MtoM #44 - Back to Broke Oncologist

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 Millionaire podcast number 44, Back to Broke Oncologist. If you haven't heard this podcast before, this is a podcast where we celebrate your accomplishments with you. We want to say good job, Congratulations, well done. Keep going. No matter what your financial accomplishments have been, if you would like to be on the podcast, you can do so just go to whitecoatinvestor.commilestones and sign up and we'd love to bring you on the podcast. Celebrate your milestone. Whether it's becoming a millionaire or a DECA millionaire or paying off your student loans or your mortgage or whatever it might be, we'd love to celebrate it with you. If you're looking to boost returns, lower taxes, and build wealth, join the WCI monthly Real Estate Opportunities list for tips and strategies to maximize your real estate returns. And for introductions to exclusive investment opportunities, expect educational emails that introduce you to syndicators, fund companies, online courses, and online real estate platforms. Go to whitecoatinvestor.com reopportunities to sign up today.

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You can do this. And the White Coat Investor can help. All right, let's get our guest on the podcast. All right, my guest on the podcast today is David. He is an attending oncologist. Welcome to the Milestones to Millionaire podcast.

Thank you. It's really my pleasure to be here and great honor to speak with you. A financial hero of mine.

Financial hero. That's a wonderful thing. There are real heroes and there are financial heroes.

Well, I haven't had the opportunity for you to be a real hero of mine, so gladly. Gladly.

And hopefully you never will. You don't want to meet me at work for sure, but let's talk about your milestone today. We may be celebrating more than one milestone for you because it's been a while since you applied, but the one when you applied was that you had gotten back to broke. So congratulations on that.

Thank you.

That is a wonderful milestone. People don't realize that in our field, they do. Maybe listeners to this podcast do, but most people don't understand. This is a big deal for doctors. You know, you come out of school, tons of debt, and it takes a while to climb out of that hole just to be broke. Most of us, when we come out of school, we're poorer than the. You know, the guy living under the aqueduct, you know, he's got a net worth of zero, and our net worth might be minus 300 or 400,000. So tell us, how far are you out of school?

So I graduated oncology, hematology, oncology, fellowship a year and a half ago and started. Right. Started working right away.

Okay, so when you came out of training, what was your net worth?

So I've got all of my spreadsheets like a good financial nerd.

A true white coat Investor, huh?

On July 1st, my net worth was negative $128,828.

That's not bad. That's not bad.

No, not bad.

So how much student loans did you.

Have at that time? We had 187,000 of student loan debt between my wife and I.

So you accumulated some assets during. During your training?

Yeah, one of the things that I had always tried to do is just have some side income. My wife worked a little bit. She's a stay at home mom now. And during fellowship. Stay at home, but she had to earn a little bit of money. But during fellowship, I was able to moonlight and increase my income, and the student loans were at a very low rate. And we just didn't feel like we could really make significant, significant headway during fellowship. So we decided to work more on the investing side. So, yeah, we focused on getting assets rather than necessarily just putting an extra thousand dollars here or there to the student loans and not really feeling like we'd make traction.

And over the last few years, that's been the right decision because investments have done so well.

Yes, definitely.

Especially with inflation up a little bit. Helping wipe out your debt a little on that side too. Right. So what's your approximate net worth at this point? You're a year and a half out. What are you guys worth?

So we hit back to broke in January, so about six months out. And then as of today, our current net worth is around positive 210.

210. So that's pretty awesome. Pretty awesome. Only a year and a half out, so that's great. So what's that divided up into? How much debt you got? You know, how much is retirement, other investments, home equity, et cetera?

Yeah, so we rent, and that has really helped keep our expenses predictable. Right now our student loan debt is at 158,000, and we've got $370,000 in assets. So our assets are split $150,000 of real estate, and the rest is just a total stock market index fund and a little bit of cash.

Okay, real estate. It's an investment. It's an investment property or what is it?

Yeah, actually private real estate, syndications. So we have a very aggressive, very aggressive asset allocation, I would say.

Yeah, all stocks in real estate it sounds like.

