financial independence
Physician burnout is on the rise, but I’d like to discuss a different type of burn out that I recently experienced. Specifically, I found myself facing FIRE burnout.
The Start of FIRE Burnout
Once I drank the financial independence Kool-Aid, I wanted to get there … yesterday. I found myself feeling envious and jealous of others who have achieved FI or those that are already able to work less. Must be nice, I'd think.
Impatience spurred lots of number crunching to see if I could somehow get around the fact that time is a pivotal part of compound interest. No matter how I ran the numbers, the truth is inescapable. There's no way around it.
Enjoying the Journey to FI
The goal of a FI is definitely a worthy one and en vogue according to the NY Times. However, like all goals, it is not about the goal itself but about the journey. Why is it so important to enjoy the journey? Because tomorrow is never guaranteed.
Sometimes you need to be personally reminded that tomorrow is never guaranteed.
A very important person in my life passed recently. Someone that truly helped sculpt who I am today. I didn't even know he was gravely ill. He never got a chance to meet Eggy.
These moments always cause the world to stand still. They prompt self-reflection and remind you to be present. They remind you that life is not a series of curated Instagram images. Life is now.
Life is what happens to you while you are busy making other plans – John Lennon
Final Thoughts on Facing FIRE Burnout
So, I am learning to enjoy the FI journey. Perhaps the best part of the journey is meeting other like-minded folks. They are truly a wonderful and supportive community. There may not be a perfect cure for burnout on the road to FIRE, but learning to enjoy the journey is a start.
How is your journey to FI going? Are you feeling any FIRE burnout? Comment below!]]>
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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 – Eliza from Minimal MD.
Tell us about yourself:
I'm Eliza from Minimal MD. I love my life as a 35 year old retired dermatologist, living in the Midwest with my husband and two kids. I'm really into minimalism and travel.
Did you graduate with student loans?
Yes, I went to a private medical school. The total payback over a ten year term was projected at $250,000, including interest with rates of 1-9%.
I paid off my first small loan during my intern year to avoid the terrible 9% interest rate. Then I got serious about the loan with the next highest rate. I graduated from residency in 2012, and made my last loan payment in April of 2017.
Financial aspects of kids
I had both kids during residency.
The out of pocket cost for two kids at our on campus daycare was $2,400 a month. Luckily, they had a financial hardship program. It brought the cost for our first child down from $1,200 to $400. The amount varied every few months. As soon as I graduated, I went to a part time position, working 2.5 days a week.
We tried a highly rated Montessori school for our daughter. It was $9,000 for a half day program that didn't really meet her academic needs. That disaster, on both the educational and financial fronts, has made me really skeptical about paying lots of money for private school tuition. I think carefully now about the opportunities I could provide with a similar amount of money.
We currently live in an area that doesn't even have private schools. Most recently, we have decided to homeschool because I really like the flexibility to be able to travel with the kids now that I am retired. We will take off for several weeks at a time to explore the U.S. or Europe.
Financial aspects of marriage
I am very happily married. My husband is loving his career right now, so he continues to work. Retiring early isn't for everyone. Luckily, he is a teacher, so we have been able to just relax and travel together all summer.
What financial mistakes have you made?
I've already mentioned the private school fiasco. Our second big financial mistake was living apart during five of our early years of marriage. Having separate households and commuting frequently across the country is not a way to build wealth. For the record, it isn't a fun way to parent two small children either.
Our next mistake was regarding our home purchase. When we bought our first home, we wanted to live in a certain public school district. We also wanted a fenced in yard for the kids and a basement to protect us from tornadoes. The only house that fit those specifications was a 4,700 square feet custom built home. We had no money for a down payment because we spent so much paying down my student loan debt, so we financed 100% of the purchase price and took an adjustable rate loan.
In addition to the loan terms, the house was a lot to take care of and many repairs were more costly because of the size of the home.
The saving grace to the situation was that we then bought a home well within our price range. We took on only 25-33% of the loan that the bank would have allowed us to qualify for. Also, rather than accepting the loan as a part of life, we paid as much as we could each month and knocked out the entire mortgage in 2.5 years. We moved recently and used the equity from the first house to pay cash for a smaller home.
