MtoM #66 - Living Like a Resident Really Works

This is the White Coat Investor podcast, Milestones to Millionaire. Celebrating stories of success along the journey to financial freedom.

This is Milestone to millionaire podcast number 66. Living like a resident actually works. 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. Listen, if you'd like to come on this podcast, we'd love to have you. You can apply to come on at whitecoatinvestor.com Milestones. And whatever your financial milestone is that you've reached, we'd like to celebrate it with you and use your experience to inspire others to do the same. Today we've got a great guest who has had a wonderful experience the last few years hitting a pretty important financial milestone. Let's get him on the call. Our guest today on the Milestones to Millionaire podcast is Ben. Welcome to the podcast.

Thanks, Jim. Happy to be here.

What's your profession and specialty, and how far are you out of your schooling?

I'm an assistant professor in palliative medicine, and I finished school in 2014 and finished my fellowship in 2018.

So I came out of training essentially in 2018. And you're married to another professional. Tell us about your spouse.

Yep. So my wife Angela is a physical therapist. She finished open, oh, about 10 years ago, I think.

Okay. And where do you live in the country?

We're in a Midwest metropolitan area.

Okay, Midwest. All right. And we're celebrating today debt payoff. It sounds like you have paid off quite a bit of debt. How much debt have you paid off?

Yes, sir, we refinanced $338,928 about a little over three years ago.

And how long did it take you to pay that off?

So we refinanced in October of 2018 and just made the last payment in December of 2021.

Okay. So just recently. Congratulations. That's pretty awesome.

Thank you so much. Yeah, we're very excited.

How does it feel to have it off your back?

It's a big relief. I don't know of another way to say it. It's like a several ton weight has been lifted off our shoulders.

And what was your range of income over that time period that you were paying off debt?

So that first year I was out of fellowship, fellowship I took a few weeks, just as kind of some personal time after school and training. So for the entire year between my wife and I, we were about 175. And then this most recent year, we were $375,000 to $400,000 or so.

Okay, that works out to be about a third of your income or more that went toward debt over the last three years. How did you do that?

Well, I suppose a few different things. I mean, I don't think coming out of school I was particularly financially literate. So, you know, podcasts like yours and a few others, I really got into reading financial books. So I really liked the Millionaire Next Door and the Automatic Millionaire, just to name a couple. And then really, I think it was a shared goal with my wife. We kind of came from different financial backgrounds, and she made it through her school and training without any educational debt. And I decided that if we're going to get there for our family, that I really wanted to get rid of mine quickly. So I think just having a shared goal with her and then lots of little stuff along the way. So we refinanced, I think three different times, specifically through your website. And the first couple times it was just to get the rate lower. I did fixed rate refinances, and then the most recent one, a little over a year ago, we did a variable rate loan, and that got us much lower. And obviously rates were low during that time. So just kind of using the tools at our disposal. And I think those are probably the big things. I should also mention, you mention all the time insuring against catastrophe. So we did that. We had an emergency fund so we didn't have to take out new debt along the way. And I thought that was really critical for us. I had a child who had to spend, you know, a month in a children's hospital. He's doing fine now, but certainly protecting against things that could have really precious along the way was, I think, an important piece for us.

So of the money you carved out and didn't spend, how much of it went toward investments and how much of it went toward paying off debt?

I think most of my after tax income, almost all of it at the end of the month would go towards debt payoff. And, you know, we were very intentional about maxing out our tax deferred buckets. So I Have a. A pretty generous 401A contribution from my employer. I do a 457. I do a 403B. My wife has a 401K and a 457. So we really decided in the early going that if we can end up backdoor rocks for both of us. So if. If we max out those really, if. If we want to get out of this big hole that we're in, we just decided to put everything extra at the end. So in the early going, some months, we'd put just a couple thousand extra dollars towards loans. And by a few years in, we were really able to make a big dent at the end, especially after bonus months and things like that.

So you didn't hold off investing. You were investing right along the way, maxing out retirement accounts and still paid off your debt in three years. Tell us how you did that.

Yeah, I mean, I really just think it was using the vehicles at our disposal in transparency. So we, like I said, I really wasn't financially literate. Coming out of training, I think I knew I wanted to pay off loans quick, but didn't know so much about the other stuff. So through listening to your podcast and just some of the other things, we recognize we could be putting more money away. And I made my wife listen to one of your podcasts on one of our long car rides, and she came back from that trip and started maxing out her 401k. And we're able to add more to that, and we've really seen that grow here in a couple of years. But, you know, it was paying ourselves first. It was putting the money where we could to make sure we were still investing. And then, like I said, whatever was left over, we just put towards loans, so we weren't tempted to spend it on other things.

So there's two of you, at least one child. How many children do you have?

We have three kids, all under the age of six.

So five of you, and what did you actually live on? How much were you spending?

