MtoM #209: OBGYN Takes 5 Months Off and Still Builds Wealth and Finance 101: Treasury Direct

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 209. OBGYN takes five months off and still builds wealth With Wetherby Healthcare, you choose your own healthcare career path. Our locums experts then support you every step of the way, helping you find the right opportunities at the right times. We understand your professional and personal goals and are experts at helping you achieve them. Let's keep your career interesting with new locations and settings and diverse patients and cases. And just as importantly, let's make sure you get more free time for your hobbies or to just relax. We'll help you find that balance with more jobs and more locations. Weatherby gets you where you want to go. Learn more@whitecoatinvestor.com Weatherby all right, welcome back to the podcast. This podcast is about you. We use your successes to inspire others to do the same. If you'd like to be a guest on this podcast, you can apply@whitecoatinvestor.com Milestones. All right, for all of you medical and dental students out there, other professional students, too, this probably applies, but it's specifically aimed at medical and dental students. We're going to talk about what you need to know about money. Okay? This is free information that can literally make a difference worth millions of dollars over the course of your career. You simply cannot afford to wait until the big paychecks start rolling in to learn about money. And you certainly don't want to do what lots of doctors before you have done, which is to wait until you're about wanting to retire before you start learning about money. We're going to put together a webinar, and this webinar is going to run February 12, 6pm Mountains. That's five Pacific, right? That's 8pm on the east Coast. This is the presentation I would give to you if you were flying me out to speak at your medical or dental school. And just like I would if I was out there in person, you're going to stick around afterward and answer your questions. So we've done this before. It's been very successful. We've had hundreds and hundreds and hundreds of students on it, and we usually stick around for an hour or two afterward. I say we because I'm going to bring Andrew Paulson on with me. Andrew might be the world's leading authority on physician student loan management. He's the principal behind studentloanadvice.com, which is the student loan advice company we started four plus years ago. Now I think he's consulted on nearly a billion dollars in student loans already. And so he knows his stuff on that. And obviously that's a big important topic to medical and dental students. Right. A lot of you owe 200, 300, 400, $500,000 in student loans. It's not the only topic we're going to cover though. We're going to talk about why your patients need you to be financially literate. We're going to talk about the secret to being a financially successful doc. We're going to talk about how to not worry about student loans, how to save money during residency interviews. Although they're a lot less expensive than they used to be, why buying a house during residency might not be a great idea and more so please join us. This is going to be February 12th at 6pm Mountain and you can sign up at whitecoatinvestor.com studentwebinar today we've got a great interview. It's a new milestone, one we've never done on this podcast before. And so I always love doing cool new stuff. You guys come up with that we can celebrate with you and use to inspire others. But stick around afterward. We're going to talk about treasurydirect. As the owner of three treasurydirect accounts, I can tell you a lot about it and why you may or may not want to use it. So stick around after the interview. Our guest today on the Milestones podcast is Olivia. Olivia, welcome to the podcast.

Thank you for having me.

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

Yeah, so I am an OB GYN. I'm about 2 1/2 years out of residency and I live in California.

Very cool. Now we're celebrating a milestone today that I don't think we've ever celebrated before in 208 prior episodes. Tell us what you've accomplished.

Yeah, so I took a five month maternity leave.

Well, that by itself is not what I'm most impressed about. Right. I mean, granted it's good for anybody to be able to take a five month maternity leave, but there are some things financially that have to happen, especially in California for you to take a five month maternity leave. And it sounds to me like you actually were ahead financially after five months rather than being broke. Is that right?

Yes, yes. So, you know, it is my husband and I, but yes, I took a five month maternity leave and somehow we continued to build wealth during that time. So.

Okay. Now you're a gynecologist. What does your husband do for a living?

He's a family medicine physician.

Okay, so he's a doc as well. And are you in a particularly expensive part of California or are you in one of the really expensive but not terribly expensive places?

Yes, I'm in one of the more affordable parts of California, which is still probably medium cost of living area compared to the rest of the country.

Okay. Now you took this five month maternity leave in 2024 or what year was it?

Yeah, 2024.

Okay. So were you both attendings for all of 2023?

Yes. Yeah.

Okay, so approximately what was your 2023 combined income?

2023? We made about five hundred and fifty. $550,000? Yeah.