What’s your FI (financial independence) number?
We used the general advice of 25x yearly expenses to achieve financial independence. I don't include home equity or the 529 account money in that number.
Do you have disability insurance?
I did have own occupation disability when I worked. I have cancelled that since the policy only applied when I was working anyway and was the largest line item in our monthly budget. I also canceled my husband's primary life insurance this year since we are financially independent. We do have some other umbrella and supplemental life insurance policies that are just so inexpensive that they barely register. I'm constantly adjusting the coverage.
If you are FI or “retired” – what are you doing?
I left my clinic job in June 2017 and have spent the last year traveling with my homeschooled kids across the U.S. and to England, France, Iceland, Scotland, Sweden, and Denmark. To keep my license active and engage with peers, I have done some free skin cancer screenings and locums work averaging one to two days a month. I've also downsized from the 4700sf house to a 1350sf house plus basement on 5 acres of forest.
With so many changes this year, I'm still adjusting and growing into this phase of my life. You can read more about my minimalism, financial story, and travel experiences at MinimalMD.com, or connect with me via Facebook.
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 totally agree that minimalism and simplifying life has great rewards. Kudos to Eliza for achieving FI!]]>
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Physician Wellness and Financial Literacy Conference aka the “White Coat Investor Conference” in Park City, UT. I got to meet WCI and many “online” friends that I had interacted with on Facebook, Messenger, and on the WCI Forums.
Jim opened the conference with “The State of Physician Financial Literacy.” He implored physicians to create the job we want now where we can work for a long time. Career longevity is more important vs. trying to “retire/reach FI ASAP.” As the conference unfolded we had two great lectures by my friend Nisha Mehta on physician burnout and what we can do about it. What I took away from the conference was to start an inquiry into what my ideal life would look like if money was not an issue. What changes can I make now to get there? (After all, I will not be FI for at least a decade.) And how feasible is it to create my ideal life now vs. “when I reach FI?“
I subsequently stumbled upon this post by WCI where he presented a Venn Diagram as a visual to visualize the discrepancy between your actual life and ideal life. Obviously the higher the overlap the happier you will be. 60% is the % overlap to “be happy.”
Like WCI, I started thinking what my ideal life would like (the green circle on the left):
- See patients 3 days a week with no weekends or holidays
- Walk to work or commute less than 15-20 minutes
- Start the work day after Eggy gets up and be home in time to play with him for a few hours before he goes to bed (and when he is older, start work after he goes to school and be able to pick him up from school)
- See no more than 4 patients an hour and run on time
- Work out 3 days a week
- Cook most meals for my family
- Have the freedom to take trips with my family 2-3 times a year
- Work on my blog ~ 10 hours a week to keep up with regular blog posts and such
- Since my current and ideal life has M & Eggy in it, I'd like M to also work 3-4 days a week and home by 4-5pm if he wishes to work that is.
- See patients 4 days a week with no weekends or holidays – Almost there!
- Commute 30-40 minutes by car – This is a HUGE improvement from my old job where the commute was 1-2 hrs each way
- 3 days a week I work 7-3pm – so I am up around 5:30am. Eggy gets up around 7:30am. 1 day a week I work 10-6pm so I get to spend part of the morning with him.
- The job is new so I am not fully booked yet but will likely schedule 6 patients an hour and I do generally run on time
- I work out 1-2 times a week
- Cooking has become almost non-existent
- We probably have the freedom to take trips but they need to be scheduled in advance and M's job isn't as flexible as mine
- Right now I struggle to put in regular time into the blog
- Right now, M works too much and works too late and for someone who isn't a physician is “on-call” quite a bit
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 – “Hatton1” .
Tell us about yourself:
I call myself “Hatton1” on the White Coat Investor and Physician On Fire blogs. I am 60 and in the process of getting divorced as I write this. I live in the deep South in a low COL town. I actually grew up in the town I live in and have family here. I am an OB/GYN. I did OB 26 years. I went through one malpractice trial and won the case. I am doing just GYN 3 days per week with essentially no call. I own the practice. I could essentially retire any time but owning a business with employees is keeping me off the Obamacare exchange. Would I pick OB/GYN again? I really do not know. It is possible now to do shift work (hospitalist or laborist) which did not exist when I was doing OB. The lifestyle is brutal and stressful especially if something goes wrong! Per hour worked lots of other fields pay better. When I was younger I liked the excitement of a STAT c-section or a ruptured ectopic but I aged out of that. I suspect that lots of ER docs and trauma surgeons feel the same way.
