MtoM #190: Pediatric Dentist Hits Net Worth of $6 Million and Finance 101: Expense Ratios

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

Hey everybody, it's Megan, your podcast producer. I'm just here to remind you that Dr. Dali is still resting and recovering from his accident. But don't worry, he will be back soon. He's doing well. Please enjoy this episode.

Welcome to Milestones to Millionaire podcast number 190. Pediatric dentist hits net worth of $6 million. Sponsor today is Mortar Group. Mortar Group is a premier real estate investment firm focused on multifamily properties in both ground up and value add projects in the competitive markets of New York City since the early 2000s. With over $300 million in assets under management and over 30 investments since inception, their fully integrated firm model allows Mortar to maximize efficiency and value across their investments in these niche markets. Mortar leverages over two decades of experience in architecture, development and asset management in their projects to build value and minimize risk for investors. Invest in tax efficient high return risk adjusted strategies with mortar group@whitecoatinvestor.com mortar we've got a great interview today. It was so exciting talking to this guy. Great story to tell. That's coming up. And after that, for Finance 101, we're going to talk about expense ratios. So stick around after the interview this week. Let's welcome Phil to the Milestones Millionaire podcast. Phil, good to see you. How are you?

I'm doing fantastic. How about yourself?

I'm doing very well, thank you. We have an exciting milestone for you today. You have hit a net worth of 4.5 million. You're basically halfway to being a DECA millionaire. That's incredible when somebody says that to you, you're at this point 4.5 million. You're halfway to being a DECA millionaire. What swims through your head?

For me, it just, it means more time with the family. That's, it's, it doesn't equate into kind of anything like a big purchase or of that sort, but really just means, okay, I can kind of do this now because I enjoy it and there is no kind of obligation to where I have to keep doing this, you know, indefinitely. Or I can kind of hang it up tomorrow if I really wanted to and that would be fine. So the kind of freedom and not being tied to it, I get to do it because I like it and not because I have to.

That's, that's great. So do you, are you, do you consider yourself financially independent?

Yes, Yes, I do. Yeah. And I know however long ago it was when I filled out, you know, the questionnaire about net worth. I actually just went through everything briefly yesterday, and it's now it's. If you include some home equity, it's about 6. Like 6 million.

So that is a pretty big jump in a not very long span. How'd that happen?

I think the 4.5 was just low because I kind of did it on the spot. I might have been in between some patients or something when I was filling out the paper on the computer.

So you're more than halfway to being a DECA millionaire. That's awesome. Okay, so let's break it down. What is your profession, and how far are you out of school?

So I am a pediatric dentist, and I've been practicing pediatric dentistry since 2013. So 11 years, pretty much on the head. I was a general dentist for a couple years before going back to be a specialist. So for two years I was a general dentist, and then 13, or excuse me, 11 years as a pediatric dentist. So 13 years total.

How come the decision to go back and specialize?

I think, you know, after being in school for so long, to be. To be a dentist, you kind of. I wasn't 100% certain I wanted to be a specialist, so I was like, you know, I've been in school long enough. Let's, you know, you know, start making some. Some money. And then as I got out during that time, I was like, you know what? I do like being a general dentist, but I think I want to be a specialist. I always had it in the back of my mind. And now that I've kind of been in the real world, so to speak, I was like, let's. Let's go for it. So I went general dentist for two years and then went back to pediatric dental residency up in Philadelphia.

Oh, so that's okay. So let's talk about salary ranges. Then you were a general dentist. Now you're a specialist. So what's the salary ranges from. From then to now?