Well, you know, maybe more than I probably recognize. I mean, we had at 1.3 kids in daycare, which for a couple of months in there, when the youngest was in daycare and the oldest one wasn't quite in kindergarten. I mean, that was over $800 a week for daycare. We really were diligent about making sure we weren't going out to eat too much. We tried to shop in bulk for groceries. We don't really got intentional about eating leftovers. And I really think Covid probably helped. Cause for almost two years we didn't go on vacations, we didn't really go out to eat. We were just kind of home as a family. And I think Covid was a really hard time, but I think it helped us sort of springboard our debt payoff for sure.

You think you're spending $50,000, $75,000, $100,000 a year. What do you think you're actually spending?

I would bet in the 60 to maybe $80,000 range.

So you lived like a resident. You basically lived like a resident and you were able to max out your retirement accounts and pay off your student loans in three years.

If I could have said that at the beginning, it would have been much easier.

Yeah, it's amazing. It works, huh? You're living proof that the formula works if you just do it. It's not complicated. Yeah, but it's not necessarily easy either. I'll bet you were tempted a number of times along the way to spend more money on something. What do you think was your biggest temptation, the hardest thing to say no to?

I think simple, but not easy, for sure. You know, there's still opportunities to spend money for unexpected stuff. So I mean, we live in kind of an older house. I think that's really helped us. It's less than one time, our gross income and you know, that's, I think probably helped us along the way. But we've, you know, all the time we look at newer houses and bigger houses and newer cars. But I drive my 8 year old car that's got some cosmetic defects. We'll just say, and you know, when we had our third child, we had to upgrade or I guess buy a new to us vehicle. So we traded a smaller vehicle. We had to buy a minivan, which my wife is not so keen on, but really I think it works for us and we were able to have that. We had to take out a little bit of a loan for that, but was gone in six months. So again, just buying what we need and wanting what we have and not really trying to just continually buy stuff just to have it. I mean, we just made do with what we have.

Approximately. What's your net worth now with all this money you've been saving?

I think so we've been doing this last couple years. I try to take our home equity out of it and I think that's gained a little bit, but I think, I think we're probably somewhere in the 500,000 range.

Wow, that's really impressive. You guys are doing awesome. And any of this come from either of your families? I mean, was there a big inheritance or. I mean, her parents paid for her school, but was there a big lump sum of money that either of you brought into the marriage or anything?

Not really at this point. I think just with what I've shared here, it's almost all off of just saving and putting money in retirement accounts and just not really spending a lot on extra stuff for the time being.

Very impressive. You guys have done very well. What's next for you in your financial goals? I mean, at the rate you're going, you're not going to have to say no to much in the future. She's not going to have to drive that minivan very long. You're not going to have a car with dents in it very long. At the rate you're going, you're going to be financially independent in just a few more years. But. But what are your plans?

Well, I think we will loosen up a little bit. I think we'd like to live in a nicer house, but we just finished the fire financial advisor course. I'm getting the rest of that down on paper. I think we really need to get a will and trust in place here soon. I think we're just going to kind of keep the course for a little bit. We'll stay in the same house until we find one that we really want to buy, not that we have to buy, so we'll save for a down payment. We want to keep funding our 529s for our kids and just continue to build wealth here for a little bit. Trying to be satisfied with what we have and not try to grow too fast now that we're out of that big student loan debt hole.

Awesome. Well, if there's somebody that's a few years back, they're you five years ago and they want to get to where you are now. What one piece of advice can you share with them?

I talked with my wife about this and really I think just have a plan, have confidence that if you work hard, you're going to be just fine. And then I really think big thing for me was try to find time outside of work so you don't just put your head down and work the whole time. I think in palliative care we talk about what brings you joy. And I think the converse of that's pretty true and important. Also what sucks joy from your life. And it was really hard for us just to go out and spend a lot of money if we knew that we still owed it. Other places. And so, you know, I thought just having a plan, getting rid of the student loans, it's. It's really allowed us now to spend money and not have to think about, gosh, I, you know, I need to be putting this elsewhere because we have so much to pay off. So I think that was big for us. Just focusing on what made us happy and getting rid of that debt has sure brought some happiness to us.

Well, that's pretty awesome. Well, congratulations on your success. I'm very proud of you. What you've done is very, very impressive, and I know it'll inspire listeners to do the same. So thank you so much for sharing your story and your experience on the Milestones to Millionaire podcast.

It's my pleasure. Thanks for having me.

Well, that was a pretty awesome episode. I teach this stuff all the time, once a week at least. Whether it's on the podcast, whether it's on the blog, on a newsletter, talking to somebody via email, or speaking to a group of docs. I tell them, hey, if you live like a resident for two or three or four years, you can max out your retirement accounts and you can pay off your student loans. And it really works. The math is undeniable. If you just do it, it will work. I promise. It works. Ben is a great example of how it works, what it looks like, right? Obviously, it's going to be a little bit easier if you live in the Midwest than if you live in the Bay Area, but it can be done in any part of the country. And you just got to keep the spending down enough that you can still do what you need to do financially to get there. So I appreciate him coming on and preaching the good word of keeping your expenses down. Still not denying yourself, right? You're still spending more than the average American household, but not going crazy either. And that allows you to do all kinds of great financial stuff. 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. Or you can do this, and the White Coat Investor can help.

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.