MtoM #130:Family and Sports Medicine Doc is Back to Broke and Finance 101: Tenant Contracts

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

This is Milestone to millionaire podcast number 130, Family Medicine Doc.

Gets Back to Broke.

If you are finding our podcasts informative and helpful, check out our website. Since 2011, we've been working hard to provide valuable personal finance and investing information. Through thousands of blog posts written by an array of authors, you can find information on how to manage your student loans, fix and avoid common financial mistakes, understand your retirement accounts, optimize your investments, find professional help at a fair price, get started investing in real estate, and so much more, all at no cost to you. You can find out more about the courses we offer, the conferences we put on, the newsletters we provide, and interact with other WCI readers through our online forum. Head on over to whitecoatinvestor.com to start learning today. You can do this and the White Coat Investor can help.

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Today we have a great interview with a family doc who has accomplished one of my favorite milestones. We'll bring her on in just a minute, but afterwards, stick around. We're going to talk for a few minutes about 10 tenant contracts, landlord contracts that you have for rental properties, for investment properties, and we'll go over some important things to have there.

All right. Our guest on the Milestones to Millionaire podcast today is Mandy. Mandy, welcome to the podcast.

Thank you so much.

All right, we are celebrating one of my favorite milestones today. You are back to broke. Congratulations.

Thank you so much.

Yeah, that's a pretty awesome feeling. All right, tell us a little bit about yourself. Tell us what you do for a living, how far you are out of school or training, and what part of.

The country you live in.

So I am a family medicine and a sports medicine doc. So I'm dual board certified, I practice both and I am three years out of fellowship this month.

Awesome. And what part of the country?

And I Practice down in the Southeast.

Southeast. Okay, Very cool. Well, congratulations to you on that, perhaps the most important milestone in the long list of milestones we celebrate back here. Tell us about how you started out, let's say, coming out of fellowship. What was your net worth? Do you remember?

I remember very clearly. And it hurts a little bit to say this. We were negative 440.

440?

Yeah.

Holy smokes. What was that from?

A lot of it's from med school debt. I also did a master's degree before I went to medical school. I really wanted to make sure that medicine was what I wanted to dedicate things to. And so I did a master's degree out of state. So that was a lot of the debt as well. We had. My husband had like $15,000 in loans, like, very minimal compared to what I had. And then we had $25,000 in car loans at the time as well. So, yeah, it was negative 440. It was a lot.

So other than the car, did you have any assets at all? You have bunch of savings or investments or anything?

No, we did. We were not good savers. No, we did not. No, we were. We didn't have any of that. And so it was a very solid negative number for us. And it was a strong negative number. And on one hand, I think it kind of motivated us to be strong earners and really negotiate for things and work for promotions and kind of negotiate on our behalf. But it was also like, you know, something that kind of loomed over us a little bit too.

Yeah. What does your husband do for a living?

So he does healthcare. It.

Okay.

And so he, you know, he worked all throughout my med school, and so we had some income there. It doesn't mean that we didn't max out what we could take from. For loans. And I went to a private university for my medical school school. And so that racked up very quickly. And that's one thing that when we look back at things we could have done differently or would have liked to have done differently, that's one of the big ones for us, is actually having a budget while we were in medical school and considering his income in the budget and really taking out less than we needed to.

So was there some point at which there was a financial awakening?

Yeah, that's a nice way to put it. An awakening. I think it honestly was just an acknowledgement. I think when you get into these six figure negative numbers, it just kind of becomes, I think to actually get through it, you just become numb to it and just pretend it's not there. We had a great financial advisor actually at our school, at my med school. And so she would give us lectures all the time about, listen, that $5 coffee that you're getting at Starbuck is actually going to be 15 or $20 because of the interest that you're accruing. Cause you're buying it with 7% loans. It went in one ear and went out the other.

You got the information you just didn't.

Do anything with was there. And I was like, I just have a lot on my plate. I'm not ready to acknowledge what we're going to have to do. And before you graduated, you had to sit down with your partner, your spouse and go through everything. And I remember her sitting us down and saying, hey, you're going to have to pay $5,000, pay this off in 20 years, you know, with the way you're going. And I just remember the look on my husband's face in that room of just like, what, $5,000 to pay this off? And I think for, you know, that was like, okay, yeah, we'll deal with it down the road, right? And you hear people talk about it all the time on podcasts like this, like the arrival fallacy. Oh, we'll take care of it when it's residency or we'll take care of it when it's fellowship or when we, when we get to making the big bucks, we'll take care of it then. And we kept doing that until probably fellowship was about the time that I started looking at things and being like, we really need to turn this around and if we don't turn it around now, we may not ever.