So, yeah, great question. As a general dentist, the base pay that I got, it was a contract that I signed. It was $125,000 per year, a typical nine to five work week, five days a week. And so I pretty much made that for two years. Sometimes I would go above. If you do a certain amount of production, you know, you get kind of a bonus. So there was. Out of 24 months as a general dentist, I've maybe went over to get the bonus, maybe two or three months, and that equated to maybe an extra five grand. So not. Not A huge amount. And then after, when I went to residency, when I did apply, I wanted to go to a residency. Some you have to pay tuition all over again. And some residencies, you actually get paid like your hospital staff. So I was like, you know what, I think I can get in. I'm going to go apply to ones where you're actually on salary. And at Temple University, where I did my pediatric dental residency, our salary was like $49,000 for a first year, and it went up to like 52,000 for a second year. So the same pay grade as a medical resident. So, you know, some schools you would have to pay 50,000 a year. So that's, that's $100,000 swing for each of the two years of school. So fortunate that worked out. And then my first year practicing pediatric dentistry, I would say for the first two or three years, I was making probably 350,000 a year. And then one year I worked more than 40 hours a week. And this was probably 2017, 2018. So a few years before COVID and just it was a perfect year. Minimal cancellations in the office, kids not getting sick from a hospital, cases where those who had to get canceled. So just from salary alone, I was able to eclipse 700,000 for that year. So it was like 705, something like that. And it's never quite been that high, especially since after Covid, but it's starting to tick back up there. So you're talking about to sum it all up from a general dentist at $125,000 per year to pretty much a five times increase up to say 600,000 a year just from being a specialist and being efficient in what I do.

Good decision to go back to residency then, huh?

Yeah, no, it worked out. I always think, you know, what would I have done if I didn't go back to the Specialized? And I'm sure one way or the other, I would have, you know, done something on the side like I kind of do now.

Yeah, because I mean, if you're making $125,000 and maybe you bump it up every year, maybe maybe you'd be making say 200k this year as a general dentist, there's no way you'd have $6 million, right?

Probably not. I'm super frugal. And I know if we get to that, talking about that later, but no, that would be very, very difficult to get to that point so quickly.

Do you think you would have gone back to residency if you had to pay?

I think I would have just to know that, like I said, that was about $100,000 per year swing for two years of getting paid versus not getting paid. But I would have made it work. So even though you paid 50,000, I probably wouldn't. Had to, would not have had to get a loan for all that, but I probably would have had another 50,000 in debt, I would say. So I would still go back because I could see the long term financial gain anyway.

Sure. Are you still in, in the Philly area? What part of the country are you in?

No, we're in Fleming Island, Florida. So that's like pretty much like a segment of Jacksonville, Florida.

Okay, so what's. Well, I mean Florida is not like necessarily low cost of living area.

No, Jacksonville for the most part is still pretty. Yeah, it is pretty low. So factoring real estate, obviously no state income tax in Florida, but it's, it's relatively, it's not somewhere it's not as expensive like you know, Florida, Fort Myers, Miami, those sorts of areas down south.

Palm Beach.

Exactly. Palm Beach, Jacksonville is pretty pretty economical and so is Fleming Island.

Is that. So is there some geographic arbitrage at play there as well or. I don't know what part of the.

Country you're from originally, but yeah, I'm originally from Kentucky. My wife and I are from Kentucky. So we actually just came down here on a whim. We vacationed here once and said hey, it's great weather if people vacation here, it must be something going on. Well, and then kind of the nice little perk was no state income tax. So we just went down here on a whim. Didn't know anybody with a little kiddo too.

So. Okay, so how many in your family now?

So we have two kiddos, 13 year old girl and a 7 year old girl.

Okay, so your net worth is about 6 million. How is that divided up?

Yep. So that's, that's including everything as far as what we have equity in homes that we have. So the majority of it, about a little over 4 million is in our Vanguard brokerage account. So that includes a Roth IRA for myself and my wife. We do the back door every year and that includes both of our girls. 529 plans are in there as well. And then all the kind of post tax accounts that are there. So that's four points about, probably about 4.4 million there. And then we have about 40,000. I wrote some of these down here. We have about $40,000 in I bonds. My 401k with our group, I have about 250,000 there in a bank account. And there's a little too much in this, just a low interest checking account. But I have it just if we need it for something that comes up. There's $125,000 there. Another online bank account, we have $50,000 there and our health savings accounts, we have about nine grand between my wife and myself and each of our health savings accounts, our personal residence. Right now we owe 227,000 on it. And it could sell now for 600,000. So that's about 350,000 in equity there. Then we have two rental properties. One is a short term rental on the. It's an oceanfront property and there's 400,000 in equity if we were to sell that. And then our long term rental that we have is, we pay cash for that. So there's no debt on that home. And if we had to sell it now, all those homes are kind of selling for $250,000.

