MtoM #84 - Primary Care Doc Gets 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 84. Primary care doc gets back to broke. If you are finding our podcast informative and helpful, check out our website. Since 2011, we've been working hard to provide valuable personal finance and investing information. Through thousands of blog posts written by an array of authors, you can find information on how to manage your student loans, fix and avoid common financial mistakes, understand your retirement accounts, optimize your investments, find professional help at a fair price, get started investing in real estate, and so much more, all at no cost to you. You can find out more about the courses we offer, the conferences we put on, the newsletters we provide, and interact with other WCI readers through our online forum. Head on over to whitecoatinvestor.com to start learning today. You can do this and the White Coat Investor can help. All right, well, this is the third week in a row when we have a white coat investor who has gotten back to broke. We started with a OB gyn, then we had an anesthesiologist. Today we have a primary care doc. I hope you're getting the message that your specialty doesn't matter so much. It's more about what you do with that income when you get it. If you have a plan for your income in that first year out of residency, you can use it to build wealth, whether that's paying down debt, whether that is investing, whether that is, you know, getting into your dream house, et cetera. You can do it. You just gotta have a plan and then work your plan. Let's get today's guest, Matt on the line and talk about his plan. All right, our guest today on the Milestones to Millionaire podcast is Matt. Welcome to the podcast.

Thanks for having me.

So tell everybody a little bit about you. What do you do for a living? How far are you out of training?

So I'm a primary care doctor, internal medicine trained. I finished residency in June of 2020 just after the pandemic started. Started working at my full time job about December of 2020, where I've been since then.

Awesome. So you're a couple years out.

Yeah.

And. And we're celebrating that you're back to broke, although that was. That was a little bit ago. What's your net worth now?

Yeah, so our net worth now is about in the 200 range.

Okay. Congratulations. That's pretty awesome.

Thank you.

What was the lowest your net worth ever got?

We were negative 280 was the lowest negative 280.

All med school loans or what other debt did you have?

So mostly majority med school loans have a very small amount for from undergrad, same as my wife. But then there were. We had purchased two cars during residency, one from a family member, one new.

So at some point you decided to sit down. Sounds like you're married, right?

Yes.

You and your spouse sat down and you calculated your net worth. Why did you do that?

So actually, I started this back in 2018. I've been doing it every month. I. I keep like an Excel sheet. And just so I found that it was too cumbersome for me to figure out. I don't like doing budgeting. So I figured if I just tracked the net worth, I could just kind of see if we're sort of sticking on track. So then if not, then I can take a closer look at. Or we can take a closer look at our spending habits. So I've been doing it every month since then. So it's been about four years now.

So you're enough of a finance nerd that you know how to use a spreadsheet, but not so much a one that you're willing to budget?

Yeah, no, I. It takes me, you know, five minutes every month to go through everything, whereas budgeting. I've tried using Mint. You need a budget, but I just couldn't. It was just too much for me.

And yet you can still be financially successful. You can still pay off loans. You can still, you know, build net worth even without, you know, getting into the nitty, gritty, hardcore budgeting kind of stuff.

Yeah, Yeah. I guess it works when you don't really have children or a lot of responsibilities.

Yeah. I suspect it may have something to do with just your habits, too. But let's break down your net worth to start with. What do you have right now? How much you got in retirement accounts or other investments or cash or home equity or loans? Give us the breakdown.

Yeah, so we have about. In assets, we have about 4 to 510% in cash. The rest invested mostly in retirement accounts. You know, 403B, 401 Roth IRA, 529 HSA, stuff like that.

Yeah, so it spread around pretty good. And I think you started with 250 or so in student loans and how much that you got left?

Pretty much most of it. I use Excel a lot. I like to figure out whether it's more worth it to pay off my loans or invest. And, you know, I figured in the. At least the first seven years after residency that it May be better for me personally to invest. So I try to pay as little as I can towards my loans, especially.

When there is zero percent and you don't even have to make payments, huh?

Yeah, for at least the last two years, it's been great. But even aside from that, it was still worth it, at least in the short term to do that.

So what kind of income are we talking about over the last couple of years? Does your spouse work?

She does. Together we've made. When I was in residency, we were making between, I'd say, 120 and 150 together. Kind of evenly split between the two of us now, we're in the 300 range now that I'm in attending.

Okay. And let's talk a little bit about any other help you got. Did your parents pay for any school or was that you borrowed the whole thing or did you get some sort of inheritance or what?

No. Yeah, so my parents helped out with undergraduate. They paid about. Over four years, they paid about 60,000. The rest came from grants. And then I paid, maybe came out of school with about 13,000 in loans from undergrad. Med school was all me, although they were nice enough on occasion to help me with groceries and things like that. So that was very helpful. Both my wife and I, we haven't received any inheritance.

All right, so what were your secrets to success? Right. I mean, you've gotten back to broken, really, in less than two years out of residency. What do you attribute that to?

Yeah, so I. The main thing was we employ the pay ourselves first. So I try to invest. We try to save and invest as much as we can and then live off the rest. It was a little bit hard in residency to max out two 401ks, but at least we were doing one of those, plus the Roth ira. And then since becoming attending, it was a lot easier to do that. So we were able to open up a taxable brokerage account, and now we're sort of funding that as well.

