MtoM #20 - Psy-Fi MD Millionaire

This is the White Coat Investor podcast Milestones to Millionaire. Celebrating stories of success along the journey to financial freedom. Here is your host, Dr. Jim Dali. This Milestones to Millionaire podcast number 20 Syfy MD Millionaire studentloanadvice.com is a White coat investor company created to help doctors, dentists and other high earners tackle and defeat their student debt. Letting a professional guide you through the best options to manage your loans will save you hours of research and stress and potentially save hundreds to thousands to even more dollars with your custom student loan plan. Book a consult with Andrew Paulson, the lead student loan consultant and co founder of studentloanadvice.com today. All right, I was on the Reddit the other day in the White Coat Investors subreddit and came to my attention a thread there about one of our Milestones to millionaire episodes, number 10. Apparently when we did the episode, the numbers in the episode, this was a Millionaire episode, didn't quite add up to a million dollars. And what it turned out to be, once we dove into it, was that person had actually reported them wrong a little bit and had rather than the value of the home, they'd use the equity of the home. At any rate, all the numbers actually did add up to them being millionaires. And so don't worry, they still qualified as millionaires. But. But it kind of illustrated a point, right? We're not auditing people on this podcast. They don't have to send in their brokerage statements and their Zillow of their house to show that they're actually millionaires. All right? We're taking their word for it. And the podcast is meant for inspiration, right? For people who have done something cool financially and we want to celebrate with them and we want to use their experience to inspire others to do the same. So obviously, some people are going to have an easier time than others, right? If you come out of medical school with no debt because your parents paid for your medical school, it's going to be a whole lot easier for you to become a millionaire than it is somebody who, you know is an associate dentist with $470,000 in student loans coming out. You know, it's just going to be easier for some people than others, and that's okay. What we hope is that over months and years that we'll have somebody on the podcast whose situation is similar to yours that you can take inspiration from and take that and apply the lessons learned in your own financial life. All right, we've got another great guest today. He's going to stay anonymous but has a Twitter handle, SciFiMD. So let's bring him on. All right. Welcome to the White Coat Investor podcast.

Hey, Jim. Good to be on.

Great to have you here. You are a millionaire. Congratulations on that.

Thank you. Thank you.

Tell our listeners what specialty you practice and how far you are out of training.

Sure. I'm an anesthesiologist and I am year nine out of training.

Awesome. And what is your approximate net worth?

It's right around a million dollars.

Okay, and what's that divided up into?

Sure. So it is about 900k in traditional index mutual funds with about 180k in a taxable account. And then the rest of that number is in retirement accounts. Yeah, within retirement accounts. 401k, Roth, IRA, HSA. I have about 50k in a singular private real estate fund. And then we have about 100k in cash for spending goals and emergency fund.

Okay. Home, home equity, anything like that.

Currently, we. We have just relocated, so we currently. We currently don't own a home we rent for right now.

Okay, awesome. So what's been your range of income throughout your career over the last nine years?

Sure. So I started as low as 225k a year and it's been as high as 530k.

So quite a range there. Maybe we should have a different episode where we talk about how you managed to double your income, because that's pretty awesome, right?

Yeah.

So how long did it take you to become a millionaire? This just happened. So nine years out of residency.

Is that nine years out of residency? Well, we had quite a few roadblocks during the journey. It basically started out with my spouse, who's actually a practicing dentist, having her career ended by a disability, a hand injury.

Sorry to hear that.

Yeah, well, I mean, luckily, since we listened to you, we secured own occupation disability insurance.

Thank goodness.

Yeah. And we've been able to get by just fine with my income and the disability coverage.

So can I pause right there? Because obviously that's a fairly unique thing among people on this podcast. Right. I mean, a lot of times I'm always telling people, make sure you get enough disability insurance that not only can you pay for your living expenses, but you can also save for retirement. You know, and there's probably a lot of people in your situation that would have said, I'm married to an anesthesiologist. Maybe I don't need disability insurance at all.

Right.

So I want to ask you about what your thought process as you decided to get disability insurance. What was it that you guys decided to get it for, you know, we.

I was, I was maybe a CA2 or CA3. So almost final year of residency. And I had it, I had received it. And then the disability insurance agent who, who we worked with also decided, also sort of told us and convinced us how important it was for my spouse to have the same sort of coverage, you know, because you just, you never know. And then here's one thing that, you know, I don't hear nearly as often. Not only is your income threatened when you become disabled, but your expenses go up in disability. And that's like sort of that, you know, that black box that nobody talks about. You know, sure, you have health insurance and things of that nature, but, you know, frequently, you know, some of the physical therapy, rehab, all these things, they're not 100% covered by health insurance. So you are dipping into your pocket to help with that disability from using those funds. So that's another reason why disability insurance is so important, even if you're a high income earning couple.

So did you have any trouble with the claims process? Was that a big pain in the butt to actually qualify your spouse for the benefits or was it really smooth?

That is another interesting story. So this is where having a good disability insurance agent matters. Basically, the insurance agent we had gave my spouse bad advice. She was starting winding down from her work, so she just couldn't do the procedures that she normally did. And he essentially told my spouse that, no, don't claim disability now, even though we had a residual disability rider. And that was not good advice. So another nugget there is that make sure you know the person who's going to be providing you the insurance, that they actually know what they're doing on the back end of it. If something should go wrong, they know exactly the steps to do. Fortunately, we switched to Larry Keller, who's just been, you know, a boon to us, like, incredible in terms of getting this sorted out and continuing. And we had to fight with the disability a little bit, to be honest with you. We did use attorneys and things like that, and it got sorted out, but she's receiving her benefit.