Okay, and how much did that drop in 2024 with you taking five months off? Did he take a paternity leave or were you the only one who really took significant leave?

He took about six weeks total.

Okay, so not insignificant.

Yeah.

So he took six weeks off, you took five months off.

Yes.

Was any of it paid, any of the parental leave paid?

Some of it was paid. California does have some nice benefits. So we did get. I got state disability for the time I was on pregnancy disability leave, and then we also have paid family leave for the state. So it's less money than you would make as a doc, but it's not nothing. And then my group also had a temporary short term disability policy, which I got for several weeks as well. So when we calculated all those different. And through my group leave policy, it was about $50,000 between the both of us.

Okay, so I don't know, maybe you haven't added this up for 2024, but I'm curious how much your income dropped from 2023 to 2024 with all that leave?

Oh, yes. We were calculating this last night. We made about 470 for 2024.

Okay, so that's about an $80,000 drop. Some of that goes to taxes, obviously, but. But it's not terrible. That's not a terrible drop.

No, it actually wasn't too bad. Yeah.

Was that smaller than you expected it would be going in? I mean, you're probably pregnant at the beginning of 2024 and you thought, oh boy, this is going to be a rough year.

Yeah, yeah, exactly. So it was. Actually we didn't think that it would be such a small drop. We thought it was going to be significantly more. So like going into 2024, you know, 2023, we maxed out all of our retirement accounts early on, for 2024, we kind of held back and saved up that money. I had the baby in March, so, you know, I started maternity leave in early February. So we really just kind of waited to put any money into 401ks or anything else until after it kind of seemed how things were going to pan out.

Kind of saved up a war chest.

Yeah, yeah.

Because you never know what's gonna happen. I mean, crazy things can happen as you know, as a gynecologist.

Yes, yes.

Were you able to come back later in the year and catch up and kind of max everything out that you typically do?

Yeah, we did. We did. And then actually, I really became financially literate during maternity leave, and I even.

Discovered that good use of that time. Right. It turns out that you can, you know, feed a baby and read stuff at the same time. Huh?

Yeah. It was actually mainly a lot of podcasting, so I got these, like, bone conduction headphones. And then while I was holding the baby, my hands are busy, but I can listen to things. So I just did a lot of listening to a lot of podcasts, and that's really how I learned. But even during that time, I discovered that my group actually had a mega backdoor Roth that I didn't even realize that we had. So I'm sure they said it, but I just didn't process it. So we were actually even able to max out that this year, too, for 2024.

Did your wealth go up in 2024?

It did.

I mean, what do you attribute that to? I mean, obviously the US stock market did really well in 2024, and you still saved a bunch of money even if your income was lower. How much, how much more do you think your wealth went up in 2024?

For 2024 specifically, I think it went up about $200,000.

Okay. Pretty cool. Pretty cool. So you should have a baby every year. Here's another question for you. What did your expenses do this year? I mean, obviously there are some expenses associated with having a baby. And this is your first or do you have more?

This is our second. So we have a toddler, a three year old, and a baby. Yeah.

So you already had a bunch of stuff that you didn't need to buy again.

Yes.

But I'm curious, going from this is a less interesting question, going from 1 to 2 than it is going from 0 to 1. But I'm curious how your expenses changed. Did you spend less because it was harder to travel? It was harder to go out to eat? Um, or did you spend More. Cause you had another person in the family.

Yeah, I think we spent less because with. With just one, we were still able to kind of do things, travel a little bit. But with two, it's just. Especially when they're so little, it's. It's pretty challenging to, to do anything. So definitely, I think our daycare spending obviously went up a little bit, but otherwise, I think our. Otherwise our spending went down.

Yeah. Well, in basketball parlance, you've gone from playing zone to playing man to man. So I think the harder transition is not going from one to two. It's going from two to three. When you go back to zone coverage, that becomes even harder.

That's what they say when they outnumber you.

Yeah, for sure. Hopefully the oldest one is a little more independent by the time that happens. But that's not always the case. I've met plenty of people with three or four kids under five. Okay, what did you learn financially from this? That you can help others. Maybe there's people that are starting 20, 25 pregnant or scared to have kids because they don't know how everything's going to work. What advice do you have for them?