Did you graduate with student loans? How much & what are the interest rates?
I had $29K in student loans. I know you all hate me. I had an academic scholarship. My parents paid for undergrad and bought me a car. Medical school tuition now is ridiculous. I don’t know if I would've gone with today's prices. I can’t even remember the interest rate or payment because it was that insignificant.Financial aspects of marriage
Are you married?
I am legally married as I type this. I expect my uncontested divorce to be final in the next week or two. I had no prenuptial agreement. My state is not community property.If you are divorced – what have you learned financially from this, and what advice would you give to unmarried women planning to marry?
My attorney gave me the advice of not raising your spouses lifestyle to the “doctor” lifestyle. If you encourage them to quit work then if you divorce you may face alimony. In my case my husband is still working full time and I went to part time. I gave my husband my equity in a farm we bought which I really did not want anyway. It cost me $35k and $600 in legal fees. We married later in life and kept our finances separate.
General Finances
What’s your FI (financial independence) number?
My financial independence number is 5 million. I hit this at age 56. In retrospect with what I now know about the FIRE movement I think I could've retired at about 45.What is your net worth?
I am now 60 with a net worth of ~ 7.5 million post divorce (Includes home equity).Are you DIY?
I handle my own finances. I used a commissioned stock broker for several years starting out.How did you get to FI and what does it mean to you?
I always filled my retirement accounts up and then filled up a taxable account. I have most of my retirement money in a SEP-IRA and some in a traditional IRA. I have converted a small amount to a Roth IRA. For what it's worth, most of my money is in a taxable account. FI means you can quit work or go part-time. It means no call or weekends. It means anything you want it to mean because you no longer have to work and put up with crap.One thing you regret:
Not buying an office building.Do you have insurance?
I no longer have disability insurance. I cancelled it mid-40s when I knew I had “enough .“ I have umbrella insurance ~2-3 million.Any parting words of wisdom?
My advice is basically grow into your income slowly. Do not keep up with the Jones. Dr. Jones is 75 and still working! I made a number financial mistakes along the way but came out ok. Basically learn about money or it will fritter away. I also recognize that I was very lucky. I became an OB/GYN when very few females were doing it. The demand was huge and I never had to market myself. Those days are gone and you will have to hustle to do well I think. Good Luck.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 “Hatton1's” story and I hope you did too. I think she may be the first woman physician interviewed here that has achieved financial independence!]]> Read More
Sometimes, the right money move means an actual move. Here's everything you need to know about making the move to a lower COL based on my very own move.
Considering the Possibilities
I put in my 90-day notice at my job (my first job out of residency) the end of September. This nicely coincided with my maternity leave, so I won't be returning. M also gave notice around the same time. Why? M was offered an opportunity he (we) couldn't refuse.
Except the job was not in NYC or within commuting distance. Let's just say my initial response was “Hell No” as a New Yorker. Our first trip to Philadelphia together–aka the “I need to convince Bonnie trip”–didn't end well.
At first, I was excited. Philly is a lot like Brooklyn (Shhh, I've been told they don't like to hear that!). But then, as the day wore on, I was sad about leaving my friends and my life here.
I was a wreck.
Exploring New Opportunities
However, it became clear to me this was a job he could not turn down for his career. So, I figured, at the very least, I should check out the job market for me and see what turned up. There was no shortage of opportunities for me. I looked into both private and academic positions.
For a number of reasons (new addition to family being a top one), I decided to leave academics and join a private practice. The deal was clinched when M said “we can retire 5 years faster.”
I found a job that I am excited about. It doesn't hurt that both M & I will also be increasing our incomes significantly and living in a lower COL area. I took advantage of the job and location transition to take an additional month of maternity leave bring the total leave to 16 weeks.
