Anesthesiologist Becomes a Millionaire - MtoM Podcast #168

This is the White Coat Investor Podcast. Milestones to Millionaire Celebrating stories of success along the journey to financial freedom. This is Milestones to Millionaire podcast number 168. Anesthesiologist becomes a millionaire at PKA Insurance Group, Inc. Pradeep Oddho and Matthew Peterson are independent brokers focusing on disability and life insurance. They excel in securing coverage for physicians, including those on visas like J1H 1B, et cetera. Protecting your family in the event of a disability or death is important. There is now an A rated carrier offering up to $10 million of life insurance without labs. If you're very healthy with limited or no medical issues, approval is likely in five minutes. Reach out to PKA Insurance to discuss your disability or life insurance needs@whitecoatinvestor.com PKA or by calling 1-800-258-1018 or emailing infopkainsurance.com all right, those of you who don't know about our free Financial Basics email series, check this out. It's WCI101. You can find it@whitecoatinvestor.com Basics Basically, for a period of about 12 weeks, you'll get a couple of very short emails a week teaching you the basics of finance. You know, if you don't become financially literate, if you can't speak the language of finance, it's very hard to be financially successful in your life. The combination of financial literacy and financial discipline is so powerful and so rare in our society that having them both is like having a superpower. It's pretty amazing what you can do, as you've noticed by listening to people that have combined these two things on this podcast. This is the Milestones to Millionaire podcast, where we celebrate what you've accomplished and use it to inspire others to do the same. But we'll celebrate anything. I don't care if you paid off your credit card. We'll celebrate that with you. I don't care if you're a DECA millionaire. We'll celebrate that with you. Whatever it is, we will celebrate and we will use it to inspire others. Apply to whitecoatinvestor.com Milestones we have a great guest today. Let's get her on the line. Stick around. Afterward, we're going to talk about the White Coat Investor philosophy. I'm going to give you 12 timeless financial principles for doctors. Our guest today on the Milestones to Millionaire podcast is Jane. Jane, welcome to the podcast.

Thank you.

Tell us what you do for a living, how far out of training you are, and what part of the country you live in.

I am an anesthesiologist. I am four and a half years out of training and I live in the mid Atlantic area.

Okay. And tell us what milestone we're celebrating with you today.

We are celebrating becoming a millionaire today.

Awesome. Congratulations. A millionaire four and a half years out of residency or did you do a fellowship?

I did a fellowship, yeah. So I'm three and a half years out from the fellowship. Yes.

Oh, wow. Three and a half years out from the fellowship and already a millionaire. That's pretty awesome. Let's break it down. Tell us about your assets and your liabilities.

So net worth now is 1.2 million. Actually, when I filled this out, I was a millionaire about three months ago. Right now, in cash, I have 90,000. In investments, mostly ETFs, I have 1.08 and liability, student loans are 15,000. And then I have a mortgage which makes up the rest of my liabilities.

How much equity do you have in the house?

So about $70,000 equity in the house.

Okay, very cool. Very cool. What's your income been over the last since you got out of training?

My income has averaged about $600,000 each year since fellowship.

And is there anybody else in the picture? Are there any kids? Is there a spouse that's working? Is there a domestic partner? Anybody else in the picture?

I have a fiance. We have not merged our finances yet, but I take care of my mom and my grandmother and some other family members.

Okay. So some dependents, but really nobody else contributing to the income in this story. Anyway, this is pretty cool. I mean, you're three and a half years out making 600. So you've made $2 million in your career, let's say, and. And you've got over half of it still.

Yes.

That's pretty awesome.

Thank you.

Tell us how you did that.

So I actually give a lot of that credit to you, Jim. I found a white coat investor. During my PGY2 year, there'd been some incidences of financial abuse in my family. And so I never wanted to be a victim of that. And so when I found White Code Investor when I was looking into disability insurance, just started reading the blog posts and just never looked back.

