MtoM #102 - Psychiatrist Reaches Half Million Net Worth

This is the White Coat Investor Podcast. Milestones to Millionaire Celebrating stories of success along the journey to financial freedom.

Milestones to Millionaire podcast number 102 psychiatrist reaches half a million dollar net worth. If you're like most doctors, nobody taught you anything about personal finance or investing during your undergrad, professional school or residency. Even though your family and perhaps even your business rely on you to be the Chief Financial Officer, you have never been given the tools to succeed. Enroll in WCI Financial Bootcamp, a free educational email series, and learn to convert your high income to wealth. You will learn the basics of investing, saving, insurance and more. Your high income alone will not lead to financial success, but as always, we want to help you on your financial journey. Go to whitecoatinvestor.com financialbootcamp to sign up today. You can do this and the White Coat Investor can help. Welcome back to the podcast. This is the podcast that is all about you. As the WCI community, we want to celebrate your successes no matter how big or small they might be. I don't care if you are a multi deca millionaire or if you have hit your first $10,000 in savings, whatever it might be, we will celebrate it with you. The way you get on this podcast is by applying@whitecoatinvestor.com milestones and we'd love to have you on for a short interview and the opportunity to share your story with others. All right, we've got a great guest today. Let's get her on the line. Our guest on the Milestones to Millionaire podcast today is Sarah. Sarah, welcome to the podcast.

Thank you so much. I'm excited to be here.

Well, congratulations to you. You have accomplished an impressive milestone here and we're gonna celebrate it and hopefully use it to inspire others to do the same. I understand you individually have recently reached a net worth of half a million dollars and combined with your spouse are actually millionaires. So congratulations to you.

Thank you so much. I'll be honest, it still quite hasn't hit yet, but we're like, oh. We look at our mint accounts and we're like, I guess this is where we are. So that is very exciting.

Well, the exciting thing about it is 2022 wasn't exactly an awesome year for most investments, right? I mean, stocks are down, bonds are down, at least publicly traded real estate is down, the value of most people's homes is down. And yet you're hitting milestones. And that testifies to me that you're saving a lot of money and doing a nice job, you know, playing defense and Taking care of business in that regard. But let's let people get to know you a little bit better. Tell us your specialty and how far you are out of training.

Sure. So I am a child and adolescent psychiatrist. I am academic and I work on the east coast and I graduated in 2018, so I'm about four and a half years out.

Okay. And there's another person in this equation. Tell us a little bit about your spouse.

Yeah, so we actually met virtually in 2021 and just got married last year. There's a lot of logistics involved in combining our finances, but he is a non medical professional and he's a little bit younger than me, but has been more financially literate than I have been.

Okay, well let's. Since you just barely got married, let's focus on what you've done here. First, you've reached a net worth of 500,000 DOL. You're about 4ish, 4 1/2 years out of training. Tell us about your average income over that time period.

Yeah, so in residency I made residency income and since 2018 I've made about between 200,000 and $300,000. And that's my base salary plus the moonlighting.

Okay. So basically an average physician income is what you've been making for the last four years. And did you come out with a bunch of debt? I mean, what was your net worth when you came out of residency?

Yeah, so I was really lucky in that my parents were very generous and privileged and able to help out. So they really paid for all of undergrad and they helped with my rent during medical school. I also got a very large merit based scholarship, so I only graduate. So I graduated with only about $70,000 of loan debt and then lived relatively, I guess, frugally during my residency and the first year as an attending because my biggest goal coming out of residency was wanting to be debt free.

Why was that such a big goal for you?

I think a combination of reasons. So I am Muslim and so we're a relatively debt averse people. I came from an immigrant household and so, you know, we don't like being in debt. And I think it just, it was weighing on me and I didn't want to have that negative balance.

Yeah. Figured the closest you could get to no debt was to take as little as possible and pay it off as fast as possible.

Yes, that was my goal.

All right, so how did you do this? Right. It's not like you were making $800,000 a year. You're making an average physician income and yet you've seen a swing in your net worth of $570,000 in just four years. How did you do that? I mean, that represents over half of your income going toward building your net worth every year.