Not quite LCOL, but for us New Yorkers, Philadelphia is a significant drop in COL. So we are practicing a bit of geographic arbitrage.
So here is what I learned from by making a move to a lower COL:
#1. Don't be afraid to see what else is out there.
Explore options job wise. Obviously, I knew I was making less being in academics AND being in NYC (doctors get paid less here…). But until I saw the numbers in front of me, it didn't feel real.
#2. Don't be afraid to move.
Moving is one of the top stressful events for adults (and children). I could see us living in NYC for the foreseeable future. Once I ran the numbers living in Philly vs. NYC (incorporating our new higher salaries, less taxes, less expensive childcare), it really was a no brainer. At the very least, it can't hurt to try!
Both WCI and Physician on Fire espouse living in a lower COL to get you to FI faster. I finally listened to them.
Thankfully, my parents live in New Jersey, so Philly isn't that much further away. Also, they can still be quite involved with helping out with our newborn.
#3. Sometimes you just gotta do what's best for the family.
We would've been “fine” staying here for a while or forever. I'd be lying if I said the cost of childcare (and private school if we went that route) in NYC didn't cause some heart palpitations, though.
Both of us have lived in NYC for several years and were open to trying something new.
NYC won't be going away if we want to come back.
Final Thoughts on Making a Move to a Lower COL
It's hard to give up what you know, what feels familiar, and what you call home. However, if you're feeling a pinch financially or want to accelerate your FIRE journey, a move to a lower COL area might be the right decision for you.
Have you moved to a lower COL? Comment below!]]>
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I've estimated that these mistakes have cost me at least $350,000. Meaning that if I didn't make them, I'd have at least that much more money saved. Big sigh.
Here are the biggest financial mistakes I've made and survived to date:
#1. Cashing out my old work's 401(k) plan & selling company stock
I started a coveted job at Morgan Stanley in 1999 right after college. It was the height of the tech boom. My starting salary was $50,000 + a small guaranteed bonus. (I made the same as a resident in 2012!) My first 6 months was in London with all expenses paid.
I was an ex-pat there – meaning I was paid my U.S. salary but received free housing (picture beautiful 2 bedroom, 2 bath furnished apartment with marble bathtub, heated towel stand across the street from Hyde Park, neighboring the Grosvenor House) and a generous cash per diem. I did not have to spend any of my actual salary to live in London.
Now I don't totally regret this part – I was able to explore Europe on the weekends – weekend trips to Paris, Spain, Amsterdam. Priceless. Back then, friends and family from NYC could visit me in London for less than $400 roundtrip.
Plus, I had access to a 401(k) plan for the four years I worked there. I'm pretty sure I didn't max it out, but I still had a nice chunk in that account.
Still, I cashed it out in 2004. Yup, it gets worse. In addition to a company match, we also got free stock as part of our retirement plan. I sold it.
#2. Barely saving despite high earnings as a 22 year old
I listed my starting salary in mistake #1. About 1 year later, I got a $22,000 raise and a $25,000 bonus. This meant I hit 6 figures at the tender age of 23.
My only wish is that I had some savings to show for that! I lived paycheck to paycheck despite a high income. I guess I can blame NYC.
#3. Racking up $20,000 in credit card debt before starting dermatology residency
Yeah …. someone went a little nuts during intern year in NYC. I had awesome clothes, though. I paid it all off before graduating residency. Thankfully, I no longer carry any credit card debt and pay off cards in full every month.
#4. Not funding a Roth IRA until 2014
The Roth IRA was enacted in 1997. I've been earning money since at least 1992, so I'm not even counting opportunities to fund a regular IRA prior to that!
I actually never heard of the Roth IRA until sometime during residency so I feign ignorance prior to that. I couldn't imagine forking over $5,500 a year as a resident, but I totally could have. This is especially true because I moonlighted most of residency.
#5. Not paying off student loans during residency
Every year during internship and residency I meticulously applied for deferment or forbearance on my student loans. Isn't that what everyone does? Apparently not.
By the end of residency in 2015, I had almost $50,000 of interest capitalized onto my loans.
Surviving My Biggest Financial Mistakes
You can always earn more income, but you can't create more time. That's why some of these financial mistakes really sting.
