MtoM #52 - Multimillionaires 5 yrs Post Residency

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 52 multimillionaires, five years out of residency. 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. All right, we've got some great guests to bring on the podcast today. Let's get them on. All right. Our guests today for this podcast are Liz and Adam. Welcome to the Milestones to Millionaire podcast.

Thanks, Jim.

Thanks for having us.

Now, tell us a little bit about what you do and how far you are out of school and training.

So I am an internal medicine trained physician. I started my career as a hospitalist. I did that for four years and transitioned over to outpatient medicine about two years ago. So I'm about six years out of practice. I'm sorry, out of residency.

And I'm a trial lawyer. I have my own practice. I'm about 13 years out of law school, but about 10 years out of training or whatever you want to call it in our world. Cool.

And what's your approximate net worth?

About 4.2 million.

And what's that divided up into?

See, we have about in retirement accounts, about $428,000. Most of that is in index target date funds. Our after tax account is about 1.286 million. About 3/4 of that is in VTI with about a quarter in VX. US we've got a lot of cash, and one of the reasons we have a lot of cash is just because of my law practice. We have to be a little bit cash heavy. With some of the different revenues we have, we have about 540,000 in cash, so that sounds like a lot. About 100,000 of that is in our personal accounts. And then in real estate, that's divided into our primary residence. We've got about 500,000 equity in our primary and about 350 in equity in an office building, and then about 100,000 in the kids. 529s and my law practice, we don't have a hard and fast value, but we put that at about a million.

So pretty good range of different assets there. Nice diverse selection. So what's been your range of income throughout your career that's allowed you to build this much wealth this quickly?

We've been really fortunate. I make exactly what you would think an internist makes. We're right about average here where I practice. So at the start of my career I got fortunate actually. When I started my chief resident year, they paid me as an attending, so I made a little bit more in that year than I would have had. I stayed somewhere else. I actually went somewhere else for my PGY four year and then anywhere from about 180 to 220 just to start working pretty average hours with seven on, seven on shifts. And then transitioning now to outpatient, I'm making about 275. So that's been my range. Just in clinical practice, we've been really fortunate. Adam's practice has been phenomenally successful, kind of unexpectedly so we've really benefited from, you know, just a joint marriage with the two of us. Two of us both having good careers.

But I suspect your income's a lot more variable as a trial, as a trial lawyer it is.

My first salary out of law school clerking for a judge was $39,000 a year. And I've made as high as 800,000 in a year. So it just kind of, it's all over the map.

Very nice. So when did you become a millionaire? When was the first time your net worth was a million? Do you remember?

It's hard to put a date on it. We weren't really paying attention to it. We think it happened around four years ago, probably about 4ish years ago. So, you know, one to one and a half years out of my residency we are have found ourselves to be very debt averse people. And so we had this financial planner who was like, you don't need to pay those off, just, you know, hang out with those loans. The rate isn't that bad, but the rate was terrible. When I was a medical student, my rate was anywhere from six and a half to eight and a half percent.

Told you to hold on to that, huh?

Yeah, hold on to that.

It was during that period when they switched, unbeknownst to us, from private ownership to Fedloan. And you know, we didn't have any control over what the rates did. And so we actually had a kind of a love hate relationship with our financial Planners at the time who were people that we met through my residency program who just kind of came in and, you know, offered free services and then hope for your business afterward. And we kind of got bitten with that because we found after the fact that we had missed out on three full years of public service loan forgiveness opportunity because of the way the loans have been consolidated, which was wrong. And so we kind of just bit the bullet and said we're going to move somewhere where we probably. We think we won't like living there as much, but we know that we're going to make a lot more money. So we practiced geographic arbitrage. We did what, what you tell everyone to do and, you know, kind of go to a place that's not as populated and try to try to make a living there, possibly a better living and a better lifestyle. And it really has turned out that way for us. We've been just incredibly fortunate. So we kicked our financial planners to the curb a couple years, a couple years in after that experience. And it really has just been an upward bound for us since then.

So aside from geographic arbitrage, what were your secrets to success? I mean, at some point you decided, we're going to pay attention to this and we're going to become successful. It doesn't sound like this was an accident to me.

Well, I would say stick with a plan. You know, we had a plan very early on in. We basically maxed out our retirement, maxed out any backdoor Ross or anything else we could do, and then we took everything else that was extra and we threw it half at paying down the student loans and half at investing. And we sort of just continued that trend until you sort of get into this momentum. And then I remember, Jim, one day we looked at our account and the balance was under a hundred thousand. And we just lost our minds because we had over $266,000 in loans and. And we just threw everything at it until it was paid off. And it was the best feeling in the world. So I highly recommend anybody do that.

Awesome. So how much debt do you have currently? Do you have some mortgages or anything?

The only real debt we have now is just about 600,000 on our primary residence. We built our dream home actually this year. So we did the whole, finally, what you consider a dock, I guess, to live in, actually a dock with a dock. We have a dock outside. So I have a little bit of a mortgage on my office building, but not much. And so we're working towards paying that off now, too.

So have you loosened the purse strings yet? Have you changed the way you spend, or do you anticipate doing that, or what's going on there with your spending habits?