Wow. You know, I tell people to live like a resident for two to five years, you know, and that's usually about until the time they pay off their student loans. Your student loans aren't actually quite gone, but I don't expect most people to become millionaires during the live like a resident period. So this is Pretty impressive to me. About how much of that 600,000 do you think you pay in taxes each year?

So the first year I was W2, and I paid about a third of that in taxes. And I saw that tax bill and that tax bill. The tax bill alone was more than anyone in my family ever made ever in life. And I was just. I mean, I was glad that I worked hard and I made all that money and I was happy to pay my taxes, but I felt like never again. And so I kind of transitioned to 1099 full time to make roughly the same amount, if not more, but to utilize tax saving strategies, continue living like a resident, to use kind of the leftover to take care of family and make sure that my folks were taken care of.

Yeah. Did you form an S corp?

So I did that this year. I kept going back and forth. I did not do it prior to this year because it's just. It was hard to find an accountant to get straight, straight answers from. I kept talking to different accountants and, you know, I'm on my third accountant now. It's been quite a pain actually. But, yes, I went S corp this year.

Very cool. So how much do you think, you know, on average over the last three years, how much a year do you think you're spending?

Oh, gosh, I spend a lot. I spend roughly about anywhere from 12,000 to 15,000amonth.

Okay, so that adds up to 150 to $200,000.

Yes, yes.

Something like that.

Yeah.

Okay. Very cool. That's pretty awesome. So that means if a third's going to tax maybe a little less, once you kind of sorted out the tax situation, you're spending a little less than a third, you're saving more than a third. Your savings rate over the last three years has been 40% plus.

Yes.

So that explains why you've been able to. Why you have half of your. Half of your money still more than half of your money, especially if you include some appreciation on the house and, of course, some increase in your investments. You've now got your money working as hard as you are working. So this is pretty impressive. So there's other people out there. Maybe they're in residency, maybe they're in fellowship. What. What advice do you have for them if they want to be millionaires? You know, three or four years out of training?

Um, so I would say what worked for me was getting a bigger shovel. Um, I looked at, you know, what my time is worth, and I looked at how can I maximize my income without burning out, you know, what, what do I enjoy doing and how can I do more of that to get a bigger shovel? So I'll say, really, as a resident, don't get caught up in a small stuff. Your goal, your job really, is to get board certified. That's your job. So do all you can to get board certified and prioritize your financial education like you prioritize your medical education. So for me, it was. I set a goal of reading at least one blog article every day. So either white coat investor or money mustache or go carry cracker. You know, I would read at least one article every day and a couple more on the weekends as a resident and then as a new attending. I remember you wrote this one article about, like your first attending paycheck. And you wrote that how you spend that money will set the tone for, you know, much of your. Your next financial future. And so I really thought hard about that, and I got together an investment plan without a. Without a plan, without a roadmap. I'm not sure that I would have gotten this far. I made a roadmap and there were times when I deviated from it. But then I was able to come back to that document. I was able to update it, change what wasn't working to what would be a better idea. Staying away from individual stocks and doing ETFs and mutual funds. But really, at the end of the day, I think what works and what the advice I would give is figure out your why and use that as a guiding light and then build your roadmap. So the financial plan and investment plan and stick to it. Like you, you say that over and over. Make a plan and stick to it, but it really works. It really works. And there's going to be times when it doesn't, when you don't stick to it. Don't beat yourself up. Just figure out why, figure out what you need to change, and stick to the new plan and keep going.

Very cool. So tell us a little bit about your why. What motivated you to do this?