Despite these awesome mistakes, I should be able to reach Financial Independence within 15-20 years and pre-Financial Independence within 10 years or less.
Feel free to share your mistakes below!]]>
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every physician (especially women!) should strive for financial independence (FI) or pFI in a reasonable amount of time.
Why?
1. Carve out the dream job
How many physicians do you know are not happy with their current job but can't walk away because, well, they need the money? The answer is probably a lot.
In fact, one frightening survey said only 6 percent of doctors are happy with their jobs. Yikes!
Attaining pFI or FI gives you the ability to work on the terms that make you happy. It gives you the ability to walk away from a job that isn't working for you. I don't know about you, but I'd love to see less patients per hour and spend quality time with them instead of being rushed so that I meet “my numbers.”
2. Go part time!
Many women physicians would love to work less and spend more time with their families. Or spend time on other priorities. Attaining pFI gives you that ability. This is definitely one of the main drivers for us.
3. Stay flexible when life throws you that curveball
I hear a lot of “I love what I do and will work until I die” among physicians. Not so fast. Your goals and priorities will likely change as you get older. And sometimes, you don't have a choice.
A close family member needs extra care or passes. Your child has special needs or other needs that require your time and attention. Being FI gives you the freedom and ability to take the time you want to address whatever life may throw at you.
4. Enjoy your freedom
To me, FI means total freedom. We have become so used to debt that we are numb to it. We think of debt as “just another monthly payment.”
Final Thoughts on Women Physicians and Financial Independence
Looking over these top four reasons that women physicians should pursue financial independence, it's hard to believe you might have ever thought FIRE wasn't for you. If you're just getting started, no worries. Even if you've made financial mistakes in the past, you can still reach FIRE. To get started, calculate your net worth and check out the other FI resources on this blog to see how the start of your FIRE journey stacks up.
What do you think? Why is financial independence important to you? Comment below! ]]>
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I recently discussed and defined the terms FI, RE and FF. I'd like to introduce another term – Pre-Financial Independence or pFI.
pFI is just like it sounds. You have not reached FI, but you're at a point where you have some choices. Perhaps the most obvious choice is go part-time or take a job that will make you much happier but pays less. pFI is obviously easier to attain than the ultimate goal of FI. I just recently became familiar with this concept and Physician on FIRE discussed this concept in a blog post titled: What's Your Part-Time Number?
In my opinion, pFI is the new FI. Why? FI can seem unattainable or “too far away” for most people. pFI isn't. It may be closer than you think! There is no hard and fast rule on how to choose your pFI # but it should be at least 50%-70% of your FI number.
So, how do you calculate these numbers? The short answer is that you estimate your yearly expenses in “retirement” and multiply that by 25. Or take those yearly expenses and apply the 4% rule. The 4% rule basically states that you can withdraw 4% of your portfolio annually and most likely not run out of money. It's tough to know what your expenses will be unless you know what you are actually spending now. Keep in mind that the goal is to be done with things like paying off your mortgage and other debt at FI. And as mentioned previously, these expenses can and will change, so you may want to pad these numbers a bit.
Here are our (tentative) numbers with dates:
pFI # = $3 million by 2027 (I turn 50)
FI # = $5 million by 2037 (I turn 60)
FF # = $7 million by 2039 (I turn 62)
[ Editor's note: After this post first went live, I realized the FI & FF numbers & dates were slightly off, they have since been modified ]
You'll notice that I chose 60% of our FI number for our pFI #. These numbers probably seem really high to most of you. I figure the more the better (and safer). They are tentative since we are still working out what our actual spending is. I recently added M's accounts to YNAB so we'll have a much better idea in the next month or so. We are also still working on the plan with our FA. I'll be sure to post an update once our initial plan is finalized.
My pFI date is only 10 years away! And, we may reach that # sooner. What does my pFI look like? I'd cut down my clinical duties to 3 days a week (2.5 perhaps …). I'll be able to spend more time with my kid(s) – the first one will be around 10 then. I'll have more time to work on other endeavors like this blog. I'll be in awesome shape. I can't wait.
