MtoM #38 - Dentist Achieves $0 Net Worth

This is the White Coat Investor Podcast Milestones to celebrating stories of success along the journey to financial freedom. Here is your host, Dr. Jim Dali. This is Milestones to Millionaire podcast number 38, a dentist getting back to broke. I estimate that 80% of doctors need, want and should use a financial advisor and or an investment manager. Some investment gurus, such as Dr. William Bernstein, think my estimate is way too low. At any rate, if you want to use an advisor temporarily or for your entire life, there's no reason to feel guilty about it. Just make sure you are getting good advice at a fair price. If you need help updating your financial plan or just getting one in place, check out our list of recommended financial advisors@whitecoatinvestor.com financial advisors. You can do this and the White Coat Investor can help. Now this is the Milestones to Millionaire podcast where we celebrate whatever your milestone is and use it to inspire others who are working toward that same milestone. Now, we've had lots of really impressive guests on this podcast lately, which might make people think that, you know what, I can't relate to that. I am so far away from that. Should I even be listening to this podcast? Well, today we've got a different milestone. We've got someone who has gotten back to broke, which is probably the first and most important milestone that we reach on the pathway to wealth. And so we've got a dentist on today who's been working toward this milestone now for several years. And let's get him on the show and listen to what he has to teach us. All right, I'm here today with Dave, who is a dentist. Welcome to the White Coat Investor Milestones to Millionaire podcast.

Yeah, happy to be here.

So tell us about your profession, specialty and how far you are out of school.

Sure. So I'm a 31 year old general dentist and I'm just about five years out of training.

And what's your approximate net worth?

So my net worth is a whopping titanic $40,000.

$40,000.

Crucially a positive number, unlike it was some years ago.

Awesome. And what's that divided up into at this point?

Sure. So I have about nice round numbers. We have about $200,000 in investments, pretty much all index funds, 60% US stock, 20% international, 10% REITs, 10% bonds. Half of those are TIPS. And we have a big amount in cash right now, about 160,000 in cash. And the reason is because we're getting ready to pay off my federal student loans, which are sort of in that federal loan freeze right now, and my wife has about 160,000 in debt as well, but she's in PSLF, so we're kind of just making those payments for her.

Okay, so you guys relatively recently just got back to broke. Yeah, that's the big thing, which is quite an accomplishment. What was your negative. How negative was your net worth when you came out of school?

Man, I might set a record here. So we were negative 510,000 when I came out of training in 2016.

Awesome. So in five years, you have increased your net worth by over half a million dollars.

Yeah, absolutely correct. When you put it like that, it sounds more impressive than it sounded in my head.

Well, it is impressive. It is impressive, right, because there are a lot of dentists out there that they come out, they buy a big fat house, maybe they buy a practice with a half million dollar or a million dollar loan. They still have half a million dollars in student loans, and five years later, they just still have a whole bunch of debt and no assets. And you guys are starting to build assets and you're already back to broke. Sounds like you've got great plans to get rid of your student loans PSLF for one of you and just paying them off for the other one. As soon as the student loan holiday is over. I mean, you guys have got it wired. You're doing great.

Well, I appreciate you saying so. Yeah, that. That was exactly the plan. And thankfully we've stuck to it for the most part. Coming out of training, I really didn't know very much at all about financial things. You know, when you see the numbers that are that high in the negative, it feels quite overwhelming. But then you become a little bit more financially literate and you start to make a plan and you just sort of stick to it.

So when did you make a plan? How far along were you into this process? When you kind of mapped it out and said, this is what we're going to do?

Sure. So when I was in my general practice residency, I started to see the amount that my loans were increasing per month. Like, I think my debt amount was increasing around $2,000 per month. And I certainly wasn't making an amount that would be able to pay it down. And I started to think like, oh, okay, so the math doesn't exactly work out here. What's happening here? And so somewhere in residency, we started to look into how to pay off student loans from there. Dave Ramsey then. Mr. Money Mustache White coat investor. I'm sure a familiar track for many of your audience.

Awesome. So what do you think Were your secrets to success? I mean, how did you do this where so many people don't.

I think a big part of it right off the bat, is not making mistakes. Right. Being very intentional about our plan. Thankfully, when we were not very financially literate, we were not taken advantage of, sort of by all the different ways that people can fall into traps. We did end up losing a bunch of money on our wedding, which was a big pain early on as our venue closed and they took our deposit, and it was a big problem. Looking back now, that wouldn't worry me quite so much in the amount, but at the time, it was devastating. But I think the intentionality is a big part of it. Having the tough conversations with my wife about what really makes us happy. And I think another big part of it is sort of making it into a hobby, kind of becoming a nerd about it. You know, it strikes me that I have friends who will put an infinite amount of effort into fantasy football and don't know anything about their finances.