So I'm West African and I'm an immigrant. And I saw my parents, especially the women in my family, work their knuckles to the ground to get us this far. And I didn't want to also have to grind my knuckles to make things work, to take care of my family. So I wanted to work smart, and so I wanted to be able to take care of my mom because she's gone through so much in her life to get us where we are. I wanted to take care of my grandmother and some other people. In my family that are, you know, that are instrumental in my life a lot of times with immigrant families. Well, I think in a lot of cultures, actually taking care of extended family is part of the culture. And so I wanted to be able to set myself up to do that in a smart way without. Without killing myself. You know, a lot of people talk about, you know, oh, I have to send money back home and, and that's a big expense. That, that's about a third of the chunk of. Of money that of my expenses. I wanted to make sure I'm still able to send money back home, still able to take care of my mom, but still feel like I'm not sacrificing myself to do that.

You know, you make about $50,000 a month.

Yeah.

What were your thoughts the first time that paycheck hit your account? And I'm curious, it sounds like you probably share a lot with your mom and grandma. What were their thoughts when your first $50,000 paycheck hit your account?

So I actually, I actually don't share the information with them. They have no idea that, you know, this is happening or that I've even hit this milestone. The first thought I had actually at the time, I still had a scarcity mindset. So the first thought I had at the time, which I don't recommend, is, ah, this is not enough. But when, you know, I kind of plugged it into the plan, you know, the second thought I had was, oh my gosh, this goes so far. You know, we can do so much with this. So those are the first two thoughts I had.

Very cool. Very cool. So you talk about having a big shovel. You know, when I look at the Medscape survey this year, it says the average docs making 352. The average specialist is making 382. The average anesthesiologist is making 448. You make 600. Can you tell people what you did to have an above average income for your specialty? Are you working more than average? Did you negotiate harder? Did you go to part of the country where you typically get paid more? How do you get paid, you know, a third more than the average for your specialty?

That's a good question. I invested in, in learning how to negotiate. I started with books. Harvard has this negotiation like certificate or they have negotiation courses. I did one of those as well, and I subscribed to their newsletter and they send out emails periodically with different negotiation tips. I invested in learning how to negotiate my first year and a half as an anesthesiologist I worked 80 to 100 hours a week. And, you know, and so to work that much and then look at that tax bill. You know, for me, that was an absolute no. So I actually work less than I did before. I probably. I probably average 80 to 120 hours a month. For me, it was negotiation. Negotiating better. And then also switching to as an independent contractor, so doing some locums, but then also figuring out how to get my own contracts.

Very cool. Now, we kind of glossed over this, but you mentioned you had, like, $15,000 worth of student loans left. I'm assuming they're disappearing in the next month or two. So basically, you've hit another important milestone here. How much did you owe when you came out?

Thank you. Yes. So when I came out of fellowship, it was 180.

Okay. So not too bad. Below average, actually. How did you. How did you keep that bill so low, Given it doesn't sound like there was a lot of help coming from family. Were you on scholarships, that sort of a thing?

Yes. I was lucky to get a lot of scholarships and grants for undergrad. So coming out of undergrad, I did not owe much. I mean, it was less than 50,000 coming out of undergraduate because I did work study. I worked, like, three jobs in undergrad as work study, and then I had scholarships, so that helps to keep it low. And then for med school, I had scholarships, but I also worked as a tutor during med school, tutoring high school kids and then tutoring, like, as a second year, tutoring first years, as a third and fourth year, tutoring first and second years. So that helped. Plus the scholarships to. To an end with interviews, just either driving or staying with family. So I was lucky to come out with 140,000 when I finished med school. And then for much of residency, I either deferred or just paid the absolute minimum. And it was 180 when I came out. I refinanced right away, following your advice.

Yeah. Sounds like the timing on that wasn't awesome, huh? Right before we went into the holiday.

I still would do it again. I mean, you know, it's. I feel a little salty, you know, missing out on the zero payments, but it's okay. But so I finished. I refinanced down to, I think, like 3% when I refinanced. And then during COVID I refinanced again to 2.5%. And I've just been paying. I think it's like 2,600 every month since then.

Does your fiance know that You're a millionaire.

He does, yes.

Have you guys talked a lot about money?