Was that scary to think that maybe.

You would never turn around.

It was not an option. I think I had decided at that point it wasn't going to be an option for us to keep going down the path that we were going to. We got into credit card debt early. I grew up, and I'm sure you're going to ask this later, but my parents, I've come from very hardworking, blue collared people who traded their time for money. My sister has a birth defect and so there were medical bills and my parents relied on credit cards for emergencies. There wasn't an emergency fund. They relied on credit cards for their emergencies. And so I thought that that was what you did. You relied on your credit cards for your emergencies. You know, and so we got into that a little bit and I think not even using it for emergencies, but I think that hidden cost of going to a private medical school Part of it is all of your classmates either have a lot of money and are going to that school or are in the similar thing. So you're going and doing things with them. Maybe instead of doing like a potluck on Thursday night where everybody brings their own thing, you're like going out to dinner and it's more expensive. And so we racked up a decent amount of credit card debt that way as well. And I think that that was definitely something. Was like, okay, we have to stop the bleeding on this.

Okay, so by the time you're coming out of fellowship, you're awake now financially, you know what's going on. Your spouse is working. You're now starting to look for jobs. You mentioned that you got really aggressive about income. Tell me what you guys did to boost your income so you'd be able.

To take care of this problem.

I negotiated like crazy on my first contract coming out of training. I worked really, really hard. I negotiated a lot. I knew what I was worth. I knew what I was bringing in. There's not a lot of us female sports medicine docs out there. And so just kind of working and negotiating that, learning what the worth was in the area, what I could contribute to an organization and requiring that in the contract. I did a lot of moonlighting in residency and in fellowship as well. So I think that that helped. We were good earners. We just weren't good spenders or savers or investors.

So household income for the last three years altogether between you and your spouse.

Last three years between 345 to 415.

Okay.

And so that came with a pretty significant tax bill. How'd that feel to pay taxes knowing that you had all these student loans to pay off?

Listen, I honestly, the tax bill, I kind of am like, yeah, that's fine. I'll make the money. I didn't have that much of a problem with it, to be honest. We paid a very high five figure amount in our taxes, almost six figures. And I think that's just par for the course. I was okay with that. I guess. I don't know that I would have taken the tax money and put it straight to my student loan, so it didn't matter. That was like an equitable trade in my mind.

So, yeah, for sure. Okay, so you're making money now.

It's pretty good income and you're trying to decide what do you put it toward? How'd you decide how much went toward loans, how much went toward retirement accounts, how much went towards savings, how much.

Went toward credit cards?

How much went toward car loans? How'd you decide?

Yeah. So we did a modified debt snowball. I had our first daughter at the end of the day, chief year, and I really sat down and read as much as possible at that point. Lots of Dave's Ramsey, and we went through your financial boot camp book at that point. So we did a modified debt snowball. We listed everything out from least amount to highest amount and put the interest rate with it, because I just could not justify doing a lower amount with no interest on it before we paid off some of the other things, like a higher institute interest rate. I remember listening to one of your podcasts at one point, and you said somebody had called in and was having this question about pay off the debt or invest, and their debt was over 9%. And you could hear it in your voice that you had very strong opinions about where that money should be going. And you called it a debt emergency. And I will tell you, at that time, our credit cards were definitely over 9%. And we had a consolidation loan that we had taken some of this debt in and consolidated it down, and that was over 9%. And I was looking at it, and I was like, I have like 10 digits worth of 9% plus debt right now. And so we just went after that. We just, you know, anything we could to get it down. Obviously, as you pay things down, as you make more money, people want to offer you better rates, better loans, no interest, you know. And so we just started attacking it and going at it with the modified debt snowball. And we're still working with that.

Yeah.

So what's your net worth today?

$175,000.

Okay.

It took us a little while to get you on it.

Sounds like.

Well, well, it was one of those things. We got to the zero, and I was like, okay, yeah, I'm going to apply for it. And then I was like, well, let's just make sure that we're actually at that before I hit the submit button. So once. Once I had over $100,000 in my retirement account. I was like, okay, even if I run the numbers and it's still a little off, I have something good to celebrate.