This house was kind of against all of our policies as far as what we were following, how we were saving, but we also knew that and in healthcare. And I think in this last couple of years, I really realized the value of time and how we don't really know, you know, what the future is going to bring, how our careers are going to work out, you know, whether family members are going to get sick, whether I'm going to be able to work full time, you know, for much longer. And so we just went with it. It was Adam's idea. He needed to live on the water, and I went along with it. And yes, we built our dream house during COVID which was kind of an experience in itself, but we moved in about six weeks ago. So we've been really just enjoying it and trying to, you know, just live every day to its fullest and have gratitude for what we have. And hopefully now with our children getting to the ages where we can finally take them places and not want to end our own lives in the process, we're kind of. That's where we're loosening our purse strings, as you mentioned, and hopefully trying to travel more and, and experience the world with our kids.

So is there anything out there tied up to that dock?

All right, well, this morning we had basically a full gale, so my buoy is gone and the rope is gone, but the boat is still there.

So that's.

That's key. What.

What kind of boat you got out there on the dock?

Oh, it's an 18 foot key west, so it's enough to take the kids to dinner or take some friends out or go fishing. You know, it's. But I paid cash and that's what matters.

Very cool. Very cool. So how are you passing along these habits of success to your children?

I love that question. I think it's very difficult to be a full time working mom. I think everyone deals with this at some point. What do I do? Stop work for a couple years when my kids are young, Take care of them before they get into school. And while that was an attractive option, I think potentially what was more important is me being able to financially contribute to their educations and also to a 401k that eventually, you know, hopefully all of us will be able to utilize in our futures. And you can't make up for that lost time. So our goal was really just start working as early as possible, work those extra shifts. You know, I think I had my. Our kids are three and five now. I had my first child when I was at the end of my cheap year. And I think just the realization that them seeing me as a hard worker and also Adam as a hard worker and hopefully seeing that and having some appreciation for, you know, the place that we live in, the friends that we have, you know, all of the connections that we've made in our professional careers, too, and the recognition that that comes from hard work and not from being at home. I know different people do it different ways and philosophies are different. This was just the right one for us, and so we've stuck to it. And don't be afraid to hire help. Get some help in your house with your kids, because that really has helped.

That has been key.

Has helped our marriage a lot too.

Especially in a dual professional home.

Yeah.

Yes.

It's tough to play the game of whose job is more important. And marriage is hard enough without that. So we're full believers in as much childcare help as you can get. People you trust.

How about lessons from your parents? Did your parents teach you anything that affects how you manage your money?

That's another great question. We come from completely different ends of the spectrum as far as that's concerned, both in how our families functioned and also in how our families dealt with money. So we saw both ends of the spectrum. We saw penny pinching and then we saw kind of elaborate purchasing. And we sort of agreed when we became a couple that we didn't really like either of those. We wanted to hit somewhere in the middle, hopefully, and maybe we could reach happy medium. So we certainly could have done, you know, the rice and beans approach and, you know, cutting back everything. We really never did that. We still took time to kind of enjoy, you know, some luxuries. Adam mentions we have, you know, an 18 foot boat like that embarrasses him sometimes, but he promised me that he would keep this boat for five years and if we would move on. And I think it's important to recognize that too. You know, you can be chained to your things also. And so, you know, we wanted to reach some happy medium with that. And hopefully that's also the kind of skills that we're teaching our kids as well.

Awesome. Well, I'll tell you what, I don't regret upgrading my boat for my 17 and a half footer that I had for five years. I like the new one much better.

He's got two more years on this one. Yeah.

What advice do you have for those who are a few years behind you, five years or ten years behind you, they want to get to where you're at. What should they do?

I. I would say, I would tell people who have young children. I mean, because we have a, like I said, a three year old and a five year old, like Liz said, first thing is we would say the time to really put it in, to put in the, the, the midnight, you know, burn the midnight oil, put in the extra shifts because I think later on when they get older, that's when you really want to be there for the T ball games and the Cub Scout meetings. And so we feel like this is really the time to really put in that extra time. And then of course, that translates to everything. If you put in the upfront now, it's going to pay huge dividends later. We've seen much larger returns and investments that we've made earlier on. I think that's just simple math and I would say that it holds true for anything you do.

Awesome. Well, congratulations on your success. We really appreciate you guys coming on the Milestones to Millionaire podcast and showing us what you've been able to accomplish and letting us use that experience to inspire others to do the same. Congratulations and thanks so much.

Thank you so much, Jim. It was a pleasure.

Thanks, Jim. We think a lot of your podcast and you. Thank you very much.

All right, a lot of good lessons there. Similar to the episode we recorded, I recorded it just a few minutes ago. You probably listened to it a week ago. But of somebody that really put their nose to the grindstone at the beginning and put in the work up front and is now reaping the benefits of it. Again, a good example of what happens when you marry another high income professional. You know, there are a lot of dual career couples out there where you both make a lot of money and there's a lot of benefits to that. I think people tend to find other people that are similar to them. So it's no surprise that professionals tend to marry professionals. But it certainly supercharges a lot of things about your financial life if you manage it well. And one of the things they did to make sure their marriage was solid was hire help. That's one of the things you got to do when you both have this crazy career is you got to make sure that things are being taken care of at home. And whether that involves hiring people to shovel the driveway and mow the lawn and clean the house, or whether it's an au pair or a nanny or whatever, then you got to make sure you do it so you can take care of things. Yes, it's going to cost you some money, but if it means your kids are better taken care of and your marriage is stronger, you know you don't want to be pennywise and pound foolish in that regard. 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. Keep your head up, shoulders back. We'll see you next time on the podcast. If you'd like to come on whitecoatinvestor.com Milestones is where you apply. See you next time.

My dad your host, Dr. Daly 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. Sam.