Yeah, I think this is where I was a bit surprised that I've gotten here. I think some of your listeners are way more financially savvy and literate than I am. But I think I just really focused on making as much money as I could and thinking about what really brought me happiness. And luckily, a lot of those things are, like, spending time with family and friends, cooking on my own, doing, you know, relatively frugally things. And I'll say, like, there are a couple of things that I think also helped. I rent. And I know it's a big controversy as to, you know, should you buy a house or should you rent? But I think renting a allowed me to get, like, a nicer apartment but not really fill it with a lot of new stuff. So most of my furniture is still carryovers from med school and residency, and I think that allowed me to live a little bit nicer, but not spend lots of money buying new furniture and decor and things along those lines, which I hope to do once we buy a house. Yeah. And then I think inherently I'm a natural saver, and I think Covid also helped in that regard, because the biggest thing we now spend money on is travel, which we obviously didn't do a lot of, and 2020 or 2021.

So before you got married, what do you think you were spending a year as an attending?

I apparently not a lot. Yeah. I honestly, this is where I don't know what my savings rate was.

So, I mean, I can tell you what it was. It was. It was 50 or 60%, given what you've accomplished in the last four and a half years. So, yeah, I guess clearly you must have been not. You must not have given yourself that big of a lifestyle jump out of residency.

It's funny, because I thought I did. I was like, oh, no, I'm getting a much nicer apartment downtown in a city like, can I afford this? And the retrospective answer is, yes, I can afford this.

Yeah, absolutely. You could for sure. A little raise doesn't hurt people. It's not the lifestyle creep that kills you. It's the lifestyle explosion that most physicians undergo. That's pretty awesome. All right, so if we look at your net worth, what's it divided up into? I mean, clearly you wiped out the debt, so that's 70,000 of the swing from minus 70 to 500,000. What else is it in? Is it all in retirement accounts or taxable investments, or do you have rental properties or what's your net worth composed of?

Sure. And again, this is where I'm pretty simple. So about $80,000 is in a savings account and then about a total of 430,000 is in investments. And that's roughly evenly divided between retirement accounts and my IRA and a personal brokerage account.

All right, well, let's talk a little bit about this process you've had, because you just got married last year and so you had some talks with your spouse, I'm sure, about money. It sounds like, given your proclivities to being financially savvy and now you're undergoing some challenges combining your finances. Tell us about what you've learned in the last couple years about working together with somebody else toward financial goals.

Yeah, and I think it was a really interesting part of our relationship where it's very easy to talk about all the fun stuff. But then some of the logistical conversations we had as we were still dating, I think were cemented to us that, hey, I think we'd be a really good fit and like, I really want to marry you. And I think the financial goal in particular, like, helped us share not only what our dreams were, but how we wanted to get there. And I think it kind of added a grounding to what, you know, was the fun part of the relationship of getting to know each other. So I think we both tried to be very intentional about what, you know, we wanted to do with money, how we thought about spending it again. We're both relatively debt averse and thinking about, you know, what we wanted in terms of our future and how we get there. So I'm personally proud of having some of those conversations. I know it's not easy, and I think if I hadn't listened to a bunch of your podcasts, I probably wouldn't have been able to have some of those conversations.

Just not having the vocabulary and skills. Or what was it that you think just the permission you were given to have the conversations, or what was it about learning about financial literacy that made it easier?

I think from a superficial perspective, it's very easy to say, oh, sure, I want to make money and retire. Well, I think getting into the depths of great. What does that actually mean in terms of how much we're saving, how much we're spending? Are we budgeting or not? What are the big ticket goals that we have? I think that requires, again, more of a vocabulary and really an understanding of different equations, even, like, in terms of, hey, how much are we putting into our retirement accounts? Or what are we trying to max out? Or where do we want our money to go? And even now, he's savvier than I am. So, you know, there's some sophisticated conversations I think we're having or trying to have that I'm so, like, I need to look a little bit more of this up before I can participate as fully as I would like to. But I think for both of us, it's fun to have those conversations. And again, we try to be intentional about our time, but also our money and, you know, knowing that we are trying to work hard, but we're also trying to, like, live a very fun and exciting life.

What was the biggest disagreement the two of you had as you worked on combining your finances and talking about what your financial life would look like later?

I don't know if we've had a ton of big disagreements. I think some of it is just we're still trying to ground how much we are making and how much we are spending. And luckily, he's much better at, like, pulling that info and putting it into Excel sheets. Last year was also just an odd year in terms of both of us in our financial spending because we got married. We're South Asian, so we had four wedding events. We went on a very extravagant honeymoon. So I think for both of us, we were like, oh, my gosh, we spent a lot of money this year, and we still ended up saving at least 20%, if not more, for retirement because we always max out our accounts and those kinds of things. But I think it's the literal. How do you combine some of these accounts together now that we've had, like, separate financial lives and are, you know, early in that, but still have a slew of different retirement accounts or investing accounts, and how to bring that all together into one and then think about it in a holistic perspective.

