ER Doc Becomes a Millionaire In 5 Years - MtoM Podcast #177

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 177, Emergency Physician Becomes a Millionaire Five Years Out. This podcast is sponsored by Bob Baiani of DrDisabilityQuotes.com he's an independent provider of disability insurance planning solutions to the medical community in every state and a longtime White Coat Investor sponsor. He specializes in working with residents and fellows early in their careers to set up sound financial and insurance strategies. If you need to review your disability insurance coverage or to get this critical insurance in place, contact bob@whitecoatinvestor.com Dr. Disabilityquotes. You can also email infodrdisabilityquotes.com or call 973-771-9100. Don't forget, you've got two more days for our sale. This is our biggest sale of the year, really. Everything's on sale. It's all 20% off. Just use code SUMMER20. We're celebrating the start of the new medical year. Today is July 1st, as this podcast is dropping and there are new interns, new residents, new attendings, new fellows. So let's celebrate. It's the biggest day of the year, really, for all of us in the medical field. So we got a sale. It goes through July 3rd. Is 20% off everything. That's all our courses, that's all our swag, that's all our books, everything. Okay, just go to whitecoatinvestor.com courses or whitecoatinvestor.com store. Use the code summer20 when you check out and you get 20% off. Otherwise, same deal with everything, right? I mean, our, our courses always have 100% money back guarantee. Now, if you want to take our real estate course, you've been waiting to take that. You want to take that, just step in your investing career. Or if you want to just get a written financial plan in place with our fire your financial advisor course. You know, we have a version of that for students, one for residents, one for attendings, and one that you can even use CME dollars to buy. And of course, we have our continuing financial education course. Those ones are always good for cme. They have lots of wellness content in them. I think this year's course is about 50% wellness content. So if you're feeling a little bit crispy from burnout, maybe that's the course to get. At any rate, whatever you want to get 20% off through July 3rd, check it out. Okay, we got a great interview today. I Think you're going to enjoy this one afterwards? Stick around. I'm going to talk about an interaction I had with someone who calls herself a financial advisor. I'm going to explain what you really should be looking for when running into some people in the financial services industry. Our guest today on the Milestones to Millionaire podcast is Vitaly. Welcome to the podcast.

Great to be here.

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

So I am an emergency physician. I work at an academic emergency department, and I live in Charlotte, North Carolina, and I am about five years post fellowship. So I did a fellowship and so this is actually finishing in my fifth year.

Okay. Yeah. The emergency medicine programs in Charlotte have a pretty darn good reputation. I applied to a couple of those when I was applying to residency two decades ago.

Funny thing is, I applied to it too, and I did not get an interview, but I ended up getting a job.

They want you now as faculty, you know, I got an interview one and not the other and ended up not going to either one of them. But it was one of two places in the country that didn't interview me. I remember. And I was like, wow, it must be really great. They didn't want me.

Yeah, yeah.

Congratulations anyway.

Thank you so much.

So let's talk about this milestone. You've accomplished something. Tell us what you've done.

Yeah, I mean, I was just honestly. So I've always had a goal to like, kind of had a goal to get to about a million dollars net worth until when I was 40 years old. And that kind of. That was my goal. But the other day I just decided to kind of go on to. I kind of keep things tracked on, like credit, karma and things like that. And all of a sudden I'm like, that net worth seems a lot higher. So I basically got to a million dollars already and I was actually more. And superseded that. So I was very surprised and kind of texted. My wife was like, hey, how do you feel like being a millionaire? She's like, what are you talking about?

That's cool. So how old are you?

So I am 36.

36. I beat it by four years. Very nice. You know the original title for the White Coat Investor, A Doctor's Guide is millionaire by 40. And it never. It never got that title. That never made it through the writing process. But as you recall, if you've read that book, the first few chapters talk about our process of getting there, and you beat us by A couple of years. So congratulations.

Yeah, I read your book when I was a med student. I was a fourth year med student. It just came out and. Yeah, and that kind of like inspired me to kind of start on that journey. That's actually one of the reasons I actually even got life insurance. Because I never like no one in my family or I know nobody that ever had life insurance. I myself am immigrant. So like that kind of sphere of things never kind of came to us. And so it was kind of interesting to kind of delve into all of that.

Well, I have a pretty good idea what kind of money you make in emergency medicine, but I'm not sure all the listeners out there do. So can you talk to us about your income over the last five years?

