers will be VERY different. It also depends on where we want to live and when/whether we end up buying a bigger house (anything in a good school district is about 1.5 million right now, and if we wait to buy, it will only go up).

What is your net worth?  

I'm not sure exactly what our net work is but it is somewhere close to $1 million given my husband's 15 years of dedicated saving. The current plan is to save like crazy for another 7-8 years to try to hit $2 million, then reduce our contributions to more like 50K/year and buy a larger house, with extra payments to the mortgage if we can afford them. The flaw in all of this is that we will have to sell our current condo to afford a down payment, but we would prefer to keep it to make money. I will also very likely have to take a full time job since there will be simply no way to afford payments on a 1.5 million dollar mortgage (with $2,000+/month of property taxes) without a combined income of at least $500K – housing expenses will be $12,000 per month once extra expenses, insurance, and taxes are factored in. This compares to $2,900 a month on our tiny condo. Running those numbers makes me think perhaps we will just stay here forever and find a way to squeeze our hoped-for three children into our 2 bedrooms!

How are you saving for FI/retirement?

Our savings goal at present is $100K/year (we were at about 90K last year, which was about 35% of post-tax income). This is a combination of a solo 401K for me (lower fees and up to 25% of net profits as the employer contribution, a better deal than the 401K offered by my W2 anesthesia position), my husband's 401K (with a paltry $3,000 employer contribution), backdoor IRAs for both of us, and his discounted employee stock purchase program (17,500/year). The remaining amount goes in taxable accounts (Vanguard brokerage account). I have a few individual stocks, but the vast majority of my portfolio is Vanguard index funds (I like the Target Retirement Date funds since they automatically rebalance as the target year approaches). I have a little money invested with Lending Club and Ariel Investments; the fees for the latter are quite high (about 1%), but their average returns are about 10%, so I figure it is worth a try for a few years.

One thing you wish you knew/regret:

One thing I wish I had realized about marriage is that there is a tax penalty for it unless only one spouse works, since the total household income determines the tax bracket! We both have zero exemptions and extra withholding on our W2s, and I pay very large amounts of estimated taxes on my 1099 income because I do NOT want to be unpleasantly surprised by a large tax bill at the end of the year. Since I have been doing this we have gotten large refunds. My greatest financial regret is that I did not save any money during my MD/PhD years – I was earning a stipend for living expenses, and making extra money by doing TA-ships and working as a waitress…but I spent it all. I saved nothing until I started residency, and even then it was only about 5% of my paltry salary. I didn't even save much during the two years I worked in urgent care and earned $125,000 a year! On the other hand, doing MD/PhD has saved me from the crushing debt burden of most physicians, and I never had any credit card debt either. But the magic of compound interest is something I truly wish I had harnessed in my 20s instead of my late 30s.

Any parting words of wisdom?

I feel thankful every day that I have finally achieved the dreams I had as a young woman – working part time, in both my chosen specialties, a mother, a wife, and in the area I'd always dreamed of – close to home but not too close. I hope that by participating in this series I have offered some insights that may be able to help others do the same.

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 hope you enjoyed reading Cecilia's story!]]>

Read More

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 – Diana .

Tell us about yourself:

My name is Diana and I am 47 years old. I am completely debt free as I type this and it feels fantastic to say that! I have been out of residency for 12 years. I trained in internal medicine and while I was considering continuing in critical care and pulmonary medicine, I realized that I did not want to be ‘on’ all the time and bailed out on an offered fellowship spot. As many of my colleagues did at the time, we took the easiest path which was becoming a hospitalist. The money was good and the jobs were all over the place. Initially, I chose to stay on board the same residency program and was an academic hospitalist for two years. While I really feel passionate about academic medicine, I am not passionate about the bureaucracy and the nonsense of being short staffed and having to work extra without being paid properly. My husband who was getting paid ‘soft money’ in academics (i.e., grant money that could run out any year) decided that he wanted to pursue medicine. We had a baby and I was quite unsure, but he got into a school he wanted and we moved to California. I worked 10 years as a full time hospitalist, and although I admit the money was better than good, my schedule was terrible. Working nights and weekends and swing shifts was tolerable when my kids were babies but once they were old enough to do stuff, I didn’t want to do this anymore. I got interested in Palliative Care Medicine (which was not a subspecialty when I was in training) and took the proper steps and became board certified. I could make a case to my group to get me out of hospital medicine and transition to PCM. Initially I did 50/50, but like you all know that was like 75/75 and I had to make a request to switch entirely. So for the last 2 years it was PCM only. I enjoy what I do, and it was a good career decision. I was also very caught up in administration, I was always the type to show up to meetings, so I ended up being chair of medicine, chief of staff and director of palliative care. I was compensated for all these roles, but the work was getting too much and I was ready to switch roles. When my husband finished training, as a radiation oncologist, he could not find a job at the state we were living in. California being such a desired destination, it turned out what he could find was not acceptable in my opinion (no guarantee to make partner for 3 years, etc). The first year out he worked as locum tenens and being a week out at a time with two little kids got old fast. He heard of a position in Hawaii after looking into to it deeper and we moved there! Now I only work 2.5 days a week as an inpatient PCM and feel like I have good work/life balance. My hours are very nice and I found a family up the street that we share car pool duties with our kids. I love palliative care medicine. I recommend people who are not gunning for top specialty to consider it, do a month and see what you think. It may not be for everyone, and in some way, it’s best to choose it after you have done other primary care type medicine, so you have a more robust experience dealing with complex patients. The pay is not what gets you to do this, but I think that the workload can balance the average pay somehow. And if you find meaning in this type of work, like I do, it’s rewarding for the work that you actually do.