My advice initially is just to ask a lot of questions of HR and to figure out what the options are. But even actually stepping back before that, when I was looking for jobs, I knew that I was going to have another baby soon. So that was actually what some of the questions that I was asking on, you know, my, my pro con list when I was looking at different jobs is like, what does maternity leave look like? I had some groups that said kind of like, oh, you know, we, we figure it out. And that's a very unsatisfying response. I didn't like that. So, you know, the group that I picked, they had very clear kind of policies in place and they followed kind of like the. I'm an employee, so they follow the guidelines that our state sets up, which allows pre. Generous maternity leave. And they seem very flexible if I even need to take more time after that. So that was a big factor. And then after, when I'm actually planning the maternity leave, it was just talking to HR and really planning things out, trying to figure out how much money we would get from the state and from the group's disability policy and just kind of planning that going forward. So just really asking those questions ahead of time and not, you know, not feeling kind of awkward about it. Even if, you know before you even get pregnant, just, just ask the questions. Like it's important to have that information Ahead of time.

Yeah, for sure. And you know, in our group, we know when we hire, you know, when we hire a lady, they're coming out of training and if they're an apc, they're a little bit younger. If they're a doc, they're a little bit older. And we know from experience that, that most of them, in the first five years they're working with us, they're going to have one or two kids. And it is an important thing. People talk about this when we're hiring and it's important to have clear policies and if you want to have advantages over other employers, where in hiring to have generous policies, it really does make a difference. As you've demonstrated, it was a big part in your decision to work there instead of somewhere else. Yeah, yeah. Now it sounds like some of the money came from the state and some of the money was state mandated coming from your employer, and some maybe wasn't state mandated and came from the employer. How did you learn about all those state benefits?

Yeah, so a little bit of it was that I had already taken a maternity leave in California for my first. So I knew some of that, but otherwise it was talking to HR and then just kind of looking things up online myself and trying to figure out how much money exactly you get and just kind of timelining it out for myself. And then I actually made a little guide for people going forward in my group just so they wouldn't have to try to figure out all of that again.

So super helpful. Thanks so much for sharing that. And in fact, if it'd be appropriate for more than just your group, heck, we could put a link to it or something on the show notes for this episode. It might be all employer specific though, and maybe not so useful to everybody. So going back to work after taking five months off, I mean, I took 10 weeks off this fall. I fell off a mountain, of course, and I took 10 weeks off practicing medicine. And those first couple of shifts back, you know, maybe I was a little rusty mentally and just with, you know, speed kind of stuff. What did you find when you went back to work after five months?

Yeah, so I knew that my group was going to do this. When I went back, they put me right back in. So my first day back, I was on a 24 hour call.

Welcome back.

Yeah. Which is kind of part of why I took the maximum leave because I was like, oh, I don't think I can really ease back in, so I might as well maximize it. But I feel like some things is just kind of like riding a bike, like you're a little rusty, but then you catch back up, like clinic, you'll stay a little bit late to finish your notes and things. But after I felt like two, three weeks, I was right back where I was before.

You're up to speed after three weeks. Did you at any point feel like, I'm not the doctor, my patients deserve going back?

You know, I think with my. In contrast, this maternity leave, I did not ever feel like that. When I went back after my first maternity leave, I was still resident, so I went back after eight weeks and I just. I felt like severe brain fog, fatigue. And I think in that case, I did feel a little bit like. Like I wasn't fully present.

Because you went back too early.

I went back too early the first time, yeah.

Interesting.

Yeah. So I think having the full time off made a huge difference. I feel like, yes, I was a better doctor and able to fully provide for my patients after having a sufficient amount of time off for maternity leave.

Yeah, there's. There's probably a too early and there's probably a too late.

Yeah.

You know, you've just been out there so long that, you know, you've forgotten things. And I think that varies by how long you've been practicing. You know, it's like, I tell a lot of people, when you first come out, man, do what you can to work full time, because you just really need to cement your skills and your knowledge base and all that stuff. The first few years out of training, 10 years out, I think you can probably take more time off without it really affecting you. But it's, you know, it's hard to know exactly what the right amount is. I think, and I think lots of groups struggle with setting policies because of that. What would you recommend to a group that's thinking about setting their paternity maternity leave coverage? What would be your recommendation? If you're sitting at the table, you're one of the partners, you know, you're done having kids, whatever. What should these policies look like, ideally?