Yeah, so like around fellowship, I was, you know, a fellowship was making around a hundred thousand and then since then it kind of made around 280, just maybe up to 300, a little over 300, depending if I picked up extra shifts or not. So. Yeah, and so that's kind of like been the income for the last five years.

So you came out of training, what was your net worth when you came out of training?

About probably at that point in time, minus maybe 45,000 or so.

Okay, so close to zero, but negative.

So we actually, we started paying off my loans during residency. So I didn't wait to pay off my loans till after training. Actually, we started it during training. My wife worked for a little bit during that time. And so we just kind of like decided, you know, we'll just start paying things off at that point in time. And that's kind of what we did. We did take out. My parents were able to give me a small loan to kind of get rid of some of my higher interest loans, but we ended up paying them all back too.

So, you know, if I look at the numbers here, you've made maybe a million and a half dollars so far in your career and you've still got a million dollars of it. You've got a million dollar net worth after making a million and a half. That's pretty impressive ratio, don't you think?

Yeah, well, I've been very fortunate that the market has been good to us. That's been very good. And we bought a house which where some of my equity comes from during COVID pandemic.

Yeah, well, I mean clearly you've had some tailwinds, but a lot of this came from brute force saving. This is just money you didn't spend that you could have spent. What do you Think's your saving rate. I mean, what percentage of your gross income do you think has been going toward building wealth the last five years?

I mean, probably around a quarter, like 25 to maybe 30% or so.

25 to 30% plus whatever debt payments you were making, because you're paying off some debt as well. Very cool. So what's your net worth divided up into? How much is in home equity, how much in retirement accounts, other investments, real estate, whatever.

Yeah, we have about 500,000 into in investments, both 401 Roths and things like that, about 75,000 cash. And then we have another. Have now over 600 in home equity, which that is, like I said, that surprised us a lot more recently just because the housing values have tremendously gone up over here in Charlotte.

How do you feel about having such a big percentage of your wealth being in your home?

I mean, I do realize, like, it's not a. It's not a permanent thing. I don't feel like I can just take out that money and just do whatever with it. But it kind of gives me a sense of like, all right, at least I have something that's of value and of worth that, you know, should something happen, I decide to leave. I can still get something out of it, even if it drops, drops. But at the same time, I don't expect it to, you know, go down to even before what I bought it for, what I bought the house for. So I feel very fortunate and grateful to be. To be able to have what I have.

Yeah. And that ratio will probably change as you continue to save and invest as well, and it'll be a smaller percentage of your financial life. Later you mentioned that nobody in your family had ever bought life insurance. Tell us about your upbringing and how that affected how you manage money.

Yeah, so I was an immigrant. I mean, we moved to the country in literally two suitcases. My family, it was a three year old, a two year old and a one year old. And I was a one year old at the time. And so we actually grew up in Massachusetts. And my dad, I mean all whatever he training he did in the old country, it didn't kind of count for nothing. Ended up working as a baker at a bagel shop and kind of just helped put us through. And my parents were very, very much into making sure we all get our education and pushed us towards that. And so right now, for example, I have five siblings. I have four siblings, so I'm one of five. My older brother actually just graduated medical school. He's older than Me, and he just graduated medical school. And my older sister's a nurse. You know, I'm a doctor. My younger brother used to be a engineer, but now he's an investor. And my younger sister's a nurse.

So a classic immigrant success story.

It really is. And my parents own their own business now. We've had a lot of blessings. Now. They've worked hard, there's no question. I mean, I still remember the one time I asked my parents for money and they're like, you know, I kind of was talking to them about them, and they were. At that point in time, they were cleaning houses, and there was this particular phrase my mom told me. She was like, do you think I like to clean toilets for a living? You think I like to do this? But at the same time, it's like, now I kind of see that work ethic of why, you know, it's like, hey, listen, you have to do what you have to do to provide for your family. And they did. You know, when things are hard, they work extra. But now, I mean, they're not retired yet. They're still running their business, but it's a very different type of business now than what they first started.

Yeah. So you may not have inherited much financial literacy, you may not have inherited much money, but you inherited quite a work ethic.

Oh, yeah.

What were your other secrets to success?

Getting married early. I will say I got married at 23 after my first year of medical school. My wife worked, so she helped pay down that. That living expenses. And the only loans I really had to take out was to provide for medical school. And to pay for that, I also went to an in state school. So basically, I mean, overall, I lowered my expenses. But at the same time, I will say that I was able to enjoy it. I actually extended an extra year of medical school to study abroad. So I did have to pay for that. But in the end, it was very well worth it because that actually, that was the best question. I got to get into residency and to get into other places because people were always fascinated, well, how'd you study abroad during medical school? So, yeah, I think that was something that allowed me to do that. And so in the end, I basically minimized my expenses. My wife is a very frugal person. She does not like to spend a lot of money to begin with. And I tend to be the spender. But even then, I won't spend on myself. I'll spend on others. I'll spend on my kids, I'll spend on my wife or something.