Okay, very cool, Very cool.

So what debts do you still have?

So we still have a mortgage. We're still paying on the mortgage, and we still have a decent amount of student loans still. One of the things that I think I learned about investing in a way that hopefully not everybody has to learn it is compound interest in the opposite direction. So, you know, it was $50,000 loan for my master's degree. And that was in. That was 12 years ago now. And that was at what, 7 or 8%. And that had ballooned up to over $115,000 before I got out of training. Like, it had more than doubled. And I just could not wrap my head around that math. Like, how does that happen? And so then, you know, you learn about compound interest and what that looks like and how to maybe help it or make it work for you instead of against you. And so we're working on that now. We max out our 403bs and my 401k because we consider that part of our total compensation. So we've done that. We have not been putting any extra into like Roths or anything like that just because we have been prioritizing our debt and getting that down. You know, there was a point where almost 78% of our total after tax income was going towards wealth accumulation, whether it was like savings or. And that was too tight for us. 78% was uncomfortable. Like, I don't recommend that. Like, that was. The pendulum went too far in the wrong direction. But I do think, like, we're very comfortable putting a lot of our money now towards debt or towards wealth accumulation just because we've tried to keep things, you know, where we're prioritizing paying down that debt. So what did I say? Mortgage, Student loan. We still have student loans. I still have like $265,000 of student loans. It's still like, not an insignificant amount, but we pay more on that every month than we pay on a mortgage. What else do we have? We've completely paid off the cars. We're down to. We have about $10,000 left in credit card debt, but it is 0% balance transfer. We're just putting a flat rate down on that every month. So that feels good to not have any. We don't have any debt that is more than 4% interest right now, which is.

Feels pretty good when inflation's at 4%.

You can stomach it. You can stomach it.

Very cool.

Yeah, yeah, yeah.

Well, okay. There's somebody out there like you that's been saying, I'm going to take care of this when I make the big bucks. Maybe they're halfway through residency or med school or whatever. What advice do you have for them?

Come up with a plan for your money. Your money is not Monopoly money, and it is going to impact a lot of the decisions in your life. And so come up with a plan for it. And it doesn't matter how you do it. We have kind of done it a couple of different ways. We did your financial Bootcamp, which the book that I liked a lot. I kept wanting to skip chapters, right? And at the bottom, it'd say, if you can skip this chapter, if. Blah, blah, blah, blah, blah. I couldn't skip the chapter, so I had to go through and do it. Just having that accountability was actually really nice. We're about 40% of the way through your fire your financial advisor course. I would say get an awareness of where you are and look at where your money is going. It's unbelievable how much money can leak out if you're not paying attention to it. And so the first thing I would just say is get a plan for your money and know where it's going and then acknowledge your strengths and your weaknesses. Like I said, we were great earners. I busted tail. I moonlighted my tail off. I got new moonlighting opportunities in training that nobody else had had before just because it made me more money and it got me better experiences. But that wasn't enough because we weren't good savers and we weren't good spenders. We weren't spending our money on meaningful experiences. We were spending it on, you know, it was just flying out. I couldn't even tell you really what it was spending on, and that wasn't a good idea. And then I say, too, just like in medicine, first do no harm, prevention is really imperative. I'm a family medicine doc, so I believe wholeheartedly in prevention. I've experienced compound interest work against me, and I would say do everything you can to not let that happen, and do as much as you can to put yourself on a good foot today and hopefully tomorrow.

Awesome. Good advice.

All right, well, Mandy, congratulations. This is pretty awesome. You have done something incredible. Raising that net worth by 440,000. Actually, more than that. Closer to 600,000 in just three years at the trajectory you are on, you're going to retire a multi, multi millionaire. And that's pretty awesome, you know, to.

Go from broke to there in just a few more years.

So congratulations to you. Thank you so much for coming on the podcast and inspiring others to do the same.

Thank you so much. I appreciate it.

All right.

I hope you enjoyed that interview.

