MtoM #64 - Back to Broke

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 64. Back to broke. As a white coat, you have valuable knowledge. Various companies want that knowledge, and they're willing to pay you for it. That's why we put together a list of recommendations for companies that pay you to take surveys. If you're looking for a profitable side gig for not too much effort, getting paid for surveys could be the perfect solution for you. You can make extra money, start a Solo 401, and use your medical knowledge to impact new products. One of the WCI columnists makes an extra $30,000 a year just doing these surveys. Sign up today and use a fraction of your downtime to make extra cash. Go to whitecoatinvestor.com mdsurveys you can do this, and the White Coat Investor can help. All right, we've got a great guest on today. Let's bring him on. All right, I've got my special guest here with us on the Milestones to Millionaire podcast. This is Dr. Khayyam poper. Welcome to the podcast.

Thank you for having me.

So we're celebrating a milestone with you. We're basically celebrating that you got back to broke and you did it really quickly. So tell us for a minute about your specialty and when you came out of training.

Okay, so I basically graduated from medical school in 2018, and then I did three years of residency in internal medicine, and I graduated this past July 2021. Then I took some, like, a few months off, and I've been practicing outpatient internal medicine for about six months.

Okay, so you're just out this last year, and what part of the country are you in?

I'm actually in New York. I trained and came from New York City, but then I moved upstate for the practice.

Okay, so training in the city and upstate for the practice. All right, so relatively high cost of living area. So I want to make sure people catch that part before we get into the story, because a lot of people talk about how hard it is to build wealth in a high cost of living area. All right, so tell us, what's your approximate net worth now?

Approximately $65,000, but I have, like, over $300,000 in assets.

And how much debt?

About $250,000. That's basically student loans. All of it.

Student loans.

Okay.

All right, so this is pretty impressive if you do the math. You're back to broke, and you did almost all of this during residency. The notes you sent Me were that you basically came out of medical school with a net worth of minus $250,000. And by the time you walked out the door three years later, you were at only minus $36,000, which is pretty good because there's a lot of people who go into residency and they come out even more negative than they were when they started. And you came out $214,000 wealthier than you were when you started residency. Tell us how you did that.

Well, I self educated myself about personal finance during medical school. Third year medical school, I was basically lost. I never had debt prior to that. And having seen that I owe so much money basically got me to start educating myself. Actually my first resource and first thing was the White Coat Investor book. I started reading, then I listened to the. Was listening to the podcast for some time and I slowly like started listening to more and basically reading other resources and expanding my knowledge about personal finance. So the first thing was basically to make a goal and then pretty much followed by a plan on how to attack it. So of course it always has to be with the, you know, living below your means and pretty much trying to not keep up with the Joneses, even though I carry the doctor title and the pressure is sometimes on to act like a doctor, but pretty much resisted that type of thing as well as the modern consumerism type of thing. And I started investing during residency. As soon as I started investing, I learned more about like which type of free payment plan to go on. But I think I was lucky in terms of COVID hit and we got all the payments, the repayments for the student loans on hold as well as the interests which made me stop my payments and allocate everything to investments at this point, which actually paid off because of the returns during COVID I later on discovered the fire movement, which is financial dependence. Retire early. Even though I don't plan on retiring early as much as trying to aim for the financial independence part, I am, how do you call it, I'm a numbers person. So I like to play around a lot of times with compound interests and as Einstein described it as the eighth wonder of the world. So I like to play around and make scenarios either in my head or trying to figure out how I can do better. And at the same time I'm also trying not to deprive myself certain things I do allow myself, for example, I do, I leased a new car during residency. That's my one thing that I allow myself to splurge on. But even that, like I got a good deal it was not a. It wasn't just a Nissan. But other than that, everything went into 403bs as well as Roth, IRA and mostly most I think of the rest was basically into individual investment accounts.

So you basically became financially literate, you developed a plan and you started maxing out retirement accounts and investing.

Pretty straightforward, very simply put.

What did your plan look like? Did you write down a plan? Do you have a written plan?

I initially wrote it down, but not in a way where I revisited. Maybe I should have, but in my head it was constantly rolling or I had, this is how I'm going to do it. I did write down my plan for repayments, but that changed during COVID But pretty much I have it in my mind exactly how I plan on doing it. What I added also was the geographic arbitrage. Even though I'm in the city. I actually moved upstate to basically cut the New York City taxes, which has a big impact, especially if you're a high earning individual and taking advantage of the lower cost of living here, lower car insurance as well as everything else. And actually the salary is higher upstate than in the city because the demand and supply.

But you ended up building most of this wealth while you were still in residency, still living in the city. What were you being paid? What were you making?

So the Average was from first year of residency was 71,000. Ranged up to, I would say with some moonlighting, like 85,000. My third year I did some, like the first year I did some things on the side like I was playing around with. What do you call it, like with the bank checking accounts, like bonuses. I made like $4,000 just during my first year of residency, just playing around with it. But then I stopped. It was too time consuming.

So it's not like you were moonlighting a ton. You didn't make $200,000 a year or something. You made a few extra thousand moonlighting, but mostly you just saved this money. How much did you actually spend?