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

I did not have any loans in undergrad and my parents had paid for those. I got my masters and by the time I went to med school I was older than most. I got into medical school as a full ride scholarship as it was a dual degree with PhD. So my first year tuition was paid. It was very clear that I did not want to do bench research that year, so I asked to be pulled out of the PhD program. The following three years I accrued about 140 thousand dollars, but I will say that I could have saved more had I chosen to have roommates, etc. I lived alone in my own apartment and that peace of mind of not dealing with someone else’s drama was worth the money I could have saved.But, I still had my loan repayment on a 30 year plan. I think I had it consolidated to 3.15 percent and stopped thinking about it altogether. It is true that it was the Mom Finance Physician Group on FB that kicked my ass into paying it in chunks at the end. When my husband went to med school, his loans were not bad because ‘his wife’ had moved to CA for job so he had in-state status. While he accrued about 160,000 in loans as well, we paid 60,000 with bonuses here and there and did something interesting with the 100,000. We had saved for a down payment for a house as we were renting in med school not knowing where he may end up. We bought a home for $600,000 with 20% down and had a 15 year loan hoping to pay it all fast. As we had quite a bit of equity, our FP at the time told us to get a HELOC on our home for 100,000 and pay off his loans. It sounded crazy, but, his loans were 6.8 percent and we got no kick back on the interest of the loans. Our HELOC was 2.75 percent and helped with end of year taxes…

Financial aspects of kids 

When did you have them?  

I am a mother of two girls, one I had as an academic hospitalist, the second one I had in the second year of my job as a full time hospitalist.

Are you planning to fund their college expenses?

We have saved over $50,000 for each in scholarshare which is a CA 529. At this point our rent from the property we own (paid off), gets divided into two payments that go into those accounts indefinitely. When they are done with the school, I’ll continue contributing, but will put my grandkids as the beneficiary and myself as the primary account holder.

What are your child care expenses?

As far as the kids go, when I look at my social security income history website, I am wondering where all our money went in the early years of my attending salary. I am sad to say, most of it went to childcare. Excellent child care can be expensive if you live somewhere when you don’t know anyone to watch your kids for free. I had my older one in a preschool that was $1200 a month and even though I worked a week on and off, I still had to pay the full amount. Then when my little one was born, I had a nanny that would watch her at home for the weeks that I worked the first two years. That was another $1500 a month. That is a lot of post tax income that could have gone into savings, investing or paying off debts. But, when you have little ones, excellent care trumps saving money so I am glad I had the insight to not panic.

Are your kids in private or public school? What is the cost including after care if needed.

For the kids, we have chosen private school, because of the philosophy of what is being taught to them more than the experience of a private school. They go to a Waldorf school, and while it is pricy, I’ll take it over the senseless testing of the public and academically rigorous schools out there. For high school, we will switch gears and go to mainstream school depending on what they end up liking.

Financial aspects of marriage

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

I do not have a prenuptial agreement. This is my second marriage and my first one was to another physician, too. We kept everything separate, bank accounts, rent money, etc. That spoke more to the quality of marriage we had than our financial differences. When we separated, I took the things I wanted and he kept the things he wanted. Very amicable marriage and a very amicable divorce. There was no exchange of any type of money. We are good friends to this date.