Have you thought about your pFI # or part-time #? Comment below!
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have to work for money. Traditionally, FI was equivalent to “retirement.” Retirement meaning you stopped working all together usually around the age of 65 or so. Think days at the golf course, river cruises in Europe, and a drink with a little umbrella in hand. Now, the definition of retirement is evolving and FI seems more fitting now since it includes the traditional definition and more.
You've arrived.
RE = Retire Early
RE is pretty self-explanatory. What counts as RE depends. In the non-physician world the famous RE folks are in their early 30s:
- Mr. Money Mustache retired at age 30
- Financial Samurai retired at 34
Early 30's would be exceedingly difficult for a traditional physician who begins attending life at age 30. I guess you'd have to be a Dr. Doogie Howser to do that. Physician on Fire is almost there as he recently announced that he is going part-time at the age of 41. I think a physician who can “retire” at age 45-50 is considered RE.
FIRE = Financial Independence, Retire Early
FIRE is a special club. You've officially arrived if you're a member. Not only can you not work for money if you don't want to but you've attained this at an age much earlier than anyone else. This is a popular goal to strive for.
FF = Financial Freedom
Isn't FF and FI the same thing? Maybe. If you're a splitter (vs. a lumper) then FF is one step beyond FI. It's FI + generous wiggle room. It's a bit naive to think you know and can predict your expenses 20 or even 30 years into the future. Things may go as planned, but often, they do not. Your wants will most certainly change. Health care costs are nebulous and completely unpredictable. A health crisis can easily eat up several 100s of thousands of dollars for things like home health care or a long-term care facility. A family member may need help and maybe you'd like to be in a position to help them and not derail your goals either.
Stay tuned for the second part of this post – how to determine your FI or FF number and more!
What's your FI number? Are you FI, RE, FF, or FIRE? Comment below!
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Monet's lilies @ Musée de l'Orangerie, Paris, France[/caption]
This is a very frequent question and topic on the finance blogs. I like how the White Coat Investor made a nice and easy to follow order of things. Basically pay off any consumer debt and other high interest loans first. Then he prioritizes saving for retirement over lower interest loans. Then in this post he says most docs should have their loans paid off within 5 years of graduating.
I've struggled with how fast I should be paying off my student loans. If I really wanted to, I could wipe them out in 3 years (possibly less with bonuses) but would require more than a decent amount of sacrifice. How awesome would it be to be student loan free in < 3 years? I've changed my mind countless times about this. At least I was maxing out all of my available tax-advantaged accounts while flip-flopping. Currently, I fully fund my job's 403(b) (+ generous employer contribution), 457(b), and a backdoor Roth IRA. This amounts to $62,300 this year. I don't have a taxable account yet.
I think for the average physician (although even this definition is quickly changing) who becomes an attending physician around age 30 (and funded a Roth IRA during residency) the WCI's general plan is a good one to follow. For folks like me however, who became an attending much later in life (38)- I've lost valuable time. Remember, time is a huge part of how compound interest works. If you have less time, then you need more money (saved) to make up for it. The same could be said for folks who have children and other priorities that require money. This late in the game, brute savings is what will get me to financial independence. Instead of the suggested 20% saved for docs, I need to save at least 30%.
I recently took advantage of First Republic Bank's amazingly low interest rates for student loan refinancing. This forced me into a 5 year maximum pay off period with a fixed interest rate of 2.25%. I'm ok with that. I also have another $80K loan with my mom and will pay this off in < 5 years.
What am I doing with my “extra” cashflow? Saving. We hope to start a family soon and will need to pay for childcare and the kid him/herself. NYC daycare can be between $2,000-$3,000 a month easily! We also need to beef up our emergency fund with more at stake.
M and I have picked $5 million as our FI number. We probably don't need that much. I prefer to save more, just in case, to be prepared for medical costs, possible long term care etc. Picking $5 million puts us in the position to help our children and our parents too if need arises and still remain secure.
We want to get there in 20 years (2037) or less. Not a small feat. The first milestone – the first million – is set for June 1, 2023. I'll let you know how that's going year to year.
What do you think? How fast are you paying off your loans? Have you picked your FI number? Comment below.]]>