MtoM #55 - Pediatrician Reaches Financial Independence

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 55, pediatrician reaches financial independence. Did you know that the White Coat Investor not only has a podcast and a blog, but several books that will help you on your way to financial independence? These books cover topics such as asset protection and minimizing your taxes to keep more of your hard earned money. They discuss plans for insurance, housing spending, student loan elimination, investing, and estate planning. You can learn how to become a millionaire within five to 10 years of leaving residency and how to invest in a sensible, low cost and effective manner with or without the assistance of a financial advisor. There's even a book geared directly toward medical and dental students so you can start optimizing your finances or early in your professional journey. Find the book that is right for you at the WCI store, at shop.whitecoatinvestor.com or on Amazon. You can do this and the White Coat Investor can help. All right, for this episode, we got a special treat. I have our co host, Dr. Thischer Spath, here with me in the White Coat Investor Studio in White Coat Investor Headquarters. Whatever you want to call it. She's here in Utah, away from the storm that's ravaging the east coast right now.

Thank you for that shoveling.

Yeah, that's right. 29th of January, they're recording this. This won't run for about a month, but it's wonderful to have you here to do this and we've got a really great episode for you. We have a wonderful guest. Let's get her on the line. All right, I'm here with Tisha Spath. We are doing a Milestones to Millionaire podcast. We have a special guest today. Welcome to the Milestones podcast. Meredith.

Thank you for having me. Glad to be here.

So give us the basics. What's your specialty and how far are you out of training?

I'm a pediatrician, general pediatrics, and I'm about 20 years out of training.

20 years. But we are here celebrating a pretty awesome milestone. You're financially independent, correct?

Yes. Financially independent at 52 years of age. It's been a long journey.

Awesome. Well done. Well, give us the details. Tell us what your net worth is and what that's divided up into.

Our net worth right now is about 2.5 million, give or take 100,000, depending on how the stock market's doing. And that doesn't include a pretty good pension that my husband will have from being an educator. It's divided about about 20% real estate. That does include our paid off home. But also we own some land and we own part of a medical office building. And then fairly aggressive because of my husband's pension, we're fairly aggressive in our stocks and mutual funds and things. But it's about 1.9 million in our 403bs. 457s. And then we've only just in the last few years started our taxable account which now has about 200,000 and then our Roth IRAs.

Awesome. So pretty good mix of stuff.

Exactly.

So what has been your range of income throughout your career?

It's been pretty broad range. I started off, you know, back in 2003. Well, actually 2003, I was chief resident after residency and that was what, $60,000 and started off probably at about 150,000 and then all the way up to about 500,000 at my highest.

Wow, $500,000 as a pediatrician?

Yeah, pretty high as a pediatrician.

There's now a thousand pediatricians out there going, how did she do that? So tell us more about that.

Well, I'm part of a multi specialty group and in an area with honestly not a whole lot of competition. So I have a really large patient population. I worked our typical is four days a week, but four to five days a week. I also was president for a time of our group. So I've done some administrative time that's gotten a little bit very slow, small salary, but really it's just putting in patients all day, every day and just doing the hard work and it pays off.

So you worked hard, you were efficient and you made sure you were getting paid for what you were doing. It sounds like.

Exactly.

All right.

Wow, that's really mind blowing because yeah, a lot of people think that lower, you know, pediatricians have to be lower paid, but that's not true. And yeah, that's amazing.

And there is a bit of a stigma with peds that we shouldn't be looking to make much money because we're there for the good of our young population. And I've had that guilt.

It's there throughout all medicine. But it's worse in peds, isn't is?

Yeah, that's amazing. So we got the income side. How about the spending side? How much do you spend, do you think?

Now we spend only about 6,500amonth or so because we have a paid off home, paid off cars. We save probably about 60% of our income now. So we've really worked hard. There was a time early on when we were spending a whole lot more and didn't even realize it because we could afford our monthly payments on everything. But now we're down to about 6,500amonth.

So are you going to retire or are you going to keep working?

So, good question. Just this January, I went down to three days a week.

It's a typical doctor story.