Do you and your husband agree on finances?

I should say that my husband and I don’t have any fights regarding finances, because he doesn’t know nor care about what is going on. I make all the decisions, and he is happy with the outcome so far. At one point, I was panicking that he had no idea of what we had and if I died he’d be screwed, so I thought having a financial advisor going through our finances and getting him involved was the way to go.

Are you the breadwinner?

With my current marriage, for the longest time, I was the breadwinner. There was a calculation that I used in the beginning so that we felt that we both contributed fairly. It was something like, you add the total expenses of your home, say $5,000 and you add the total income of the family. And then what that ratio would be for one income vs the other. So for example in that case if I made 4 times more than my hubby, I paid $4000 and he paid $1000. And so on, that way we could also have our own money for what we wanted to spend it on. That was more than 13 years ago. We don’t do this anymore. All in one bucket. We save aggressively, and if anyone wants to buy something, like let’s say a paddle board, it gets paid with no question asked. We work hard and we spend on things that give us good life experiences… neither one of us is abusive with money and we both encourage each other to spend freely. Two years ago on an auction night he encouraged me to bid on a round trip to NYC to see Adele for $5000 dollars! I did it with my sister and it felt like absolute magic, but as a rule, we are Target and Costco shoppers if you need a visual.

General Finances

What’s your FI (financial independence) number? 

I don’t know what our ‘number’ is. Online, I had calculated something like $4.5 million and our one time financial advisor said $10 million! He was calculating that we needed 80% of our income. Well, dude, we are saving almost 50 percent of our income now, so that can’t be right! But we don’t have a number, we keep living the way we do and saving the way we do. It’s not like a cake in the oven, we hit the number and stop working. We both feel like you want a life that you can live comfortably so you are not looking forward to stopping the life you are living. Living in Hawaii is expensive but the quality of life is fantastic. Different beaches every weekend, people are very relaxed and we appreciate evening walks and morning hikes and the weather is predictable all year.

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

It became clear to him that I knew as much in many cases not if more than our FA, and if I couldn’t get him interested neither could he, and we decided after having a relationship with the FB physician mom group to cut the ties with our financial advisor. He did help us with some things so I can’t say it was a total loss as some docs mention and because I had knowledge I didn’t ‘buy’ anything and they were only managing a very small portion of our portfolio. Having a financial advisor is good only if you know what they know and you ask questions to clarify. The FB mom group did that for me for free.

What is your net worth?  

$1.6 million

How are you saving for FI/retirement?

I have been known to spend money lavishly, but that only pertains to going on vacations, eating at nice restaurants and treating my family and friends to generous gifts (I took my sister to Paris for a week as a surprise present as an intern: all expenses covered by me). But I never spend the money I don’t have. That money was saved and planned for. I also helped pull out one of my friends out of a bad financial situation by giving $10,000 dollars and never asked for the money back (update, 15 years later, that person is in a 100 times worse shape, a lesson in why you don’t give money to people with money problems…). That was a one time thing, but I am using it as an example of my extravagant spending habits. But as a rule, I am not the type of person to spend money on ridiculous stuff. I am not image conscious and I don’t care that I drive a (be it brand-new) minivan and not a high end flashy SUV. As far as saving for retirement this all was a new thing to me after I split with my first partner. I was a second year in residency and had to pay taxes for the first time on my own and I owed like $2000. Then someone told me to put away money in traditional IRA for $3000 and then I didn’t have to pay taxes since it lowered my earned income. This was all new to me. I didn’t know what retirement was and the word 401K was what older people were doing. I got a book called “smart women finish rich” and the rest is history. I read that book over a weekend in Barnes and Nobles and that book changed my life in terms of understanding compound interest, dollar cost averaging and retirement savings. I started optimizing every dollar that I could save for the pre-retirement and I became a mega savor in 2004. Even though I continued my lavish travels, now I had the notion of what paying yourself first and saving meant. Meanwhile, we have always maximized our retirement accounts. 401k and 457b (hubby) backdoor Roth IRA has been a priority. When he was doing locums we were able to put additional money $15k each year in addition due to his income. My old job had  some pension which will be about $250,000 when I turn 65, which is not bad. Currently, we have about $1.3 million in retirement accounts alone which considering we started in 2004 it’s pretty amazing. We also have about $50,000 in Metropolitan (2% interest/Emergency fund) and about $250,000 in a taxable account. This will sound crazy, but I look forward to turning 50 for all the catch up contributions!! My current job also allow for the the Mega Roth IRA, which is a new option for us and I will be maxing every year to $54,000 total. As far as my investing philosophy and strategy, I am a true believer that saving trumps strategy. I am sure someone with more knowledge than I have had, could have pulled another 5 to 10% on top of what we have done so far, but I have stuck to low cost index funds and some international money in there too and cannot complain with what is happening. I probably need to dial it back a bit and not be so stock heavy (more than 90%) but we don’t need the money anytime soon and a huge drop in the market, would just get us to investing more at this stage of our lives. In 20 years, I am sure that we would be 50/50 stock and bonds, but we are ok for now. Well, long story short, when it was time to move to Hawaii, our home had increased in value significantly and we were able to sell the house, pay off my student loans, the HELOC (essentially his loans) and the mortgage on the condo we had been using as a rental in where I trained. All that and we had about another $200,000 to keep for down payment for the next house. Which brings us to where we are now. The homes are so expensive here that we are thinking of renting for the next ten years. It’s nice not to have all the responsibility of a new home, taxes, insurances, upkeep and anything else is not our problem. The money we won’t put toward the mortgage will go into a taxable account in a low cost index fund and at that point if we need to move or go elsewhere to buy the money is there. And on a very visceral level, since we technically own a townhome in Arizona, I don’t feel like we are homeless.