It went a little longer than some of our interviews, but we went really quickly because it was such a fascinating story to listen to someone who has really just turned things around, had immense success right at the beginning of her career, despite not starting in an awesome place. Right. There's a lot of you out there that owe 200, 300, 400, $500,000 in student loans that aren't starting in an awesome place. But I hope podcasts like this give you a great deal of hope. Yes, she's still in the middle of the process, right? There's still a whole bunch of student loans to pay off, but look what's been accomplished. A swing of $600,000 in net worth in just three years. Right? And you know what? It's probably never going to go slower than that. They're probably going to build their net worth by at least that much every year for the rest of their careers and maybe even into retirement. It's hardest at the beginning. And if you can just get started, get a plan in place and start following it, great things happen. All right, I promised you at the.

Beginning, we're going to talk a little.

Bit about tenant landlord contracts. And a lot of people are just starting out in real estate investing and they don't pay as much attention to this as they should. For the most part, most contracts by mom and pop investors are not detailed enough. That contract needs to take into account all of the laws in your local area. You can't just use a generic one that you printed out of a book book or you print it off online or whatever that applies to another state. You need to have a contract that applies to your state and local area because landlord law is very local and you have to follow it. Your contract needs to follow every bit of landlord law. If you're required to give somebody 60 days after they stop paying, before you can evict them, you need to give them 60 days. If you're required to give them written notice, you need to make sure you give them written notice. So what the contract is, it spells out exactly how this relationship is going work and what is going to happen in the event that they don't pay, in the event that the house or something in the house breaks, in the event that whatever happens, it needs to spell all those things out and say exactly what is going to happen, what your responsibilities are as a landlord, what their responsibilities are as the tenant. Okay? And you need to explain this contract to them. When you rent out the place in the beginning, that this is the way things are going to work. Very clear. Fair, but clear. And then once you have this fair contract in place, you enforce it strictly. If the contract says if they haven't paid their rent by the 10th of the month, you're going to begin eviction proceedings on the 10th of the month, give them the written notice and start those proceedings, right? Whatever the contract says, that's what you need to follow. That is fair. That is treating them well. You are not being a slumlord by enforcing the contract that they signed voluntarily. That is a fair contract that follows all applicable laws.

But if you do not put these.

Sorts of contracts into place, you're going to have a miserable time as a landlord. You're not going to be successful in your real estate investing. It's going to be a curse in your life and not a blessing. It is going to make you miserable. So you need to have strong contracts in place that are legal, that are very clear, and that have been well explained to the tenant. And then you need to keep up your part. The tenant calls you and the dishwasher's not working. You need to get somebody in there to fix the dishwasher in the next couple days, right? It's not okay to leave mold all up and down the bathroom, right? Just like it's not okay for them to not clean the lint out of the dryer and cause a dryer fire or cause the machine to wear out early. It's like it's whoever's responsibility it is to take care of the landscaping needs to be taken care of, right? So work all those things out in the contract and then follow it strictly and expect them to do the same if they won't get them out of there. There are plenty of great tenants out there. You don't need to deal with a crummy one. Charge market rents and you will get a good tenant in there. When you have to evict somebody charging more than the market rent, it may sit empty for a long time. So charge market rents, Raise your rents if they're too low, lower your rents if they're too high. Charge the fair price that's going in your area.

If you are finding our podcast informative and helpful, check out our website. Since 2011, we've been working hard to provide valuable personal finance and investing information. Through thousands of blog posts written by an array of authors, you can find information on how to manage your student loans, fix and avoid common financial mistakes, understand your retirement accounts, optimize your investments, find professional help at a fair price, get started investing in real estate, and so much more, all at no cost to you. You can find out more about the courses we offer, the conferences we put on, the newsletters we provide, and interact with other WCI readers through our online forum. Head on over to whitecoatinvestor.com to start learning today. You can do this. And the White Coat Investor can help.

All right, enough about real estate. This is the Milestones Podcast. We enjoy having you here. We are trying to help you. We want you to be successful. We want you to be able to not worry about money as you practice medicine, as you practice law, as you build your business. We want you to be able to concentrate on your patients and on your co workers and on your family, on your partner, on your own wellness. And the way you do that is by having a financial plan in place. So get a plan in place. If you need help, hire help. If you need more education, read our books, take our courses, listen to more podcasts, read the blog, read the newsletters. Right. 98% of what we're producing here at White Coat Investor is totally free to you. And a good part of the rest of it is very inexpensive. So get out there, get yourself educated, develop some financial discipline, be successful. You can be financially successful and still be a good doc or a good dentist or a good attorney or whatever and be successful. So get out there and do it. Keep your head up, shoulders back. You've got this. We'll see you next time on the Milestones 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.