Bummer that you had to go through all that. All right, so that was one of the obstacles you ran into. You mentioned that you had multiple obstacles. What else have you had to overcome in the last nine years?

Right. So we had to sell the practice. I mean, talk about an illiquid asset. I cannot think of anything more liquid than a dental practice. So. So we had to sell the asset. We had taken a loan out on it. And so we had to also get rid of that loan. And then we basically had to. We moved to another area of the United States just to sort of reestablish our life and just pick up again.

So did you end up. Do you feel like you had to sell it on a fire sale or do you make money on the practice or you had to support it with your anesthesiologist income, or what ended up happening?

We actually ended up selling it on a fire sale, and part of the home equity was wiped out from that, from our home in the original in the northeast, where we were.

All right, so despite those challenges, you still managed to become a millionaire nine years out of residency. So what were your secrets to success?

Sure. We basically, after those incidents happened, we decided that we just want to be more intentional. You know, we're. We're just living life, you know, just muddling through, and we really wanted to be intentional. So what we did was, you know, we set our life with a little bit of flexibility. We rented where we were. We. We increased our savings rate. We were already maximizing our retirement accounts, but we started also increasing the amount that we were investing, you know, in.

A taxable account, and that was about it, huh?

Yeah. And, you know, just kept our expenses low. You know, we. We said, listen, we're gonna, we're gonna, we're gonna, we're gonna start all over again, and we just want to do it the right way. Let's really increase our net worth. I mean, we, we also paid off my spouse's student loans, and we actually paid down most of my student loans. I have just a little bit left. I have about 70k in my, my student loans. And, you know, I know we're all proponents of getting rid of debt, but I guess I should tell you that the only reason I'm keeping it is because it's at a variable interest rate of 0.08%.

That might be a new low for me. 0.08. Now, that's more than the people with federal loans right now are paying on their 0% ones, but it's awfully close. All right, so what was your net worth when you came out of training? Do you remember? Do you have any idea what it was nine years ago?

Yeah, it was basically what our two grad loans were. So it's like negative 500k.

Negative 500k to a million dollars in nine years. Pretty awesome. And what about parental help? They pay for any of your schooling or do you get any sort of an inheritance, really?

Our parents paid for our college education. And I feel very blessed about that because that number obviously would have been higher without that.

And besides those student loans you told us about, do you have any other debt currently?

That's the only one. The student loan.

And are you parents? Do you have kids?

Yep, we have one. Eight year old.

Okay. How do you balance being a parent with becoming a millionaire?

I think it's the same as anyone else who's trying to balance their life with being a parent. We just try to. The important things is we sort of want to teach him about the value of money, the value of hard work, the value of giving and being charitable, things like that.

Do you think you got those lessons from your parents or do you feel like you've had to learn it all yourself?

I believe that I definitely got a lot of those lessons from my folks about just working hard, living under, living below your means, and giving back. Yeah.

Cool. Now there's somebody out there listening to this podcast. They're like you were nine years ago. Maybe they're just coming out of training. Maybe they owe $500,000 in student loans and they can only dream of being where you're at right now, not only being rid of those loans for the most part, but having a million dollars. Right? What. What advice do you have for them?

So I guess my. My big thing is take on debt with caution. You are taking on risk when you take on debt, so make sure it's worth it. Obviously, protect yourself the way we did with disability and life insurance. I would say pay close attention to your savings rate, because in the very beginning, as you said, your savings rate will determine the size of your nest egg early on in your career. The other thing is be intentional. Get on the same page with your spouse if you're married, or just set some goals. Set some financial goals for yourself, and then set a timeline and set a date and work backwards from there.

Shouldn't be a surprise when you get rich, huh? Should be a known outcome. Awesome. Well, your story is very inspiring. Thank you so much for coming on the White Coat Investor, or rather the Milestones to Millionaire podcast. And we'll share your story broadly, and hopefully it'll inspire people to do exactly what you've done.

Excellent. Thank you, Jim, for having me on.

Bye. Bye. All right. That was a really fun episode. It's interesting to hear some of the things that they had to overcome en route to becoming millionaires. That's real life, right? Bad things happen along the way. But a good lesson there in the importance of having an insurance plan in place early on. Obviously that would have been even more of a financial hit if they had not had disability insurance. Andrew Paulson is the lead student loan Consultant and co founder of studentloanadvice.com with a master's Degree in Accounting and a Certified Student Loan Professional Designation. From Andrew, you'll receive a customized student loan plan using the principles of the White Coat Investors, saving you hours of research and stress and potentially saving thousands or even tens of thousands of dollars. Andrew can get you answers to all of your student loan questions, clarity about your financial future and start you down the right path towards financial independence. Book a consult with andrew@studentloanadvice.com today. We'll see you next time on the Milestones to Millionaire podcast.

My dad your host, Dr. Dahl, is a practicing emergency physician, blogger, author and podcaster. He is not a licensed accountant, attorney or financial advisor so this podcast is for your entertainment and information only and should not be considered official personalized financial advice.

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