Financial Regret:

My one financial regret is: when our group closed the 457 we had an option of rolling it into our new 401k or cashing it out without the penalty. It was about $73,000 and we cashed it out because we had just bought a house and were remodeling. In the end, it is all gone and we had to pay taxes on it that year. In retrospect, I wish it was still in our retirement account. But on the other side, all the money we put into that house came back to us in folds.

One thing you wish you knew:

I wish I had paid off all of our loans much sooner. I had no reason not to have paid it off sooner. When I had money collecting 1% in ally bank and the same amount in student loans charging me 3% interest, it makes no sense why I didn’t pay it all off then. But I think since we were always about to move etc. I didn’t want to not have immediate access to a large sum of liquid money. That will always stay with me. I rather have 12 month emergency fund sitting somewhere than riding in my fancy boat. But that is just how my brain works I guess.

Do you have insurance?

In terms of life insurance, I have about a million on myself and 2 million on my husband. We decided to forgo my disability insurance, and my husband bought something over what the group offers (group offers $10,000 own individual policy, we bought an additional $13,250). We also have the umbrella insurance policy as well. We are in the process of updating our will (new state) and trust etc. It is very important to both of us that it is squared away.

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

I can imagine wanting to do what I do indefinitely, and if the girls are gone to college I may up it to full time for three years to benefit our pension policy that goes off of highest salary of your 3 consecutive years of service the last 10 years. At the same time, my hubby loves what he does and would love to keep doing what he does, we both hope for more vacation than we have now, so we can travel more freely. Ideally, I would like 6-8 weeks of vacation a year and I think with that, I can work forever… When I was in my last practice the cardiothoracic surgeons had 12 weeks off a year. That is NICE! I’ll take that too if that is ever an option.

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

As for charity, I have been giving locally (local NPR) and globally (Doctors Without Borders) for years. I also, pay a lot for the girls schools’ charitable events (auctions etc).

Any parting words of wisdom?

I want to thank Bonnie, I think that since being in that group on FB and reading what people have shared, has really accentuated a philosophy that I have always had – which is live like a resident today so that you can live like a millionaire in your older years. It’s nice to be able to be generous and help friends and family and also benefit from years of education that has allowed us to have access to an income that we can use to live financial independence comfortably. At the end, delayed gratification, is a kick all on its own, and once you learn to experience it, going to a pre-planned and pre-paid two week European trip does not feel like a luxury but a necessity for your family’s mental health. Life is short, but if you play your cards wrong, it may feel painfully long for the unfortunate few.

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 Diana's story and I hope you did too. Love her no nonsense attitude!]]>

Read More

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 – Vivian.

Tell us about yourself:

I’m a practicing pathologist in Florida. I’m married to another physician and we have one child. In my opinion, the PRACTICE of pathology is an unexposed specialty to medical trainees. While it may not be one of the highest paying specialties, it is also not one of the lowest and we have a very low burn-out rate. Trust me…I’m not starving….. Especially for a female, pathology is a fabulous specialty because of the flexibility. I have no waiting room full of patients. While I have a stack of work on my desk, I can get up and get a coffee, run to my kid’s school for a recital, work really early or late leaving some “flexible” time during the day. I have no call or no weekend duties now, but even when I did it was home call and rarely needed to come in. I wish more medical schools would expose, particularly require, students to spend time with practicing pathologists on an actual rotation. Go visit your friendly pathologist and see what a great gig we have! I have been in practice for 16 years, all in academic settings.