So how does the short term rental cash flow?

I would say that cash flows this year has been probably the slowest year and I think just from economy talks and inflation. So there's less discretionary income for everybody. A perk, though. We'll take the kids up there because we're only an hour away. So we'll just use it if it's not rented. But that on average, I would say we would NET probably about $30,000 every year.

Okay, so you talked a little bit about debt. You have a couple mortgages. Did you have student loan debt come out of school?

Yep. Out of dental school, no undergrad student debt. I was, I had a athletic scholarship and some academic scholarship. So luckily I could go through that with no debt in undergrad. In dental school, I was able to leave with only $50,000 of debt. And a lot of that was from my wife. I couldn't have done any of this without her. And, you know, because she, she's a speech therapist, that's what her profession is. But so she was actually out of school and practicing for two of the four years I was in dental school. And pretty much all of her salary was what paid our bills and allowed, allowed me to take out such, such little amounts of loans. And, you know, I can be extreme in frugality and, you know, a lot of people wouldn't have put up with what I did. But even though, but I kept reassuring her that was a method to the madness. But yeah, no, none of this is possible without her. She was able to really kind of forfeit any of her luxuries from her being the sole breadwinner at the time, just so I could take out as few loans as possible. So a lot of that having such little debt is from her literally kind of paying for school as much as she could.

I mean, it's interesting the kind of discussions you may have had with her about frugality and about saving money. Were you guys always on the same page financially or did or how was it for you guys?

I would say she's kind of middle of the road as far as saving and spending, where I've had numerous talks about this. I know I can be at the extreme end of saving to where it's almost. It's overkill. An example I can use is. I always remember this, one of our utility bills when we lived in, because I did dental school at the University of Kentucky. Like I said, I'm from Kentucky. One of our utility bills for the month was like, $18, which is like, I don't know. Like, I think base charges. I don't even know how it got that low.

So studying in the dark, how'd that work?

Yeah, right. So it was just that stuff that she. She put up with. But, you know, I always said, this is temporary. I'm trying to. Let's get out of here with the least amount of debt as possible. Because, you know, I had classmates six times that amount of debt six, seven times now. But, you know, she. She keeps me, even though I'm still frugal to this day. I think I've made a lot of progress. But even she has to, like, slap some sense into me because I could. I could borderline save just to be saving, which makes, like, no sense whatsoever, right?

Well, yeah, I mean, that's, That's. That's the big question. Like, see, you've amassed this. This huge nest egg. It sounds like you. You don't have to work if you don't want to. Financially independent.

Sure.

At what point is. I mean, Jim talks about this. How much is. How much is enough? But for you, who certainly has a mindset of saving, saving, saving, I'm going to study by candlelight and have an $18 utility bill. How do you then go to be like, oh, okay, let's spend some money. Now, how do you make that transition in your mindset?

Right? And that is a dilemma with me. I remember when we first got married and her late father said, phil, it's going to be hard for you to turn on spending this one day. I'm like, oh, no, that's the easy Part when in reality I am comfortable now with the last doll I have. But it is still harder for me to spend money than it is to save money. And I read a book recently, I'm sure you guys are familiar, but Die with Zero and that kind of opened my eyes a little bit where the concept of almost working for free, that kind of makes it a little more tangible. So if you have all this money and you're just saving to be saving, then you're literally working for free because you'll never use any of that money. So I'm really trying to make a conscious effort here. So I bought a new vehicle in 2019, as you probably assume paid cash for it. But up until then I was driving the vehicle I had in high school. So that year I made 700. I was still driving like the vehicle I had in high school. A five speed Toyota Celica, manual transmission. Love that thing. But you know, pulling into the physician parking lot, they're like, dude, who's parking in here?

Let's get a tow truck out here. This car doesn't belong in here.