That's such a hard question because I feel like if you look at the US Compared to other countries, we're so much behind. What other countries do. You know, some countries, people get one or two years off. I mean, I think from a physician perspective, you're probably. Your skills are probably going to atrophy if you took that long. I think for me personally, the four months I went back when my baby was four months old, I think that was good. But I can see where some people are. Itching to go back sooner, and some people would have wanted more time. So that's really challenging. I think it's a matter of being flexible and kind of like working with people.

Yeah. And there's two sides to it, of course. Right. As an employee, you're like, oh, more time at course, is the right thing to do. As an employer, sometimes you might go, well, if I don't need you for a year, I don't need you at all. So it's. You're definitely weighing some competing interests there. Difficult thing for each group to decide, and I think that's why there's so much variation on it.

Yeah.

But obviously, if you're planning on having a kid or two in the first five years after you join a job, this ought to be pretty important in your interview process. They'll probably clue in on the fact that it's important to you. But this shouldn't be a huge surprise to people. When we have docs coming out of residency at 30 or 32 years old, you know, it's now or never, biologically speaking, for lots of people. So I don't think it should be a huge surprise. All right, what are some of the financial moves you guys made this year that you think made a big difference in your lives? You became more financially literate. That's obviously a huge thing. But what else did you guys do that you think helped you to actually build wealth during a year in which you worked less and made less?

I think a lot of what we do, we actually didn't change much. So we have always live below our means going back from residency. We didn't grow too much into our income during once we became attending. Kind of like the same boring story that you recommend.

I hate that it's boring, but it certainly is, right? I mean, it's not complicated.

Yeah. And then, you know, I guess another big thing is my husband is doing a loan forgiveness program, so that definitely helped us a little bit. We get a check each year, so we got our first check for that. So that definitely helped us, you know, pay down some of his loans. So that helped us build wealth as well.

Very cool. What's the next financial goal you're working on?

Right now we are saving up for a down payment That's.

That's not insignificant in California.

No, it's a lot. It's probably going to take us a while.

Let's talk about that for a second. What's your goal? Down payment? What. How much are you trying to save up?

I think, you know, right now we're still kind of iffy on if we're really, are we really going to buy a house or not? So, so we're still kind of thinking about that. When an average house is, we're, we're planning on moving to a higher cost of living area. So when, when the average house is like $1.52 million for just, just a house, not a mansion, nothing special, it's kind of like, do we really want to spend that much or are we going to just be renters? And there's a lot of kind of thoughts about that. But for now we're like, okay, let's just save up and then when we get there we'll decide. But we want to. If we're going to buy a house, we want a real down payment.

Have you two had any discussions or thoughts about geographic arbitrage, leaving California and setting up practices and you know, medium sized town in Indiana or something?

We've done a lot of thinking about what we want to do with our lives in that regard. And I think, you know, we're blessed in the fact that we're physicians and we make a lot of money and we don't have big fancy likes and interest. So even though it sounds ridiculous, like, yeah, sometimes even a physician income is, you can just kind of barely make that American dream of buying a house and you know, paying for a kids college and saving up for retirement and that's fine. We feel a lot more, you know, we're in a lot better financial position than a lot of people and we have our family here. So yeah, we've never seriously considered leaving California. I know it makes a lot more sense financially, but you know, it's our home and there's a lot more to think about. Like day to day happiness.

Yeah, for sure. Money is definitely not everything in life. Well, Olivia, congratulations to you on not only your growing family, but your growing wealth. And thank you so much for being willing to come on the Milestones podcast and sharing your success and inspiring others to do the same.

Thank you.