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

I had 80% of college paid for by the military (out-of-state public school) and 100% of medical school (in-state public school) paid for on scholarship as well. I had a small loan (around $5000 if I recall) that I had from college which I paid in full using my first few paychecks as an intern. Though I didn’t have loans, my military commitment for 13 years “trapped” me (and my husband) in non-competitive pay. What is non-competitive pay? Well…..ten years ago in 2007 our combined dual full time MD income was at an all-time high of $257,000 AGI (which isn’t shabby I realize, ….but one of us is an interventional cardiologist). If we had student loans and made even close to median income for at least interventional cardiology at the time, I’m pretty sure we could have budgeted it in to pay them off. The non-competitive pay is the trade-off for no loans. We learned to live very frugal off our government salaries and lived off of one salary for over 15 years.

Financial aspects of kids 

When did you have them?

We have one child who was born when I just started my PGY-2 year.

Are you planning to fund their college expenses?

529 plans were relatively new at the time, so we opened one in addition to the otherwise used vehicle for college which existed prior to 529s, the UTMA. We didn’t do anything crazy with funding them. I put $250/month into the 529 and $200/month into the UTMA for almost 18 years now. We also were helping to fund my niece and nephew as we opened up a 529 for each of them ($100 month/each) My son has scholarship money as well. I’m a believer in the 529 plan because of the tax shelter on growth it provided all those years. We have a lot of flexibility with the UTMA as well.

What are your child care expenses?

We used the military daycare full time from age 6 weeks to 6 years old. My son was born after the private school cutoff (which was to be 5 years old by 30 June), so he then started full-time kindergarten at age 6. The daycare was convenient (across the street), open over 12 hours a day and reliable (it closed maybe once for a power outage and once for an earthquake which also killed the power). It was also cheap being subsidized by government/taxpayer dollars for military. We were too busy to deal with nanny issues. Once our son was in school, we used carpooling, neighbors and afterschool activities to assist with transportation. By the time we moved to Florida he was old enough to ride his bike to school and stay home alone. While I realize childcare costs are steep, our expenses never went away and really got worse. Our son is involved in an individual sport at the national and international level and the cost of coaching, travel and other expenses has far exceeded most childcare costs for anyone. It’s been running nearly 30K or more annually to support his activity since age 9….and then private school on top of that (see below).

Are your kids in private or public school? What is the cost including after care if needed.

One of the best private schools in the state was four miles from our house. So we took advantage of the convenience of location, at the expense of the tuition. We have been paying over $20,000 annually for private school other than grade 7 (we homeschooled that year…I figured if you are going to F*** up a year in your kid’s education, it might as well be 7th grade…..). Is the private education worth the cost? No. I have liked the small class size and the families we have met and became friends with. Part of the tuition is really “buying you and your kids’ social life” in my opinion. The families at these schools are self-selected. Both my husband and I always agreed on never “skimping” on anything our kid may need. The largest portion of ALL our expenses was always to support our son. The private school has worked for us. Only one more year to go!

Financial aspects of marriage

Are you married?

We have been married 20 years this year. We eloped in Las Vegas while there for a previously planned weekend. The wedding cost $133. Frugality at its finest. I have read the cost of the wedding is inversely proportional to the odds of the marriage lasting.

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

No pre-nuptial. We believed in pooling resources to achieve economy of scale and ease of finances. We are both extremely busy. We don’t have time to “sort bills” or move money back and forth. We are also both physicians working full time (well my husband works 50% now). We don’t “need” each other for financial support.

Do you and your husband agree on finances?

Though my husband and I are very different in many aspects, we definitely share the same financial goals and values. Both of us agree we have equal rights to our money as we both work very hard. We don’t ask each other to buy things. We both assume were are equally financially responsible. I don’t ask him permission to buy a $750 dress. He doesn’t ask permission to buy $9000 dollars of some stock he wants. I do all the finances. If we were in financial difficulties I think we would have more discussions. (Side note I also did our taxes from 1997-2012. After our move I got lazy and just pay a CPA now. He’s not doing anything for me other than saving some time. There is no special tax code for physicians. I can read the IRS forms and use a calculator just like he can. But I also like that I can call him and complain about our taxes. This is one area where it is difficult to discuss with your family and friends. They can’t fathom paying over 300K in taxes annually).