Yeah, right. I have all kinds of funny stories like that. But for me now, you know, as hopefully everyone gets more mature as they age, I'm really making a conscious effort to spend what I have and because I get it. And my wife kind of always puts it in perspective that you know, you know, they're saying you can't take it with you. But still, even for me, I am always and probably forever will always be more comfortable if I had to save or suspend. But I think I've made progress and I still have more progress to go. But you know, I did buy a nice vehicle, my wife has a nice vehicle, we have a nice home. It's nowhere near what I qualified for, to borrow for. So, you know, I'm making progress because I tell my wife, you know, bear with me because I think I'm still spending a ton because I could be like, have a much smaller house, even older car. But so I'm making progress. I know that I'm the outlier.

Have you, have you made first class reservations yet for an airplane? Have you done that yet? That's, that's the next step for you.

We did not do that. But for our 15 year wedding anniversary we did, which is 2020 covet. I did splurge and I got us over the water bungalows at a Sandals resort. But Covid happened and it got canceled. So I did, I pulled the trigger. I did pull the trigger.

Some. Somebody was saying not yet. Phil. Not yet.

Yeah, but that was a pretty penny. But any Covid happened, and it was. I think it was in May, they closed everything. But. So I. I've pulled some. I pulled some bigger purchases now.

All right, well, I believe in you. I believe you can make it happen.

I think I can do it. And you know the crazy thing? Once I do purchase it, I mean, it's like, it's. To what we have. It's such a nominal amount that, like, you don't even miss it from the checking account. And then it's like, okay, that wasn't that bad. I can do this.

I mean, if you. If you would have gone to that Sandals Resort is very likely you could have come back a richer person than when you left, even though you spent a bunch of money on that. Right? So.

Sure. Right.

Okay, Phil. So, you know, you obviously have a lot of advice to give. I think you've changed career slightly. You've made a bunch of money. You're trying to get your spending not in check, whatever the opposite of in check is. What do you. What kind of advice do you have for somebody who is in your position, coming out of school with a little bit of debt, not too much, young family. What kind of advice do you have for someone like that?

I think your relationship with money and how you view that is very important and what gives you true joy. So if you're someone who does, like, accumulating a lot of nice material things, which there's nothing wrong with that. That's one of the things. I understand that. I like nice things, too. But to be attached to that and have your happiness and joy and fulfillment tied to that, I think it's almost impossible to get financial independence. And that's because there's a negative correlation with saving money. Right. If I'm saving money, then I'm depriving myself of something physical that I like. So my correlation, and I think it's just an innate thing. I've never really valued material things too much. I do like them, but if I didn't have them, it would be okay. So, you know, I'd rather stay in a nicer hotel room, but if I didn't have one, if there wasn't one available, I'd be fine staying in whatever. So if you can shift kind of your. What you value. So for me, it's time with my family, it's finding joy in little things, as trite as that sounds. You know, playing with my kids, that doesn't cost anything, really. My hobby of working out and running That's a nominal cost. So saving money is almost on autopilot. And it's not. I'm not. I don't feel like I'm depriving myself of anything. And then along those lines, I think, you know, you hear the word budget all the time. And I think the same thing, the psychology of money that you have. You hear the word budget, all of a sudden you feel kind of a constriction, you feel handcuffs, you feel deprivation. Whereas is, you know, luckily, as I've been to accumulate a decent amount of money, I've never really made a budget, and I've never tracked our spending. And that's because I will save a certain amount first. We're saving this much all the time, and then once ever left over, we can spend freely. So it's kind of like the irs, right? They take what they owe first and then give you the rest. So I don't budget and then save what's left over. Always save a certain amount. And then it's easier to spend because I know we already took care of the savings portion. So all that is easier. If you're again, your relationship with money, what it can provide is something that more free time than material good, so to speak.

Yeah, spoken like a true super saver. That's great, Phil. Hey, congratulations. You're going to be a deca millionaire before you know it. You come back on the podcast probably two years from now when you have that much money, and we'll talk about what you're actually, if you're still practicing, and maybe you'll be. Maybe you'll gone to Sandals by then, and you'll have experienced all that you can experience. But thanks for. Thanks for being here. Appreciate it. Congratulations.

Yeah, my pleasure.