We do. So I'm very stock heavy. Well, really ETF heavy. And he's more real estate heavy. So I have not really got into real estate yet. So our conversations are very interesting. Sometimes we'll have arguments whether it's better to invest in the stock market or invest in real estate, but for the most part, we are. We are on the same page about maximizing our savings rate and investing the rest.

Very cool that you're already talking about that. Well, congratulations to you, Jane. You've been very successful. You should be proud of yourself. I'm proud of you. The whole WCI community is proud of you. You've done a great thing here and, and we encourage you to keep it up and use your wealth to not only, you know, bless your family, but to bless the world in general around you. So congratulations to you.

Thank you so much. I appreciate it. And really, I'm fangirling because I started reading your articles since 2015, and so it's such a pleasure to be able to talk to you now. And thank you so much for everything that, all the content that you put out for us and all the research that you and your team does. I mean, we really appreciate it and all your hard work. You and your team are really instrumental to my success and I'm sure a lot of other high income earners.

Yeah, it's our pleasure. But let's be honest, it's relatively easy to tell you what to do. You still have to do the hard part, which is to do it. And you've done that, so good job.

Thank you.

I hope you enjoyed that. You know, it's fun to talk to doctors and I love it when they're killing it, when they're just doing awesome. I know most doctors out there aren't doing quite as well as this anesthesiologist. Not making as much, not saving as much, not investing as intelligently, not as financially literate. That's why we bring people like this on the podcast, to inspire you to do a little bit better, negotiate a little bit harder at your next contract to save a little bit more, to reduce the cost of your investment a little bit and optimize your asset allocation. We know it's hard to get all this right, but it's worth it. Look at all the fun things you can do once you've got your financial ducks in a row. You can help all kinds of other people all over the world. You can treat your own wellness. So you don't get burned out. You can help your family to have a better life than you ever had growing up. There's a lot of cool things you can do with it. So let's talk for a minute about the White Coat Investor philosophy. A year or more ago I ran a blog post, this is what we called it, the White coat investor philosophy. 12 financial principles for doctors. And I think it's worth going over those again. I mean, they're timeless, right? A lot of times people get confused about what we're really preaching here at the White Coat Investor. Right? We've got a missionary zeal, there's no doubt about it. And we preach, we rant, we try to get people to do the things that are going to help them in their financial lives. But These are the 12 points. These are the things you really ought to take away from it. These are the points that are not controversial. Right? Right. That nobody has some other opinion. And they're true and they're timeless. So let's pay attention to them. The first one, financial planning makes you happier. I'm 100% convinced that financially secure doctors are better partners, parents and physicians. If you will do real financial planning, you will have less stress, you will have less burnout, you are less likely to get divorced, you're less likely to kill yourself. You'll be happier, you'll provide better patient care. Do some financial planning. All right. The second principle, wealth, comes mostly from making a lot and saving a lot, right? It's not that complicated. Make a lot, carve some portion out of it to invest, and invest it in an intelligent way, right? That's the formula to becoming wealthy. It's not complicated. Don't over complicate it, right? Yes, frugality matters. Yes, it's important to pay attention to the details sometimes. But the bottom line is if you can get those two things right, making a lot and saving a lot, you're probably going to be just fine. All right? The third point is that you need a reasonable written investing plan. You need a reasonable plan. It can't be some crazy thing like putting all your money in bitcoin. You want to own some bitcoin, fine. Put 5% of your portfolio in bitcoin, no problem. And if it goes to be worth $10 million, you'll be glad you have it. If it goes to zero, it won't hurt you that much. Don't put 60% of your money in Bitcoin and 30% in gold and 10% in your brother in law's business. Have Something reasonable. The majority of your money needs to be in risky type investments. Stocks, real estate, those sorts of things. Some of your portfolio probably ought to be in something that's not so risky. Cash, bonds, that sort of a thing. Stick with it, right? Set the percentages, write them down, refer to them from time to time. And you don't have to ask yourself every