Okay, I hope you enjoyed that real life story of a doc who took quite a long parental leave period, got paid during it, and actually didn't get set back financially for having a kid, which is substantial. I don't think that happens most of the time, but I think there's a lot of important lessons to learn there. So I'm grateful to Olivia for coming on and sharing her experience. All right, I told you at the beginning we were going to talk about TreasuryDirect. Now what is TreasuryDirect well, TreasuryDirect is a website run by the US government. If you go to TreasuryDirect.gov you'll see all about it. And you can log into this and buy investments directly from the US government. So what investments can you buy from the US Government? For the most part, we're talking about buying Treasuries. Whether they're nominal Treasuries or Treasury inflation protected securities, I.e. tIPS, you can buy them directly from the US government there. You can also buy savings bonds, whether they are the EE bonds or the inflation linked I bonds. In fact, that's really the only way anybody's buying I bonds these days. It used to be you could buy them with tax return kind of money and get, you know, with your refund you could get some I bonds. People don't really do that anymore. So if you want to buy I bonds, you go and open a Treasury Direct account. What you need to recognize though is that the US Government is not very customer service focused. I think is probably the nice way to put this. This is not an awesome website to use. This is not an awesome agency to deal with. You know, I hear people complain about the customer service experience at Vanguard a lot and they're like, oh, Fidelity treats me better or Schwab treats me better. Well, if you want to make Vanguard look like a rock star, go open an account to treasurydirect. I mean, people get locked out of these accounts for months because it's just relatively easy to screw things up. You put your password in there wrong and all of a sudden you got issues. So it does have its issues. The benefit is you can go there and you can buy not only securities like TIPS and nominal Treasuries directly as well as those savings bonds. But there's no expense, right? You can buy all this stuff with no expense ratio, no commissions, nothing. So that's kind of the benefit of doing it. So we actually have three treasury direct accounts. We have one in my name, one in Katie's name, and then one in the name of our trust. And we bought I bonds in all of them. We also have Treasuries in one of them. We bought some individual TIPS there. As we've talked about the complexity of our financial situation, we've decided maybe this is not such a great idea to have three additional financial accounts, not to mention be buying tips in two different ways, both through an etf. We typically use the Schwab ETF with ticker schp, but also to own them individually, not necessarily a totally specified ladder, but we own some 5 to 10 year individual tips in there that we bought over the years. The problem with I bonds is you can only buy $10,000 of them a year. Yeah, you can buy $10,000 for you and $10,000 for your spouse and $10,000 for your trust and $10,000 for whatever else you got, some partnership or family, limited partnership or LLC or something like that. So you can create more entities and buy more of these, but each one of them has a different account and it's only $10,000 per account that you can buy each year. If you're already wealthy, you're not going to catch up and get your I bonds to be a significant portion of your portfolio. Now, if you start out when you don't have very much money and you're not investing that much each year, you might be able to buy enough I bonds every year to keep up and maintain it as, I don't know, a 5 or 10 or 15% part of your portfolio. We cannot do that. It's just not a large enough portion of our portfolio at this time that it really makes a lot of sense. So we may be dropping our I bonds at some point here and transitioning those individual tips to a brokerage account. Now, you can also buy individual tips even at auction at Vanguard or Schwab or Fidelity in their brokerages. And you can actually transfer the tips you bought at treasurydirect over to a Vanguard brokerage account or something like that. And you can sell them there or hold onto them until they mature. Either one. So there is an exit from treasurydirect, but not really. For I Bond, you basically need to turn your I bonds in to do that. And you can't do that in the first year after you buy them. And for years one through five, you lose some interest when you turn them in. So only the ones you've owned for at least five years do you get all the interest. I think you lose three months of interest when you sell them back. So there are some downsides to simplification there. But you've really just got to decide if you want to deal with the hassle of having additional accounts to keep track of and one in which it's particularly hassle. It's a hassle to deal with treasurydirect and they try. They're trying to make it easier to deal with. But even the login process takes me three times as long as it does with most of my financial accounts. And that's fine. I want it to be secure. But top notch customer service is not what we're dealing with here. All right, I hope that's helpful about treasurydirect Check that out if you want to buy I bonds if that makes sense for your portfolio. Check it out if you want to build your own treasury ladder with no commissions or any other fees or expense ratios or anything like that. But don't be surprised if you end up concluding the same as I do after a few years, that maybe the hassle isn't quite worth it. You're not getting the bang for your buck, maybe like you hoped you would all right, with Weatherby Healthcare, you choose your own healthcare career path. Our locums experts then support you every step of the way, helping you find the right opportunities at the right times. We understand your professional and personal goals and are experts at helping you achieve them. Let's keep your career interesting with new locations and settings and diverse patients and cases. Just as importantly, let's make sure you get more free time for your hobbies or to just relax. We'll help you find that balance. More jobs and more locations. Weather B gets you where you want to go. Www.whitecoatinvestor.com Weatherby thanks so much for listening to the Milestones to Millionaire podcast. We appreciate having you here. We're grateful you're in the WCI community and hope that it's been beneficial to you over the years and will continue to be so moving forward. 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.