Yes, I went down to three.

Yeah, we all want to cut back. None of us want to quit.

Yeah.

Our goal, my husband's pension will kick in in about five years. So my goal is to slowly decrease my hours for the next five years and most likely retire when I'm around 57 or so.

Wow.

So now the question is, what are you going to do with the additional income going forward? Are you going to allow yourself to spend more? Are you going to give more, or are you just going to make it so you have less risk of running out of money later? Or what's your plans with the additional income you're going to make between now and then?

Likely a little bit of all of that. We're not big spenders, but we do vacation. We've always vacationed. We are big givers. And that's something that even in the lean days, we never stopped. And so we will keep expanding our giving. I usually take a mission trip at least once a year. Covid's made that a little bit different. But I have a group I work with in Kenya and hopefully get back to that more. And people don't realize that there's quite a cost to actually going on a two week mission trip. So we'll hopefully be able to continue that and do more. And I have two grandchildren and even giving to their 529. So a little bit of everything.

Awesome. So what's the secret to your success? Like, how did you become at 52, you are financially independent and a pediatrician. What do you think the biggest thing.

Is working as a team. My husband and I, and even our kids, we started off, we were actually teen parents. We got married at 18 and 19 and lived off of credit card and student loan and maxed out everything. And even our kids remember the lean years. They remember me studying for medical school. They remember visiting me in my residency. And so we've all kind of worked as a team. And when we realized that about 10 years ago that we were floundering financially despite me having more income than I ever thought I would, my husband and I took financial peace, which is Dave Ramsey's course that he offers at churches. And we took that and saw that we had five car payments. We had, you know, an $800 a month truck payment that we were never going to pay off the truck. We were paying interest only on our mortgage. We had credit card debt and we realized that there was a problem. And so we sold the truck. We got rid of some of the cars, paid cash. We did the debt snowball, which was great for us. And we just watched my husband has a spreadsheet, we were looking at it last night of the change in our debt snowball amount and just watched it just reverse and then it's just been continuing.

Well, the wonderful thing is once you got, you got control of that spending, you had this huge shovel exactly, you know, to dig out of that hole with. And so it's like I tell doctors all the time, they've already done 90% of the work by the time they come out of residency. You know, as far as financially, they just got to clean up the last 10%. So what other challenges did you have besides the getting into trouble with debt?

Well, just being young parents and having kids that were a little older and having to navigate their activities and cars and college earlier than most people would have to. And also, you know, we got the Northwest Mutual as our disability and life insurance and things and having to get through some of those early mistakes. So those are, those are probably the big things.

So how did you balance saving for retirement while helping kids through college?

Well, we relied on the kids to have some of their own student loans. All of them had at least partial scholarships and things. One was a collegiate swimmer, one was a football player, and one is now a doctor. But she's already paid off her student loans. So really just instilling in them that we can't do it all because we're still struggling ourselves and then just committing some of our salary to them while we're also making sure we maximize all of our pre tax accounts because at the time that was all we could afford was just to maximize our pre tax accounts while we're paying down debt.

Well, that's so good that you are honest with them and open and you shared your journey with them and you know, and your limitations. And I think that's so good for your children to see that and you know, see even a doctor mom saying, listen, you know, yeah, I might be a doctor, but we have our own struggles and your, and them watching your struggle and then your triumph teaches them so much.

And you clearly passed something along. She's already paid off her student loans. How far is she out of training?

She is now two years out of training.

Two years out, and already paid off her student loans. So clearly the message came across.

Yes, definitely.

Well done. Well done. I think Dave Ramsey would say, nice job changing your family tree.

Exactly.

Awesome.

And just for full disclosure, did you receive any inheritance or did your parents pay for any of your school?

No, they did not. I was the youngest of five kids and basically we all had to fend for ourselves. So I had undergrad loans and scholarships and student loans. Probably up to about 200,000 of student loans, which was a lot back then, but we didn't know any better than they.

It's average now.

Yeah, they offered the max for a living, and so we didn't just take enough for tuition and we took enough for a living and didn't realize what we were getting into. Yeah, those were paid off in about 2015, so it's not all that long ago.