Yeah, it's definitely the best paying hobby out there. Without a doubt.

Yeah, 100%.

So what do you think? I mean, looking back now, are you glad that you went to dental school?

Yeah. My godson just told me that he was thinking about going to dental school. And at first I thought, like, oh, oh, you know, this kid's got to make a plan before he gets started. But overall, now it's a career and it's a profession that I really enjoy every day. And a big part of that is not feeling so under the gun financially. And I really enjoy my work quite a bit. But no one wants to feel like they're hamstrung into going to work every day.

Yeah, for sure. So let's take somebody that's a few years behind you. Let's say they're five or six or seven years behind you. They're a dental resident, they're a senior dental student, and they want to get to where you're at. They want to be, you know, pretty much almost done with their loans, back to broke within a few years of coming out of their training. What advice do you have for them?

A big piece of advice, I would say, is to make a plan early. And as everyone knows who listens to your show, if you can't make a plan on your own, you've got some services that will help you do it and to recognize the things that are sort of in your control and the things that aren't in your control. Right. So the things that are out of your control. The sort of privileges that you have or don't based on the sort of life you were born into. But the things that you do control are being able to have those conversations with your spouse or to choose hobbies that aren't quite so expensive, or to not make colossal financial mistakes and to think maybe quite deeply about the things that make you happy to spend money on rather than the sort of autopilot that people get onto.

Any kids in your family yet?

No kids yet, but my wife is just sort of starting to send me, you know, baby memes here and there. So I'm picking up the hint.

Do you have any plans to teach your kids about money?

Oh, yeah. I mean, I think I'm going to have to. I don't want to trash my own parents or my wife's parents too badly because we love them very much, but they didn't teach us anything about money. And in fact, if I had followed their example, we would have been in a pretty poor position, literally and metaphorically. So I would like to get our future kids off the ground correctly. Avoid credit card debt, that sort of thing.

So where do you go from here? What are your next goals and how do you anticipate moving toward them?

Gosh. Well, you know, in February, I suppose it's going to feel really good to press that button and pay off my student loans once and for all. We definitely want to start to, you know, look into getting a house. You know, we live in an apartment right now. And that's something that has surprised a lot of my friends. They're like, you know, aren't you a doctor? What's going on here? So that'll be a big thing on the docket pretty soon. And you know, it's strange that now we're kind of becoming acquainted, feeling comfortable spending money. You know, for the longest I drove this old Subaru outback that had 230,000 miles on it and then I switched it for a Honda Civic that has, you know, a triple digit odometer now. And I just put a pre order in for a 2022 Ford Maverick, which is, you know, feels ostentatious to me, but finally being able to afford something like that just with my checking account is pretty unbelievable.

Yeah, pretty awesome. Moving up in the world, huh? From one to another to another.

Absolutely.

The fun part about that is each step up just feels awesome. You know, if you take it all at once, you don't get to enjoy all those intermediate steps. Awesome. Well, congratulations on your success. You're doing great. We're Proud of you here at White Coat Investor. And we thank you for coming on and sharing your story to inspire others who are following in your footsteps.

Thanks so much, man.

All right, so that was a great episode. You know, in the last few weeks, we've had these people with all kinds of money. Three million, five million, seven million, whatever. You know, in crazy time periods, like a year out of residency, sometimes it's good to remember what the typical white coat investor is like, which is a few years of struggling to pay off student loans, building wealth, slowly getting into a practice, getting into a home, you know, building that portfolio. This is far more common for the typical white coat investor pathway. And you know what, when you start out in a big hole, just getting back to broke is a huge milestone. So if you are still working on getting back to broke, know that you can do it. Dave has shown us how you can do it. And it's just making good decisions day after day after day and taking care of business. And you know what? Now he's buying a brand new car with cash. And pretty soon he's going to be surprised how quickly his wealth starts building. You know, they say the first million is the hardest, and that is absolutely true, absolutely true. But you'll be surprised how quickly it goes after that. I estimate that 80% of doctors need, want, and should use a financial advisor and or an investment manager. Some investment gurus, such as Dr. William Bernstein, think my estimate is way too low. At any rate, if you want to use an advisor temporarily or for your entire life, there is no reason to feel guilty about it. Just make sure you are getting good advice at a fair price. If you need help updating your financial plan or just getting one in place, check out our list of recommended financial advisors@whitecoatinvestor.com financial advisors. You can do this and the White Coat Investor can help. You can get on the Milestones podcast, whitecoatinvestor.com Milestone and we'll get you on here and share your story to inspire others. Till then, keep your head up, shoulders back. You've got this and we can help. We'll see you next time on the 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.