MtoM #86 - Multimillionaire OBGYN

This is the White Coat Investor podcast, Milestones to Millionaire, celebrating stories of success along the journey to financial freedom. Hi and welcome to another episode of the Milestones to Millionaire podcast on the White Code Investor. This is podcast number 86, multimillionaire OB GYN.

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I'm so excited to introduce our guest to you today. He is an OB GYN who has reached an incredible eight figure net worth. A huge accomplishment. Welcome, Dr. Allen.

Thank you. Thank you for having me on.

Absolutely. Can you please tell us a little bit about your about yourself and how far you are out of school?

Well, I'm from the Midwest and went to undergrad state medical school in the Midwest. I graduated medical school in 1993, finished residency in 1997. I had a four year commitment to the military and actually started private practice in 2001.

Thank you for your service.

Thank you very much. It was an honor.

So you've been practicing now for 21 years?

21 years in private practice, 19 years in the private group that I'm with now.

Wonderful. And can you tell us what your approximate net worth is now?

It's approximately $12 million.

Oh my gosh. Amazing. And what's that divided up into?

A million is in home equity and a paid off home. Have about 5 million in taxable accounts, mutual funds, ETFs. About 400,000 of that would be in a private equity and maybe 100,000 in bonds. Have about 1.5 million in a pre tax profit sharing plan through work and about another million in a Roth 401K and backdoor Roth between my wife and myself.

Wonderful. And along with that, we have such a huge accomplishment.

Yeah. Well, thank you. Yeah. On top of that, we have about $3.5 million equity into a surgery center and a specialty hospital.

Amazing. And how did you get that opportunity to buy into that?

Well, that was the original partners in our practice had built a surgery center and had partnered with the local hospital system to build a single specialty women's hospital. And that's part of the partnership track is you're offered ownership into the centers.

I see. Wonderful. Well, that sounds like that was an, a great investment.

Yes. It scary in the moment when you're borrowing that much money to buy into these centers, but well worth it.

And what was your net worth when you came out of school?

I would say probably pretty much zero. Really had minimal to almost no student loan debt. I had the military or the HPSP military scholarship. So really no net worth or zero net worth. But also a low starting salary being in the military.

Right, right. And definitely a commitment. You know, your time is very valuable and that's. And you paid for it with your time.

Oh, we did, we did. But you know, in hindsight, I felt like it was an honor.

Absolutely. I mean it's, we appreciate your service so much. It's so needed. So when you came out of, when you came out of school and you finished your military commitment, what has after that, what has your range of income been?

Well, probably when I first started private practice, I think it was in the neighborhood of $250,000. But that ramped up pretty quickly.

Nice. And what was the max that you hit, you think?

I would say my top year, between the practice and the Equity Investments, about 1.2 million.

Wow, that's amazing. So, so did you see a huge growth in your, in your clinical income or was this a lot of your passive investment?

Well, the clinical income probably tripled from the beginning till the peak. I've started to purposely slow down the last few years, so I'm making a little bit less. But the, the other investments have stayed pretty consistent, pretty steady.

Wonderful. And just so just for the record, did your parents pay for your school at all or did you receive an inheritance?

No, there was no inheritance. My parents helped a little bit with the undergrad. You know, they really didn't have the means to do a whole lot, but they helped some. And then I had few kind of minimal scholarships and I worked. And the reality is the score just really wasn't that expensive.

Oh, that's great. So can you tell me a little bit about what your secrets have been? Like how most doctors do not get to double digit millionaire. What, what do you think was your secret to getting there?

Probably the most important thing is having the large income. That was a big part of it. And having your spouse on board is another major point. And really living below your means, I mean, you could have a lot of nice stuff, but you can't have all the nice stuff.

Great point, great point. I mean, it's a constant just picking and choosing. You have to be really mindful. It's so easy to get Caught up in the constant upgrades and the constant things that are in front of you to buy. But even with a large income, that's a great reminder to. You still have to pick and choose. You could still spend it all.

Oh, absolutely. And I think the other big surprise that young physicians need to realize when they start making the attending income is your tax burden is going to go up tremendously. And so you don't need to look at the gross, you need to look at the net.

What do you think your net has been recently?

Probably after taxes in the neighborhood of around 600,000. I would say the last couple of years, 6 to 700,000.

And so that's a lot different than the other figures we recently talked about. So yeah, that's really important to keep in mind.

Yes, I try to tell the younger partners that when they join the practice and try to keep their lifestyle in check along with the new tax burdens you're going to be carrying around.

Right. So how do you, is there any tax planning that you do to try to optimize your taxes or your situation?

Well, to be honest, I probably haven't done as good a job of that as we should have. I really feel like that most of us as physicians, even though we have large incomes, we don't have large enough incomes that we could really take advantage of the, all the different tax shelters that are out there that you hear about and, and you hear the super wealthy people taking advantage of most of our income truly is taxable income.

And not that there's anything wrong with paying taxes. It's just a different set of, set of obstacles than other super wealthy double digit millionaires deal with. So you basically started you work in the Midwest, you're an OB gyn, and you clearly worked very hard. You bought into a practice that has done really well. You also bought into a surgery center, so your investments have done well. And you also mentioned a brokerage account where you've been investing in ETFs. And that's wonderful. So you've clearly also utilized the WCI principles. How about your upbringing? Has your upbringing affected the way you manage money at all?

Undoubtedly it has. I mean, I grew up in a, you know, middle class, probably lower middle class income family, but also had very hardworking parents who managed the money that they did make very well. So watching them handle money well definitely had an influence on how my wife and I have handled our money as adults and when we started having children.

Wonderful. And what any specific lessons that you took away from your parents?

The main thing Is live below your means and don't try to keep up with the Joneses.

Yes, yes. Great lessons to learn. I didn't ask about your family situation. Do you have any kids?