Yeah, And I see people all over the spectrum, some people put all the money toward the loans initially. A lot of people find a balance. You know, some of it goes toward loans, some of it goes toward investments. You're kind of on the far end of that spectrum. You really didn't pay anything extra on the loans. It all went toward investments. Tell us a little bit more about that decision and why you decided to go that direction. Did it have anything to do with the student loan holiday or you just felt like this was a good time in your life to Kind of take advantage of investing on leverage.

Yeah. So the, you know, the loan forbearance, you know, 0% was sort of icing on the cake. I would have done the same thing even if I had to make regular payments. The way I sort of thought about it was, you know, I think a lot of people compare, you know, what your expected growth rate is versus what your interest rate is, but a lot of people don't take into account that it's compounded growth versus simple interest on the loan. So I ran a calculation and sort of figured, at least in the first five to seven years that at the end it's likely that I'll come out ahead if I put more money towards investment. I hadn't planned on not making any payments because of the pandemic, but I guess again that was just icing on the cake. So I'll continue that, but probably, you know, once payments resume, I'll have to at least pay something.

Yeah. So you plan to stretch them out for a while? It sounds like.

Yeah, that's the goal for now. But things could change depending on how the market does.

Okay, Any of your upbringing that affected how you manage your money?

Yeah. So my wife and I, we both grew up in pretty modest, very solid middle class homes where our parents actually live about a mile away from each other. You know, my dad's always worked, he's worked two jobs. He's now 70 and retiring from one of his jobs. And you know, I think what I would like to do is at least have the option of not having to work eventually, even though I may continue to work. So, you know, we both want to live again, modest lifestyles from what we were brought up from and basically have that independence to make a decision about what we want to do with our lives and not be, you know, bogged down by having to work to make ends meet.

Okay, let's say there's somebody that was just like you were a few years ago, you know, halfway through residency, wanted maybe to have options in life, didn't want to be working two jobs in your late 60s and maybe thinking about doing something with their finances. What advice do you have for that person?

I would recommend that you sort of figure out what's important to you. You know, for us saving was sort of important, but again we don't have kids. Whereas a lot of my co residents had other obligations, which can be very difficult. But once you sort of come up with a plan with whether you have a partner or not, you can sort of then figure out and sort of apply something that allows you to build towards that goal. For us, we were able to put as much money as we could and we were both thankful that we were able to do that. But now we're at the point where we, we're also, you know, it's great to live for tomorrow, but we also want to enjoy our time while we're young. So we travel a lot. We don't feel that we're giving anything up. You know, we don't live a very lavish lifestyle, but, you know, we're happy with how we're living.

Ben, do you have any idea how much you spend?

I was going through a budget and I probably overestimate, but I would anticipate that we spend anywhere from 70 to 90,000 if a year.

And you don't feel like you're denying yourself at all. You feel like you can take all the trips you want and that you're not having to.

Yeah, I mean, we travel a lot.

You're not impoverished in any way?

Yeah, no, we, we've, you know, I, I'm lucky. I have, you know, six weeks of vacation, which I take advantage of. You know, we, we travel internationally as much as we can. We go on weekend trips. I mean, not having worked a weekend in over two years has been fantastic. We buy, I mean, we spoil our puppy. We're buying a house at the end of the month. So we don't feel like we're giving up a lot, although my friends might say otherwise.

Yeah, well, you certainly have got results from your approach. Right. Not only have you gotten back to broke, you blew right through a net worth of 0% or of $0 and now you're building wealth quickly. So congratulations to you. Thank you for coming on the Milestones to Millionaire podcast and sharing your story with others. I know it will inspire others. We always get criticism of people who are married to super high earners or they're in, you know, some really high paying specialty. So it's always great to have somebody on that's primary care, a very reasonable physician income and, and still being financially successful. So congratulations to you and thank you for everything you're doing.

Yeah, thank you for having me. It's very nice to meet you as well.

All right, that was great. I enjoyed having Matt on. There's a lot of takeaways there. Not only can you be successful in primary care, you know, even with the big old loan burden, you know, that's obviously one takeaway, but you can also do it in a lot of different ways. There are many roads to Dublin. As Taylor Larimore of the Boglehead's fame likes to say, you don't have to follow one path. You don't have to do exactly what I did to be successful. All you have to do Become financially literate, have some kind of a plan, have a reasonable amount of financial discipline and you'll make progress. And you can get your loans paid off, you can build a portfolio, you can get that dream house you want, you can travel the world, you can do all this stuff. But what you don't want to do is wake up at 60 or 65 and realize, I don't have anything saved. I can't stop working and now I don't want to work anymore. So take care of business early in life. Get yourself in a position where work is at least optional. You can get the dream job that you've been looking for, and you can have the success that you want along the way. If you are finding our podcast informative and helpful, check out our website. Since 2011, we've been working hard to provide valuable personal finance and investing information. Through thousands of blog posts written by an array of authors, you can find information on how to manage your student loans, fit, fix and avoid common financial mistakes, understand your retirement accounts, optimize your investments, find professional help at a fair price, get started investing in real estate, and so much more, all at no cost to you. You can find out more about the courses we offer, the conferences we put on, the newsletters we provide, and interact with other WCI readers through our online forum. Head on over to whitecoatinvestor.com to start learning today. You can do this and the White Coat Investor can help. If you'd like to come on this podcast, you can apply whitecoatinvestor.com Milestones we'd love to have you and celebrate your accomplishments. Until next time, keep your head up, shoulders back. You've got this. We can help. See you next time.

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.