So I've done a lot of education just following your blog over the last 10 years or however long it's been around, I think really since the origin and done education on top of that and taken some real estate courses and felt very comfortable vetting private syndication deals and actually through networking. If you are a sophisticated investor, you can invest in these deals before you meet that accredited investor status. So we've had opportunities to invest in deals that are very nuts and bolts one on one real estate investing opportunities and are expected to have really high returns. So we've jumped on them.

Awesome. Well, congratulations. So, range of income. You mentioned your wife was working for a while.

Yeah, her income more just sort of helped us float by through residency and then in fellowship. My income was very low in my third year of fellowship. I was able to moonlight pretty substantially. That helped us. I mean, I'm only a year and a half out, but as a fellow I was able to double my income. Moonlighting and just doing little side gigs. And then I negotiated very hard for my current salary and then actually even renegotiated within the first year. So my original salary was around 450 and currently it's 500, but with the potential for bonus. So we'll hopefully be even higher.

That seems like a relatively high salary for an oncologist. I look at these salary surveys and that's gotta be, you know, 90th percentile or so, isn't it?

There's a huge range. I know of people in town making a lot more than I am, probably working harder than I am and I know people in other regions making double and triple what I'm making.

So. Not necessarily.

Yeah, it's very regional specific. I was looking at jobs that I would have taken, taken maybe a 40% cut to take.

So certainly all across this range. You know, I've always been impressed that the intra specialty pay differences are much bigger than the average inter specialty pay differences. And you know, it's not until you have an experience like yours that you really understand that. But that's the way it is in almost every specialty. All right, well, I mean, obviously you're earning good money now, but what do you consider to be your secrets to success at getting back to broke and now building significant wealth just. Just a year or two out of residency?

Yeah, I think my wife and I call it lifestyle inoculation. So there's lifestyle inflation, all this stuff for us during that Year of last, like year and a half of fellowship where I had the opportunity to moonlight, we took that as an opportunity to find how much money we needed to spend to feel like we were living a very comfortable lifestyle. And that was like a built in opportunity for us to see, like, it's not worth working more, to be able to spend more. And so we use that very intentionally to say I'm only or like, basically I'm only allowed to moonlight and work on a weekend or an evening if it's money that we want to spend to enhance our lifestyle. So our term for that was lifestyle inoculation. And basically it meant that we lived very comfortably and didn't need to substantially increase how much we spent from fellowship to being an attending. So, yeah, we're spending about 20% of my gross income and actually it's probably gone down and if I get a bonus this year, It'll probably be 15% of my gross income. And we are very happy. We feel like we're spending a lot still.

That's awesome. I love the intentionality, you know, and this is really the message. When I say live like a resident, this is the message. You know, you come out of training and you can give yourself a raise, you can give yourself a 50% raise, you can probably give yourself 100% raise, you know, and you feel very, very wealthy. And meanwhile, you've got this huge gap between what you're spending and your attending income. And you can use that to do whatever you want, you know, save up a down payment, pay off student loans, in your case, mostly invest it and rapidly build wealth. So it's awesome. I love the intentionality aspect of it.

Yeah. I also want to just point out some other things that were really helpful from educational materials that I gathered from you. One was the math with variable student loans, like a variable interest rate. So my student loans, and mainly the reason why we haven't paid them down is they're currently at 0.21% interest.

That's what happens when you use a variable rate and rates go down.

Right. So I, I had refinanced a year or two before COVID hit. And the reason I did a variable and I'm. I mean, I'm very. It might not sound like it, but I'm very conservative and, you know, wanted to make safe decisions with my money. And so I was all planning on paying the debts down very quickly. But knowing the math from the article that you wrote years ago about the difference between, or, you know, the break even, it's so Much more probable that you're going to be ahead if you're in a variable rate and paying it off within a few years. So that that paid off. We have a discount for auto pay and it's basically like 0.48% above Libor, which is at zero.

Wow, that's something. And especially with inflation now at 6% plus, you know, you're basically getting paid to hold that debt, so.

Yeah, exactly.

So that's working out well for you, at least for now. And it sounds like if it stopped working out well, you have the capacity to wipe it out very quickly when you're only living on 20% of your income. Yeah, yeah. I mean, that's, you know, it's pretty amazing what you can do financially with a savings rate like that. You know, if you don't like medicine, shoot, you're out in just a few years, you know.

Yeah.