We do. We have actually six children.

Wow.

The oldest is actually a resident physician and all the way down to middle school.

Wonderful. Oh my goodness, you are blessed. Have you found any challenges with them? Did they go to private school? Are you paying for their schooling?

No, we, we. All of my kids have gone to public K through 12 schools and the. All of them have gone to state universities and state medical schools. Well, one's went to state medical school, one's starting a state law school this fall. But I think part of it is when you were blessed in our state to have good public universities. And, you know, for us, we can have as many kids as we have. The thought of investing in the private education for college is just daunting to the point that, you know, that delays retirement potentially. So.

Yeah, well, yeah, you know, I did the same thing. I went to all public schools. And I have to say, I mean, I feel like I got a very good education and, and I'm very, very thankful for those resources from the state. And you know, those are huge decisions and very difficult ones to make and very individual. But it does, it is a huge investment. It's a huge thing to put your money into if you decide to go private. And so I can see with six kids and them all going to private school, obviously that does help you speed up your retirement. What do you have a retirement date? Are you going to be retiring anytime soon?

I'm thinking in the next five to seven years, I'll probably work full time for about another five years. Then at that point I'd like to find some sort of potentially part time job. But cross that bridge. Will, when I come to it, I think one of the things I crave, just like a lot of people, is having purpose in life. And I fear that if I just quit entirely, I'll miss that part of my life. So.

Wow, that's so inspiring. That's wonderful. Do you have like a certain number that you're shooting for or are you, are you money wise? Are you prepared now?

I think we could walk away at this point and really not have any worries. But I think one thing that, that has surprised me and I've read some stuff about this is as, as we've kind of set goals and we hit those goals, we continue to move the bar. So first I thought it would be, you know, 5 million and you Hit that and you feel like, well, that doesn't feel like enough. And then you, you know, you hit seven and a half million and then that didn't feel like enough. And now that we've crossed into the eight figure point, I know it's enough. But it's a mental hurdle to say I know it's enough. So I think I'm a little bit disappointed myself that I can't just say I'm ready to stop. You know, there's always. You feel like you always kind of need more. But I know truly in the back of my mind that we have enough now. But I would like to see like a $15 million number. And why I have comfort in that number versus half of that I really can't explain.

Well, it sounds like you have plenty of motivation to keep going anyway. Okay, well, what, you know, you've clearly done so well with being mindful about your spending, being disciplined and working and investing. Well, what advice would you have for someone that's just like you before you started?

Well, I think the big thing is pay yourself first, save the 20% of your gross. The other thing is make sure that you marry somebody that has similar goals and values. And I think those two things alone will lead to success.

Wonderful. And yeah, just as a shout out to your partner, could you please tell me a little bit about your household situation? Are you married? And a little about your partner?

Yes. Well, we've been married 29 years and I met my wife when I was in medical school and she was finishing undergrad and married right as I finished medical school and she has a master's degree and has a finance background. But after we had our third child, from that point forward, she's essentially been a. Not essentially. She is a full time mom and has done a. Just a tremendous job raising our kids. And because the onus of that has been on her and not me. But, but we've, we've been a pretty good team, to say the least, I think so. Amazing.

She has a finance background. You got lucky.

She does. We did. And her and I have very, very similar kind of views toward money and how you should, how you should use it. I mean, you need to save it, but you need to enjoy it. And, but that's been a huge asset to our marriage having. Having similar goals.

Wonderful. Awesome. Well, thank you so much for taking the time to come here and share your story. There's so much to be learned here and I'm just so inspired by your example.

Well, thank you for saying that. And I Feel the, the same way. It was just nice, you know, three or four years to go to discover the White Goat investor and all of his principles and philosophy. And sometimes when you're, you feel like you're a man on an island, you know, you look around, you see how your colleagues, contemporary or contemporaries are living and you think, are we doing the right thing? And by finding the white coat investor community, you know you're doing the right thing.

Yes. Oh yeah, that's so important. Yeah, we are. We are in such an interesting little silo of high income, high tax professionals. And when you are making the wise choices that you've made, a lot of the times it's very difficult to find peers that kind of understand that. So thank you so much for adding to our community and being here.

Thank you. It's been an honor and a pleasure.

What a wonderful conversation that was with Dr. Allen. I feel like I took away so much and you know, it was really amazing to get the insight on all the numbers that he was willing to share. He married clearly a very frugal spouse, had six kids, did his time in the military and contributed to the country and then started his practice and lived within his means, below his means puts put money away every month, paid himself first and invested in a surgery center and continued to work. Clearly he didn't tell you, but he was actually post call today and hasn't slept much. It's amazing to see the principles that the white coat investor teaches working out so well for someone who just is obviously clearly such a nice person and is clearly willing to share his lessons with you. So I'm so glad that we had that conversation today. The takeaways that I got from that conversation was just to continue to live frugally, to continue to think about what is actually important to spend on and spend on that. And remember, you can have anything, but you can't have everything. In the words of Paula Pant, you have to choose. Every time you meet a new milestone, you get other things that you want to spend your money on and other things and the goal keeps shifting and that's okay. That's life. We just have to be mindful at every step of the way and everything will be just fine.

If you're looking to boost returns, lower taxes and build wealth, join the WCI monthly Real Estate Opportunities list. For tips and strategies to maximize your real estate returns. And for introductions to exclusive investment opportunities, expect educational emails that introduce you to syndicators, fund companies, online courses, and online real estate platforms, go to whitecoatinvestor.com reopportunities to sign up today. You can do this and the White Coat Investor can help.

Thanks for listening, y'. All. I'm Dr. Spath, your host. This is the Milestones to Millionaire podcast. Keep your head up, shoulders back. You've got this. We can help at the White Coat Investor. 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.