Not much to me. I always think about, like I said, I'm a numbers person to me, I always think if I'm about to spend a hundred dollars, that's basically I have to work to earn $140 because of taxes and all the other things, about $140, $150. So it's always when you save $100, it's actually you're saving a lot more. I did go out, like I said, I didn't deprive, but residency keeping me most of the time at the hospital and Covid Keeping us constantly in the hospital. And nothing was open. So basically there was nothing to spend on. And we got a lot of free stuff during the first wave of COVID So it's pretty much not spending much.

I mean, are we talking you're spending $20,000 a year? More or less. What did it work out to be in?

Yeah, I would say approximately 20,000 a year in New York City? Yes.

And how did you do that other than, you know, people bringing in free meals and stuff because they felt bad for you during COVID I mean, did you have roommates? Did you live in a cardboard box under the bridge? I mean, how'd you only spend $20,000 a year in New York City?

So I actually, like, lived. That's actually something I should have given away earlier. I actually lived. My parents let me live like I had a room in their house. So that's actually. I saved a bunch a ton during residency by not paying the New York City rent. But other than that, everything was on me, my car, all the other expenses.

Anybody give you any money? Do you have any inheritance or anything like that?

Absolutely nothing. No inheritance. And nobody paid for my medical school or anything like that.

You paid for all of that with loans.

So loans, student loans.

So how much of this came from your family as upbringing? Did they teach you about money or is this kind of a new thing for your family?

Well, I'm the first, you know, physician in my family, the first high income earner in the family. So my parents, I don't think were very, like, financially savvy. Especially my father, even though he was like, living, I would say more frugally and saving. But I never seen him invest or do anything smart with it. And that basically I constantly was thinking I have to do better. And like I said, during medical school, I was like, starting to look for resources and trying to learn. What can I do better?

All right, well, time is short, but if there's someone out there that's like you were three and a half years ago coming out of medical school, owes $250,000 and wants to start building wealth quickly. What one piece of advice do you have for them?

Well, I would say start early, early as now doesn't matter what age, and try to educate yourself. There are plenty of free resources out there, such as the white coat investor. You just have to invest with your time and will create a goal and make a plan on how to reach your goal, share it with someone that you trust and has similar goals, and most of all, live below your means. Try not to keep up with the Joneses. Realize that people around you care less about what you wear or drive than what you think. While you need to sacrifice, don't deprive yourself completely. Try to resist the modern consumerism that is rampant. If you plan on upgrading your life after residency or anything, when you upgrade your income, try to postpone it for some time, like I'm doing right now. I am doing a financial fellowship. Try to pay off the high interest debts such as credit cards, max out your retirement accounts, invest, and try to consider geographic arbitrage. It's perhaps, I don't know, Einstein would agree that this maybe is the ninth wonder of the world.

Awesome. Well, thanks for being on the Milestones to Millionaire podcast. Congratulations on your success and I hope your experience inspires somebody else to reach the same amount of success. Thank you so much, Dr. Poper.

Thank you for having me, Jim.

All right. A lot of good lessons you can learn from that particular episode. One is if your parents allow you to stay in the basement, you can save a lot of money in New York City. So don't be afraid to take advantage of whatever unique opportunity you might have. Whether it's roommates, whether it's, you know, a spouse that's working, whether it's, you know, your parents offering to let you stay. And things like that can really help you get ahead. We also talked after we stopped recording that he's doing pretty significant geographic arbitrage. I mean, leaving New York City, just about anywhere you go is going to be geographic arbitrage. But going upstate, not only did he get out of a lot of city specific taxes, but he had much lower cost of living. And he's actually making a lot more money. He's making closer to $400,000, which as an outpatient internist is well above average. And so earning above average, saving more than average, you can build wealth very, very quickly. So a great example of somebody having a great start to their financial life. In this case, he ended up building assets more than paying down debt, but both of them increase your net worth and that's the measuring stick when it comes to, to building wealth. So I appreciate him coming on the podcast and hope you found that as inspiring as I did. If you would like to come on the podcast, you can apply@whitecoatinvestor.com Milestones. We'll celebrate whatever milestone you've accomplished, whether it's getting back to broke or paying off a mortgage or student loans, or becoming a millionaire or a Deca millionaire, whatever. We'll celebrate it with you and use your experience to inspire other White Coat investors to do the same. As a White Coat, you have valuable knowledge. Various companies want that knowledge and they're willing to pay you for it. That's why we put together a list of recommendations for companies that pay you to take surveys. If you're looking for a profitable side gig for not too much effort, getting paid for surveys could be the perfect solution for you. You can make extra money. Start a Solo 401 and use your medical knowledge to impact new products. One of the WCI columnists makes an extra $30,000 a year just doing these surveys. Sign up today and use a fraction of your downtime to make extra cash. Go to whitecoatinvestor.com mdsur 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 Milestones to Millionaire podcast.

The hosts of the White Coat Investor Podcast are not licensed accountants, attorneys or financial advisors. This podcast is free 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.