Now, they say when you combine two households, when you get married, your overall expenses go down. Do you think that's true? And if so, how much would you guess they've gone down?

I do think that's true, just basically because we were paying two. I was paying a rent, and he was paying a mortgage, and now that's essentially combined into one of those. So we're saving at least, you know, 40,000 a year on that. And again, I think we're both, like, cooking at home, and it's much easier to, you know, shop for two and just have that on together and, you know, cook for multiple people at the same time. So I do think some of those basic expenses have gotten or have gone down a lot. And I think just being able to divide the household tasks, like, I really love, you know, going to certain bulk stores and finding things on sale and purchasing them. And I think, you know, that has allowed us together to succeed a little bit more. And then he can do some of the other household tasks that I don't have time for now that I can do that.

Awesome. What's been the biggest surprise to you? You've become wealthy. Right. You now have a high income. You've married a spouse that has a high income. You're millionaires. Together, you're wealthy. What was the biggest surprise in that process over the last five years?

I think it's that we got here. Like, this is where it still feels a little bit unreal. It still feels like I have the imposter syndrome of, like, should I really be on this podcast? Because it doesn't feel like it. And again, luckily for us, it's not like we felt like we were sacrificing a lot to get here. I think we still actually think we spend probably more money than we should. And at this point, we're like, okay, but we deserve it. And we're clearly saving enough and trying to do good and healthy things with our money to make the next steps reasonable. So I think it's a bit of that.

Let's go back a few years to 2017, 2018. Let's imagine there was somebody like you were back then. You know, maybe you have a negative net worth. You're coming out of training, you kind of want to be successful. Maybe you've been listening to the White Coat Investor podcast for a while. What advice do you have for that person?

Sure. And this is where, again, I'll emphasize that I don't actually think I know that much about finances. And so I think there's a lot of people, and I have a lot of friends who are scared to look at how much debt they're in. They're scared to look at what their accounts hold. And I think that fear prevents them from doing very basic things. Like, I think that I took a long time to do very basic things, but I tried to do very basic things. So even, you know, I helped a friend a month or two ago look at, you know, what her employer offered. 401k was and, like, how to max that out. And that was something that she wasn't aware of because, again, I think a Lot of docs are just happy to sign on to a job and then they get very busy in the clinical aspects of doing their work and their personal lives. And some of the, I would say almost the HR stuff gets lost. And so I think just being able to figure out how do you find out what kind of an account you have, how much you're contributing, how to max that out or change that takes time. I remember it took me like three months to open a brokerage account. And inherently it's not that hard. I just didn't know how to do it. And probably one call to a certain company could have helped literally make that happen. And five minutes, but, you know, it's hard to find the time to do some of that. And so, you know, when I opened it, I had a ton of money just to be able to put into it. It was just literally getting to the point of how do I open a brokerage account? That took me a long time, I'd say. Another thing that seems simple, that took me a while was figuring out how to transfer my residency 403 to my current employer. 403B also was a process that took me a couple of months between making different phone calls and figuring out how to do it and even understanding what are the costs of doing it. And so my residency 403 had just higher fees. And I was like, all right, it makes sense just to transfer it to my current one, which has no fees. But then the process of doing that still took a couple of months. And so I would say if you are in that bucket of things where a lot of this still seems a little bit overwhelming, just really just focus on one step at a time. I think you can take very small steps, steps, and that'll help you get to a positive future goal. You don't need to understand, you know, 90% of what happens on this podcast. There's still terms that I'm like, I don't know how to do that. That's a five year goal to understand, like tax loss, harvesting, that's fine. You don't need to understand a lot of those things to be in a good place. So, yes, some of it is figuring out how much you're saving, but then, you know, being okay just asking questions and whether it's asking your HR department, whether it's asking your friends or your family, you know, putting it on this podcast or asking you guys, it's okay to start very small and low and then kind of grow with time.

Absolutely. And you shouldn't feel bad because I Think the fastest I've ever transferred one retirement account to another has got to be two or three weeks. It never happens fast, so two months actually doesn't sound too bad to me. All right, well, congratulations to you. You have overcome inertia. You have gotten started, and you have persisted on that path for several years, and you're showing the fruits of your labors and you're successful. So congratulations to you, and thank you so much, Sarah, for coming on the podcast and inspiring somebody else to do what you've done.