Okay, that was great. Really a lot to learn from Phil, even if you're not the kind of person who's extremely frugal or is a super saver. Phil has some really great ideas, psychologically and just in your normal life of how you can start as a dentist making $125,000 a year, go back to school, learn some new tricks, get into some real estate, and grow your nest egg to $6 million over a short period of time. Really great stuff from Phil. Really happy he was here today.

Okay, Josh, thanks for that great interview. I am Tyler Scott. I'm going to be helping Jim fill In the Finance 101 portions of the podcast while he is recovering. Today's topic is about expense ratios. We want to make sure we continue to expand your financial vocabulary here. And today the goal is to understand the important term of expense ratios. Both individual investments and the accounts that hold those investments can have all kinds of fees to be aware of. There are sales loads, broker commissions, advisory fees, account fees, management fees, redemption fees, transaction fees, 12 B1 fees. It is a cavalcade of fees out there. Today we are going to talk about just one of those types of fees, the one I think you probably read about and hear about most often at WCI as it relates to investment choices, which is the expense ratio. An expense ratio is a measure of a mutual fund or exchange traded fund's operating costs relative to its assets. It is determined by dividing a fund's operating expenses into its net assets. Operating expenses reduce the fund's assets, thereby reducing the return to investors. Because the expense ratio is deducted from the fund's gross return and paid to the fund manager, you never have to calculate the expense ratio. It will always be provided in the fund's prospectus. You can also just Google it if you know the ticker symbol for the fund in question. It's available on analytics sites like Morningstar or Yahoo finance. Good and ethical 401k custodians will provide the expense ratio right on the statement or website where you're looking at the investment options. In financial conversations you will sometimes hear expense ratios expressed as basis points or BIPs. For short, written out BIPs is BPS. When I say basis point that is referring to 1/100th of a percentage point. It is the cost of the investment expressed as a percentage. If you have an investment that has an expense ratio of 0.12% that is the same as saying the fund has an annual fee of 12 basis points. That means you owe 0.12% of the value of your investment each year to the firm that created the investment, like Vanguard or Fidelity. If Your investment is $100,000 you owe 120 bucks as the expense ratio. 12 basis points is a very low cost fund. Sadly, most of the mutual funds and exchange traded funds out there are not low cost funds. It is not uncommon for me to review a client's list of available funds in their 401, 403 or 457 and see that all of the options have expense ratios of 1% or higher. In other words, the fees are 100 basis points and up. When I was working at the Public Health Dental Clinic in Oregon, we had funds in our 457 with 240 basis point fees. That is a ridiculous 2.4% expense ratio. If I had $100,000 in that fund, they would charge me $2,400 each year just to own the fund. Imagine my returns for the year in that fund were 5%. That means the expense ratio consumed a whopping 50% of my investment return for the year. Thus, keeping expense ratios of your investments low should be a goal for any savvy investor. Fortunately, there has been a lot of pressure to lower expense ratios since John Bogle started the index fund revolution at Vanguard in the mid-70s. Today there are many wonderful tax efficient, highly diversified low cost funds available at places like Vanguard, Fidelity, Schwab, etc. Fidelity even offers their so called 0 funds that have an expense ratio of 0. Funds like this can be compelling to people once they learn about expense ratios. Now some folks can become a little obsessive about whether the fund costs 7bps or 9bps. Don't worry about that. Don't become that person. At WCICON 2024 in Orlando, during Jim's talk on index funds he said anything below 20 basis points doesn't matter. The goal is not to go from nine basis points to seven. The goal is to go from 145 basis points to nine. If you don't know the expense ratios on the funds you are using, go find out. A good investor always knows what they are paying for their investments. Good luck out there you guys. You got this Mortar Group is a.

Premier real estate investment firm focused on multifamily properties in both ground up and value add projects in the competitive markets of New York City since the early 2000s. With over $300 million in assets under management and over 30 investments since inception, their fully integrated firm model allows Mortar to maximize efficiency and value across their investments in these niche markets. Mortar leverages over two decades of experience in architecture, development and asset management in their projects to build value and minimize risk for investors. Invest in tax efficient high return risk adjusted strategies with mortar group@whitecoininvestor.com Mortar thanks for joining us today. We'll see you next week on Milestones to Millionaire.

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