If you do like it, well, now you have this incredible capacity to give to others, to have incredible experiences, and, you know, it's just a lot of good things happen from that. So I congratulate you on your intentionality.

That's.

That's pretty impressive to really see the end from the beginning and hit the ground running as a new attending, which is really what you've done. So very well done on that. So we got a few people out there, you know, that are listening to this and they're, you know, they're hematology, oncology fellows. Maybe they're going to graduate next year. They're sitting there on two or three hundred thousand dollars of student loans. What advice do you have for them?

Yeah, I think there are a couple, just other takeaways I wanted to share. I think as a doctor, we need to see our value. And I think coming out of training, what I would recommend anybody do is make themselves indispensable in their job and maximize their income in their job and renegotiate when you have communicated your value. So, yeah, I was able to renegotiate my contract off cycle, and that will really be another huge financial boon for us. Another thing I'd like to say is I did invest in coaching, actually. So I spent, you know, about $10,000 on personal investment to kind of get myself recovered and back to. Back to speed after very rigorous six years of training. So I'd encourage anybody even early in their career to, like, if you're not feeling like you're thriving and doing amazing, then get help and get there, because you can. And then lastly, I would just look at your period of training when your income is really small and you don't have a big shovel to make big moves on your financial future, to look at that as time to build up your defenses. So focus on building the good habits and the defensive work to make sure that your spending doesn't get out of control, to educate yourself and be ready so that when your income goes up by 5x, you know what to do with it and you can actually get to where you want to be.

Awesome. Great tips. Congratulations on your success. This is really wonderful. You are off to a fantastic start. And I imagine we could have you back on here 10 times in the next 10 years, celebrating new milestones. Yeah, but. But the lessons are the same. You figured it out at the beginning. You're hitting the ground running. You're. You're being intentional about what you spend and what you save and how you invest and, and how you deal with your debt. And, you know, and there's not always a right answer to all these questions, but the right answer that everybody can agree on is being intentional and having a plan. And you have that. So congratulations. Your story will be very inspiring to others, I'm sure.

Thank you very much.

All right, man. David could be the poster child for the white coat investor. He has totally done it. That's all I want you to do. Be intentional with your money. Have a plan for your debt, have a plan for your investments. Hit the ground running. As a new attending, this stuff is not that complicated. You can do it just like he did it. I love the intentionality of his plan. I love the fact that he paid attention not only to the defense. I mean, that's a heck of a savings rate, but also to the offense. You know, right out of training, he went for a great salary, great income, worked hard to get it, negotiated hard. You can do that, too, you know. You can do that, too, for sure. And, you know, even the coaching bit, a lot of docs have found some help from coaches. You know, my staff keeps telling me when I tell them I'm burnt out on writing more white coat investor stuff, they tell me, you need a coach and maybe I'll have one eventually. We're actually starting up a coaching program. You'll be hearing more about it in coming weeks. I'm not coaching. No, I'm not going to be your coach. But we have found some of the best coaches in the country to partner with, and we'll be helping you. Those of you who are in need of a good coach, you know, whether it's financial, whether it's burnout, whether it's professional, whatever, get connected with them. You know, that's what we do here at the White Coat Investor. Yes, we try to give you all the information you need to be successful, but we get lots of people asking us, well, who can I go to for this or that or this? And so that's what we do. We make connections. Make connections with the best insurance agents out there, the best financial advisors out there, the best coaches out there. So if you ever need help, go to the recommendations page, the recommendations tab on whitecoatinvestor.com and you'll see a list of everything from student loan refinancing companies to estate planning attorneys. And we're always trying to make those lists bigger and more robust and bet people on there and make sure we have the very best ones there. So it's a constantly changing list. But when you need some help and you need a good recommendation, that's where you should go. If you're looking to boost returns, lower taxes, and build wealth, join the WCI Monthly Real Estate Opportunities list for tips and strategies to maximize your real estate returns. And for introductions to exclusive investment opportunities, expect educational emails that introduce you to syndicators, fund companies, online courses, and online real estate platforms. Go to whitecoatinvestor.com re Opportunities to Sign up today. You can do this and the White Coat Investor can help. Keep your head up, your shoulders back. You've got this and we can help. 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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