Thank you so much for having me.

All right. I hope you enjoyed that episode as much as I did. It's always wonderful to see white coat investors having success. This stuff is not that complicated. You know, you've done 90% of it. When you graduate from residency, you have done what it takes. You dedicated your 20s to it, maybe half your 30s to getting a high income, and that's 90% of the work. You know, when you look at everybody across the world and even in America, the biggest financial problem out there is an income problem. People don't make enough to reach their financial goals. And most of those in the WCI community have already got that problem licked. They've got high income. That's how they end up here. They're trying to figure out what to do with it, and the rest of it is not that hard. You know, you've heard me use the example before of the 2017, I believe it was, super bowl, right? If you'll recall, the Seattle Seahawks were sitting on the two yard line with something like 45 seconds left in the game with the best running back in the NFL. And that's like doctors coming out of residency that want to be financially successful. All they have to do is get a couple of yards over the goal line and they've got the best running back in the NFL. All. All they have to do is hand them the ball. What did the Seahawks do? They called a complicated pass play, ended up getting intercepted, lost the game. That's what doctors do, okay? They make it complicated. They blow it. They don't invest a thing. They spend all their money. They got debt up to their eyeballs. They get ripped off by their financial advisors and get into scam investments, right? That's like a throwing play when you have the best running back in the NFL. Just hand the ball to the best running back in the NFL. All right? Save 20% plus of your gross income, put it in retirement accounts as much as you can, invest it mostly in index funds, and amazingly, in five or 10 or 15 years, you will be wealthy. It's not that complicated. You can do it. We bring people on this podcast every week that are just like you, that have done it. Okay, now some of us don't start on the two yard line. We start on the opposite two yard line owing $500,000 in student loans. No doubt it is harder for you if that is where you are starting, but that does not mean it cannot be done. We bring people on this podcast all the time that have wiped out 200, 300, 400, $500,000 in student loans. Yes, it's going to take you a little bit longer to become financially independent. And if you came out of medical school with no debt. But that's not to say you can't still do it by mid career, you can. You just have to have a plan. And at the White Coat Investor we are here to help you do that. If you do not have a plan, there's three ways to get it. The first is, you know, participate on the forums, read all the blog posts, read some books, write the plan up yourself. That's what I did. It's very cheap to takes lots of time. Second way is to take our fire your financial advisor online course. Now this is going to cost you hundreds of dollars to take this, but I've basically curated everything that you would spend months finding all over the Internet and in the library to what you'd need to know to put your financial plan together. We even have a version of it that offers CME so you can use your CME fund to buy it. If you need more help than that. We curate a list of financial advisors. They're all fee only. Some of them want a long term relationship with you. They want to manage your assets as well. Others just charge you an hourly fee or help you come up with a financial plan and teach you to be a do it yourselfer. Whatever you need, it's on that list. Now that's going to cost you more than just a few hundred dollars, but it'll give you the help and the reassurance you need that you're doing it right. Put together a financial plan. When we survey the audience, only about 50% of you have a financial plan. The rest of you need one. Get a plan. Write it down. When you write it down, it forces you to do two things. One, to actually do it. Two, you find out where the gaps in your knowledge are. That focuses your efforts to become more financially literate to those areas that you don't know yet. And of course, when you run into the inevitable bear market. You can go back to that plan. Remind yourself why you set it up that way so it helps you to stay the course later. But you can do this. Other doctors. Hundreds of thousands of other doctors are doing this, and you can too. If you're like most doctors, nobody taught you anything about personal finance or investing during your undergrad, professional school or residency. Even though your family and perhaps even your business rely on you to be the chief financial officer, you have never been given the tools to succeed. Enroll in WCI Financial Bootcamp, a free educational email series, and learn to convert your high income to wealth. You will learn the basics of investing, saving, insurance and more. Your high income alone will not lead to financial success, but as always, we want to help you on your financial journey. Go to whitecoatinvestor.com financialbootcamp to sign up today. You can do this and the White Coat Investor can help. Keep your head up, shoulders back. We'll see you next week on the Milestones podcast. You can do this. We can help.

The hosts of the White Code Investor podcast are not licensed accountants, attorneys or financial advisors. This podcast is free 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.