You can't just drop that little piece of information without more details. I mean, I don't know anybody that studied abroad during medical school. How did you study abroad during medical school?

So I went. So my school had an exchange program with students that came from Germany to the US except we never sent anybody back. And so I was like, well, I want to go. And my wife and I actually started dating in Germany. She was studying abroad. I was backpacking through Europe after college. And so that's. I mean, we knew each other from before, from back home, but that's kind of where we started. And I just had a big desire to do it, and so that's how I kind of worked through the plan. Actually got a scholarship to go study there. So in the end, we lived in a city in southwest Germany called Heidelberg, and it was an awesome time. I mean, you know, we had just had a great time. I both learned the German language at the time as well as did some medical rotations there, too.

Yeah, sounds pretty cool.

Yeah, it was really fun. It was really fun. Did have to pay for it, though, in the sense of, like, I had to pay a full medical school tuition because I needed to get credit, which felt rather odd because those medical students from Germany were paying a quarter of what I was paying.

Yeah, it's a little bit brutal. All right, well, let's say there's somebody that's like you were a few years ago, you know, they're coming out, they got a net worth of 0 or maybe negative 100 or negative 200. They want to be millionaires in five years. What advice do you have for them?

I mean, save, of course, spend what you like on what you like once you want. Like, not on what everything is around you and glitzy and whatnot. Like, like, what matters to you. Figure out what matters to you, and then go ahead and spend the money on that. And so I think that's what allows us kind of to be able to do what we still wanted to do. Like, ended up buying a house, ended up buying a car that I needed. But, like, I still drive my medical school car to work now, the 2009 Honda Civic, and I still drive it. Like, I don't need another car. I don't really care for it. I did upgrade to my upgrade a car just a year ago, and that was to a 2017 minivan. And that was because I have four kids now, so I just couldn't fit them in the Civic.

Very cool.

Yeah. In the end, I think this. Just spend what's Important to you and kind of save the rest and, you know, let the market do the work too, like I did. I just put it in, like what you said, put in the low cost index funds. And that's what I've been doing. And it's been, you know, went up, went down. Now it's in a good place. And, you know, I understand it may go down, but guess what? It'll go back up again. So I feel comfortable with that, you know.

You know, some people might say, oh, you got lucky with the housing market. Oh, you got lucky with investments. But you know what, you stick with them long term and eventually everybody gets lucky with them. You know, those good times do come eventually. So. Very cool. Very cool. Well, congratulations to you. You have accomplished something impressive. You know, there's lots of people out there that never become millionaires. There are lots of doctors out there that never become millionaires. The net worth statistics suggest that as many as 25% of doctors never become millionaires. Even in their 60s, they're still not millionaires. So you've accomplished this very quickly in your career, and I congratulate you on that. And thank you for coming on the podcast to share your experience with others.

Thank you so much. Thank you for having me.