month when you have some money to invest, what you're going to invest in. It's already decided. You decided it 15 years ago when you wrote down your reasonable written investing plan. Makes the whole rest of your investing career a whole lot easier. All right, principle number four. Index funds are the best foundation for a portfolio. The most profitable companies in the history of the world are known as stocks. These are your Apples and your Amazons and your Walmarts and these sorts of companies. They're all over the world. There's about 10,000 of them, these publicly traded companies. The best way to invest in stocks is via a low cost, broadly diversified index mutual fund. So these are a great foundation for your portfolio, right? If you want to add some stuff around the sides, fine. You want a little bit of real estate here, you want a little bit of Bitcoin there, you want some bonds here, whatever, add them in. But this is a great foundation for your portfolio. You know that this is not going to go to zero barring some sort of apocalyptic zombie situation, right? You're not going to get scammed by your index fund. It's going to grow over time. Ask yourself, is this likely to be worth dramatically more in 20 or 30 years when I need the money than now? And the answer is yes. Yes. There's going to be a lot of volatility between now and then. That's okay. You can buy the 10,000 most profitable companies in the history of the world essentially for free, using an index fund. All right, Principle 5 is to insure well, but only insure against financial catastrophes like disability, death, health, liability, property loss, et cetera. You don't need to insure every little thing. You don't need to insure against things that are not financial catastrophes, like dying when you're 90. That's not a financial catastrophe. That's an expected event. You don't need whole life insurance to pay out when you're 90, unless you're in a pretty unique situation that most doctors are not in. All right? It's not letting somebody sell you a whole life insurance policy that you don't need. You've got a better use for your money, almost surely. Principle Number six is to live like a resident for two to five years out of residency. Now the point of this is to front load your wealth building activities to a time of your life before you're used to making a lot of money. It's relatively easy to keep the same lifestyle you had the year before. But now with the dramatically higher income, you've got a lot of that income you can carve out and use for wealth building activities like savings, saving up a down payment, paying off your student loans, catching up to your college roommates with your retirement savings. I mean, even if you give yourself a little bit of a raise, right, give yourself 50% raise coming out of residency, you're still following the principle. You just don't want to have a lifestyle explosion when you come out of training and grow into your newfound attending income with a big fat doctor house mortgage and two big fat car payments before you even get out of residency. And then when your student loan payments come due in a few months, all of a sudden you find yourself living hand to mouth on an income of 2 or 3 or $400,000 a year. Happens all the time. 25% of doctors get into their 60s and still are not millionaires. How does that happen? Because they spend all their income. That's the main way. Yes, some of them get disabled or have something terrible happen to them, get divorced and have to split their income and assets in half. But for the most part, that tragedy is completely preventable simply by living on less than you earn. And if you will front load that for just a short period of time at the beginning of your career, you will not regret it. All right, Principle number seven is to spend intentionally. I don't care what you value. Maybe it's a wakeboat. I got a wakeboat. Right? Maybe it's a Tesla. I don't have a Tesla. Maybe it's fancy vacations, maybe it's $10,000 handbags. Maybe it's eating out at Michelin three star restaurants. Maybe it's a nice house, Maybe it's private school for your kids. Maybe it's supporting your extended family in a developing country. I have no idea what you value most, but spend your money on that, you can buy anything you want. You can't buy everything you want. And you need to be intentional. Intentional, great word. You need to be intentional about how you spend. Number eight is to get good advice at a fair price. Right? The most profitable hobby you can have is to learn to be your own financial planner and investment manager. But if you're going to do it, you need to do it right, which means you need to educate yourself well enough that you're doing it about as well as a good professional would. If you're not going to do that, go hire somebody to help you. It's going to cost you probably four figures a year, 2000, 6000, 8000, something like that a year is what you're going to pay for good financial planning and investment management. That's a fair