Are you the breadwinner?

My husband has always made roughly twice my income, though I would never want his job and I’m sure he would never want to take care of all the things I do at home to ensure our household runs like a well-oiled machine.

Have you experienced a financial catastrophe?

Definitely lost investments. The most significant one recently was one of our foreign stocks was delisted and apparently we were unaware (long story). The stock became worthless. Our real estate rental investment was a loss when all was said and done. In the end, there is no reward without risk and in the 20 years we were married, the gains have outweighed any hits.

General Finances

What’s your FI (financial independence) number? 

Never really thought about a number, but rather having enough unearned income (without actually divesting anything) to live comfortably. I definitely don’t want to work much longer. I don’t enjoy medicine as much as I used to. The “fun times” of pre-EMR and less red-tape are gone. All the other hassles which take up more of my time than actual patient care are really not enjoyable. I long for the day where I could just read a bunch of slides and talk to a clinician for 30 minutes why their patient may have giant platelets. Unfortunately the latter is not even reimbursable (though it’s a consult technically!) If it doesn’t generate RVUs our institution doesn’t want us partaking…..sad really that it has come to this. Enough soapbox, but the ability to walk away from a job at ANY time is priceless. I’m not working to pay the bills anymore.

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

We are basically DIY. For about 15 years we had an account for $8.99/month there was unlimited trading. We set up the account so that every Monday we dumped about a thousand dollars and bought shares of stock for 3-4 companies. We would just change the companies every now and then. We had to transfer our account when this institution closed and now we can’t set up automatic stock purchasing anymore; so I have to admit we are not as regimented. Some people ask “How can you all retire so early?” Well this is it….REGIMENTED DIY INVESTING. There is no fee drag with stocks or an advisor and now we have free trading. Because the majority of our wealth is not tied up until we are 59 ½, we can do whatever we want with the money and live off dividend income (in addition to pensions). From a tax standpoint we are paying taxes on four streams of income (my salary, husband salary, husband pension and dividend income), so we really “need” to retire to reduce our taxable income. I am not a huge fan of advisors (no one really cares about your money except yourself) and definitely not assets under management.

What is your net worth?  

We have no debt. We paid for our home in cash this last time around. Our net worth without our home is 5.6 million dollars. Because we own our home outright with all the equity, we are just under 6 million dollars since we actually own it rather than the bank.

Do you have insurance?

We have umbrella insurance. By the time we left the military (which offers its own version of life insurance), we were able to self-insure along with collecting the pension as “back-up income”. I do have a free life insurance policy through work at this point and free short and long term disability, but we don’t carry anything else. Due to our finances now, we have very little (minimums required by the state for car) or no insurance on material things (jewelry and home contents). If my car gets totaled I just go out and get another one, pay cash.

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

It is the ability to not depend on your employer for income. You can do what you want, when you want. You can walk away from a crappy job because you don’t have debt and have other sources of income. You can still work, but it is optional.

Any parting words of wisdom?

1) No one cares about your finances except you and your family. Trust NO ONE. You are better off managing your own finances rather than someone else. It’s not hard. If you have someone help you, you still need to have enough knowledge not to be swindled. 2) If you have two incomes, live off ONE. You will never miss the other income if you are not using it for material things. Use it to pay off debt and invest the remainder. If you have only one income try to calculate what percentage you absolutely need to live off and do the same. Remember if you are on one salary of $125,000 as an example, you still are way ahead of the average American and they can still put food on the table. There is no NEED to buy a Birkin bag……..though I really want one! 3) Regimented long term investing. The more money you can take out of your paycheck and “never see” will get you to your goals. 4) Be patient. It took 20 years to get where we are today. Time and compounding is VERY powerful. 5) Get out of debt ASAP. I chiseled away at our first mortgage (15 year mortgage 400K at 7.25%…yeah we are that old and we refinanced from a 30 year at 8%!….) I put extra towards principal EVERY month. By the time we sold our home we just pocketed the entire sale. Living through the era when interest rates were unbearable really pounds the “get out of debt ASAP” hard. And now that we have no debt it is amazing what cash flow is really like…….ALL interest is money out of your wallet no matter what the interest rate is.

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

Vivian is one wise female doc! I totally agree with her 5 pieces of advice. Way too many people are debt tolerant.  ]]>

Read More