All right. I hope you enjoyed that interview. It's always great to see people being even more successful than I was. So I'm excited to have inspired him to do that. It's pretty interesting. I went back through my mailbox. I've emailed him about five times over the years. He sent in a question, I responded to the question, and after we finished recording, we reminisce through some of those exchanges, and it's fun to see how the decisions he made have worked out for him over the course of his career. And it's really pretty impressive. I mentioned at the beginning that we're going to talk about financial advisors today. And the problem with the term financial advisor is it doesn't actually mean anything. Just about anybody can call themselves a financial advisor, but you got to get into the details, figure out how they're being paid, how much they're being paid, what kind of advice they're giving before you say, well, this is somebody I want to trust for financial advice. I have interactions with financial advisors all the time. Some of the most fiery ones come as comments on the blog. In this case, this was a comment on the show Notes for a podcast we ran not all that long ago. We ran it at the end of May, and I got a comment on there from someone who considers herself a financial advisor. And she wasn't very happy with me. She said, maybe you should learn more about annuities before you spout off about them. No annuity pays a 10% commission. The average is a little over 5%. Goes on and on and on and on. Tells me how I don't know anything about asset protection and tells me that I should learn more about the products I'm trashing before I put my foot in my mouth again. So I said, well, shoot, if you're dumb enough to leave your real name as a comment on my blog, like, I'm going to look up a little bit about you. So I did. So somebody that's been in the financial services industry for about 20 years. Hirsch started at a company called Waddell and Reed. Now, if you've never heard of Waddell and Reed, count your blessings. Mutual fund expense ratios tend to approach 2%. Then this advisor went to Raymond James, you know, not exactly, you know, the Vanguard, Fidelity, Schwab type of, you know, place, let's put it that way. And now at another firm. So I looked up that firm's adv 2. They charge wrap fees. Okay, if your advisor charges a wrap fee, you need a new advisor. All right, this is a ripoff method, pretty much should never be used. In fact, there was nine pages in their adv2 about fees. How much do you need? I don't know, half a page, Right? Just enough to explain how your fees work. But they got so many fees, it takes them nine pages to explain them. They charge an AUM fee of as much as 3%. They routinely start at 2.5%. Right? They charge wrap fees, they're charging commissions. They're selling crummy products and they're charging two and a half percent AUM fees. I mean, it's a rip off. They're given lousy advice they're given and they're charging way too much for it. And then she comes to my blog and gives me a hard time because I said, apparently on the podcast that annuities can pay commissions up to 10%. Well, I looked it up again. They range anywhere from 1%, which is like the very best immediate annuity type thing, to as much as 8%. So I guess the correction was needed. They don't pay 10%. They pay up to 8%. But it's really not relevant. But I thought this was a good example to talk about the kind of financial advisor you do not want. These are fee based advisors. They charge commissions and they charge fees. And what happens is you can't tell which hat they have on at a given time. Are they wearing their salesperson hat, are they wearing their advisor hat? And you can't tell. It all sounds like it's coming from the same person. And meanwhile, you end up with crummy insurance products, you end up with crummy investments, you end up paying way too much in fees, you grow your wealth way too slowly and it's embarrassing. I'd be embarrassed to be an advisor like this, right? I don't know how you look yourself in the mirror at the end of the day knowing you're charging 2.5% AUM fees and putting people into loaded mutual funds with expense ratios of 1 or 2% and actually feel like you're doing people a favor. You're not. So I told this lady I wasn't particularly kind in my replying comment, right? I said you're a sales agent masquerading as an advisor. I looked up your history and it's not pretty. And I kind of went through the history that I mentioned to you and I said clearly you are not the target audience for this blog, you are its subject. So I really don't care what you think about what I write. Quit selling people crap they don't need and certainly don't want once they understand how it works and pretending it is some sort of unbiased financial advice. If I had my way, your firm would have zero clients. I hope you go out of business asap. So anyway, if you have an advisor that is doing that sort of a thing, you need to get a new advisor, right? You know the people on our recommended advisor list, they didn't like it when we came out with an online course in 2018 titled Fire your financial advisor. But they got over it because they realized I wasn't talking about advisors like them when I'm talking about firing your advisor. Yeah, some of you are hardcore do it yourselfers and you'll fire advisors, even like the good ones on our list. And that's fine. Perfectly fine. I'm talking about advisors that need to be fired. I'm talking about people like this lady. This person should have no clients, charging 2.5% AUM fees and selling you crappy loaded mutual funds and crappy annuities and pretending they're helping you. They're not helping you, they're just ripping you off. So if you have an advisor like that, fire them. If you need an advisor, get a good advisor. We got a whole list of them. If you don't need an advisor, Learn how to do it yourself. Need a little help with that? Our fire your financial advisor course can help you, but these sorts of people need to be run out of business. They either need to change their business practices and become real financial advisors, or they need to be run out of business. And that's just the way the financial services industry is. And I make no apologies about that. All right, enough of a rant on that subject. This podcast was sponsored By Bob Baiani, Dr. Disabilityquotes.com A listener sent us this review. Bob has been absolutely terrific to work with. He's always quickly and clearly communicated with me by both email and or telephone, with responses to my inquiries usually come in the same day. I have somewhat of a unique situation. Bob has been able to help explain the implications and underwriting process in a clear and professional manner. You can contact bob@whitecoatinvestor.com Dr. Disabilityquotes. You can email infodrdisabilityquotes.com or you can call 973-771-9100 to have your disability insurance coverage reviewed or get a policy in place if you still don't have one. All right, that's the end of our podcast. If you want to be on the podcast, you can apply whitecoatinvestor.com milestones. If you just like listening, that's fine too. We'll have another episode for you next week. Until then, keep your head up, shoulders back. You've got this. See you next time.

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.