price. But they need to be talking about the same stuff we talk about at the White Coat Investor, right? If they're not talking about index funds, if they're not talking about rebalancing, about insuring only against financial catastrophe, right, then that's not the sort of person you want to be getting advice from. If they're selling you products, you're almost surely getting bad advice. All right, Number nine is to understand and use your tax advantaged accounts. Doctors often have a plethora of tax advantaged accounts provided by their employers or not by their employers. These can include 401s, 403s, 457, 401s, solo 401s, Roth IRAs, HSAs, 529s. Learn how all these accountants work. Use them to your advantage. Not only they provide great tax benefits, which makes your money grow faster than it otherwise would, but they give you estate planning and asset protection benefits. So learn about them. Use them to your advantage. Number 10. Pay cash and avoid debt. We all become numb at some point during dental school or medical school when we get used to living on borrowed money. You got to get over that when you get out of your training, you got enough income that you can waste quite a lot of it and still be just fine. So get used to saving up for stuff. It's a good habit, I promise. It's like that old skit that Saturday Night Live did with Steve Martin where he says, where would I get this saved money? Well, you know where it comes from, right? It's money that you earned but did not spend. So minimize your debt. Pay cash for stuff. My kids know when I ask them from a very young age, would you rather earn interest or pay interest? They know the right answer. Make sure you know the right answer too, okay? Principle 11 is to minimize your taxes and know the tax code, okay? For the most part, you lower your tax bill by living your financial life differently, not by knowing some secret loophole or having somebody different file your taxes. Okay? Don't go looking for the secret loophole. The secret loophole is to live differently, right? Might be getting married. It might be having kids. It might be starting a business. It might be saving for retirement. It might be paying for health care. Those are the sorts of things that lower your tax bill. And finally, principle number 12, asset protection is actually pretty easy and it matters a lot less than you think. Do the basics. They're cheap, effective and pretty easy, right? Title your property properly. Max out your retirement accounts. Know the laws about asset protection in your state. Buy malpractice insurance. Buy personal liability insurance. Right? And as you acquire millions, you may want to look into some more complicated, expensive, less reliable asset protection techniques. But you probably don't have to, right? We're all worried about losing money in an above policy limits judgment from practicing medicine or dentistry. But the truth is those are extraordinarily rare events. For the most part, you're playing with the house money and you're functioning as a witness for the defense. Won't help you sleep any better at night if you get sued. I know, but the truth is you're probably not losing any of your personal assets in that lawsuit. I hope those 12 principles make sense. They're timeless. We're going to keep talking about them here at the White Coat Investor, so don't be surprised by that. But if you incorporate them into your life, you will be successful. This stuff's not that hard if you just concentrate on the basics and get the basics right. It's like what Jane told you in the interview today. She concentrated on getting a big shovel. She carves a whole bunch of it out. She invested just in simple ETFs. It's not that complicated. She's a millionaire. She's going to retire early as a multimillionaire and have helped a whole bunch of people along the way. You can do the same at PKA Insurance Group Inc. Pradeep Oddho and Matthew Peterson are independent brokers focusing on disability and life insurance. They excel in securing coverage for physicians, including those on visas like J1H 1B, et cetera. Protecting your family in the event of a disability or death is important. There's now an A rated carrier offering up to $10 million of life insurance without labs. If you're very healthy with limited or no medical issues, approval is likely in five minutes. Reach out to PKA Insurance to discuss your disability or life insurance needs@whitecoatinvestor.com PKA or by calling 1-800-258-1018 or emailing infopkainsurance.com all right, we're at the end of our episode today. There'll be another one on Thursday, the regular White Coat Investor Podcast and another Milestones to Millionaire podcast will be next Monday. If you'd like to come on, you can apply@whitecoatinvestor.com Milestones. Keep your head up, shoulders back. We'll see you next time on the White Coat Investor Podcast. The hosts of the White Coat Investor.

Are not licensed accountants, attorneys or financial advisors.

This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.