Well, there's somebody out there who's in the situation you were in 10 or 15 years ago. They've got three or four or five car payments. You know, maybe they still have student loans. They're realizing they're eating. Living hand to mouth. What advice do you have for them? How can they stop doing that and become what you've become and do what you have now done?

I would say it's never too late to start because we really were 41, 41 and 42 by the time we really put our head down and started to dig ourselves out of a pretty big hole. So definitely just knowing you can do it. And physicians, we do make a lot of money and you don't have to spend it all. Just because you can make a monthly payment does not mean you can afford to have the house or the car or whatever. So really looking at what your priorities are and what you want for your future, I got tired of feeling like I had the golden handcuffs. I didn't like to have to look at how many patients I saw a day and worry that I was not going to be able to continue making the mortgage. So I think just making that mind shift of we want to climb out of this. We don't want to get further into this hole.

Awesome.

And again, it's just no matter your age, you can get out of it.

Well, thank you so much for coming on the Milestones podcast and sharing your story. Congratulations to you. It's a wonderful story and I know there are others out there who will find it inspiring. So thank you for being on.

Thank you for having me.

Well, what did you think of that one?

I think that was an amazing story. I find that so many people get caught up in the presumption that just our specialty determines how much we can earn and what we can do financially. And I'm so glad to hear more stories of that just not being true.

Yeah. I mean, I've met orthopedic surgeons that make $150,000. I've met pediatricians that have seven figure incomes. So I have this discussion with medical students all the time about what specialty they should choose. And while I think medical students probably don't put enough emphasis on future income and lifestyle, the truth is you want to choose the specialty that you love because you're more likely to be able to practice it longer. And that's the biggest effect. If you can practice something for 30 years, no matter what you're making, you're going to do better than if you burn out in five years. And so I think it's important to find something you love. But then once you do that, realize that there are people making a lot more money than the average in your specialty, and there's no reason you can't be one of those people.

Yeah. And even if you're just making the average, we still earn so much more than the average person in this country. So we have so much room to grow if we're just able to make. Make some room between our income and expenses and just make just some few good. Right. Choices.

Yeah. The other thing that I thought was really interesting about the story is despite a great income, Meredith got in a lot of trouble with debt. I mean, five car loans, you know, it reminds me of somebody I was trying to help out once that had 23 different loans, including a pet loan, but five car loans. Right. I mean, it just goes to show you that no matter what your income, your. You can screw this up. Right. It is not a given, it is not guaranteed that you will be financially successful because you became a doctor. There are still some things that you have to do in order to become successful. And they got that figured out. Maybe not right from the beginning like some of the people we've had on this podcast, but I think that's inspiring to all of you out there who, like me, didn't get it all right from the very beginning. And so I thought that was pretty inspiring.

Yeah, absolutely. You know, that message of just take on more debt, just finance it out, you're fine, you can afford it, is all over the place. And I'm so glad this podcast is here to give you the other message, which is, you know that's not really a good idea and if you want to turn around as a physician, you'll be able to do it really quickly.

Yeah, that's the wonderful thing about our incomes. Did you know that the White Coat Investor not only has a podcast and a blog, but several books that will help you on your way to financial independence? These books cover topics such as asset protection and minimizing your taxes to keep more of your hard earned money. They discuss plans for insurance, housing spending, student loan elimination, investing and estate planning. You can learn how to become a millionaire within five to 10 years of leaving residency and how to invest in a sensible, low cost and effective manner with or without the assistance of a financial advisor. There's even a book geared directly toward medical and dental students so you can start optimizing your finances or early in your professional journey. Find the book that is right for you at the WCI store, at shop.whitecoatinvestor.com or on Amazon. You can do this and the White Coat Investor can help. All right, keep your head up, shoulders back. We'll see you next time on the rather the Milestones to Millionaire podcast. Or you can tune in on Thursday and listen to the White Coat Investor podcast as well. I suspect most of you probably listen to both, but until then, keep your head up, shoulders back. You've got this. See you next time.

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.