MtoM #91 - OBGYN Builds Wealth

This is the White Coat Investor podcast, Milestones to Millionaire, celebrating stories of success along the journey to financial freedom. Hello, and welcome to another Milestones to Millionaire podcast. I'm your host, Dr. Disha Spath. This episode is number 91. OB GYN builds wealth.

No more wading through dozens of books at the library, scrolling through hundreds of blog posts on dozens of blogs, or checking in daily with online forums, trying to gain a financial education the way the hobbyists do for a fraction of the price of hiring a professional financial planner. The Fire your financial advisor online course will take you from feeling anxious and having no plan to having a written financial plan. You can follow the rest of your investing career as a professional and a retiree. This course is the material that should have been taught to you in college, medical school, or residency, but never was. Fire your financial advisor also has a version eligible for CME credit. Get your financial life in order today. Go to whitecoatinvestor.com courses to sign up. You can do this. And the White Coat Investor can help.

All right. Welcome Dr. Bradley Mayer. How are you doing?

Well, thank you so much for having me today.

It's our pleasure, Bradley. Thank you for being here. And tell us what we're celebrating today.

We're celebrating having a written financial plan that has led to a lot of subsequent small financial milestones.

Okay. Small, but very significant. Tell us what financial milestones you've achieved recently.

We've been able to fully fund our emergency fund. We've been able to start and partially fund Roth IRA for both my wife and myself and not take on any more debt other than what we took out for medical school.

Amazing. So you're living on a resident's salary and able to do all of that? Most Americans don't even have $1,000 saved in real job, so what a great achievement. Tell us about where you are in your training right now.

I'm in my final year of training in OB gyn.

Okay, awesome. And what part of the country do you live in?

We're down in Houston, Texas, which is a good cost of living.

Yeah. And tell us about your family situation.

So I'm married to my wife. We've been married for eight years and we have four beautiful little children. A seven, a five, a three, and a two year old.

Oh, my God, they're so tiny.

They are, yeah. They grow fast, though.

And does your wife work?

She does. Well, she works, but she works in the home taking care of our children for now, yeah.

Awesome. So what's your total household income?

Our total household Income last academic year was $67,000 gross.

And what has been your range of.

Income during this time from 63,000 to this academic year will be 70,000. Awesome.

Yeah. The resident salary has gone up significantly since I've been in school, which is good to hear. Much needed.

Yes. Nice. Yes.

So tell us about your cost of living. What are your household expenses like?

We did some arbitrage within Houston and found not the nice, one of the least nice houses, but in a very nice neighborhood, as close to where we work as possible. We wanted to maximize the time I was at home and minimize the commute. And in Houston, if you go to the Med center, most people will commute anywhere between 20 minutes to an hour just to get to work and then another 25 minutes to an hour. So we chose a place that takes me 10 minutes to ride my bike. I don't have to pay for parking, which is $100 to $120 a month. Our rent is about. It's 1375 per month. And the typical rent in this neighborhood is about 2,000 to $3,000. For the same place that we have, we just found a private. An older gentleman who owns this home who was willing to give us a good deal.

Oh, what a nice find. Good job.

Yeah, it was a huge find. It was a huge blessing for us.

Wonderful. So you have a low cost of living situation, you don't have a commute, and you're riding your bike to work every day.

Every day? Yep.

Rain or shine and in the Houston heat?

Yes, every day.

Wow, that's really amazing. So I forgot to ask you about your income. Have you had any inheritance or any other sources of income that we haven't covered?

Yeah. So my dad wanted us to give. He gives every child $10,000 for a down payment on a home. And we were not going to purchase a home since we were going to rent for our four years. And so we used that to purchase our minivan when we had our fourth. And then my grandparents gave some money throughout childhood, but I didn't know how to manage money. So I spent it all when I was in childhood and like through high school and undergrad and things like that.

Well, thank you for sharing that. And what a generous thing that your family has established.

Yeah, yeah. Very grateful.

Were you able to purchase a minivan in $10,000?

Yeah. So we found a private seller who was an accountant, and him and his wife were very scrupulous in the way they took care of the minivan. And they only had two children, and so We. It took us about three or four months to sort through all the minivans we could find. And we found a private seller with about 100,000 miles on the van. But it was in great condition and only one owner, completely complete records. And so we purchased it for. I actually kind of only offered $6,000 for it, and he took it for $6,400, and so that's what we bought it for. And we were able to get some Weathertech mats so our children didn't destroy it.

You guys are really good at finding deals.

Yeah, we also, you know, it's interesting. There's a lot of wealthy people in this world, and they don't live forever. And so we also. We have very nice furniture in our home, like, much nicer than what we should have for our income. And it's because we use. We'll find estate sales where people have passed away or things like that, and they'll have this furniture that is just, you know, thousands of dollars. If you were to buy that, like the Pottery Barn or something. We just will offer, for instance, our couches. They were selling them for $2,000. They're Pottery Barn couches. And we said, we have $500 cash, if you'll take that. And they said, sure. So we. They were brand new. They'd only been amazing.

Oh, my God.

Where we kind of learned how to work the system with our small family.

You know, that's such a good point. That there, there's so much out there, and a lot of people are looking to get rid of stuff that you want right now. And, you know, it's so nice to think outside of the box and go to an estate sale. You know, you're also helping the earth and reducing waste and reusing and, you know, and recycling. I just. That's. That's a really good point.

Yeah. And it helps us. You know, we don't have a lot of money to go spend on nice, nice things, especially because our children will destroy them. So we just kind of. My wife does a really good job of finding ways to find nice things. And then we generally try to work with the person to give us a good deal. And if we need to save up for it, we do.

Lovely. Awesome. So you guys keep your expenses low. Household expenses by. By renting. And you have thirteen hundred dollars for rent. You're biking to work. What about groceries? How do you guys maximize your grocery budget?

Groceries is probably the only thing we actually ever go over on in our family.

Yeah, you have a big family.

When I'm on really hard rotations. My wife's alone with four children a lot of the time. And so it's not as cheap to feed a family on healthier non fast food items. And so that's kind of beaten into our budget. But groceries will spend anywhere between 800 and 1100 dollars in a month. It just depends on the month, really.

Yeah, that's pretty reasonable for four kids and two adults. Sounds like you kind of need that. Okay, so what's your approximate net worth? Right now?

Our approximate net worth is about 100, negative $175,000, but has improved from 200 minus $236,000 over the last three years.

Okay, and how did you do that?

The. We, you know, our emergency fund. We built up our emergency fund to $20,000. And then we also have about $20,000 in our Roth IRAs. My wife and I combined.

Okay.

And then we have. I signed a very large signing bonus of about $90,000, which after you give taxes and our tithing things away, kind of brought it down to about $175,000 in total net worth. So sorry. Minus.

That's okay. So the 90,000 signing bonuses for your new job that you're about to take?

Yes, yes, it is.

Okay. And where are you taking this new job?

It'll be in a small town called Twin Falls, Idaho. I'm. I'm from Boise, so we kind of wanted to go back west.

Oh, wonderful. 90,000 is quite generous for a signing bonus. My goodness.

In more rural areas, they. I mean, it's harder to attract people. But because I know Idaho and Utah, the jobs that we were looking at out there, we kind of knew what our worth was and we paid for a person to kind of analyze what we could get. And so we negotiated and we ended up with a very good contract and a very good deal.

Sounds great. So tell us a little bit about how you're spending right now. What is your pre tax saving rate?

Our pre tax saving rate is 10% of our gross. So this year it'll be $7,234, which is exactly 10% of our gross. And so. Okay, that's what, that's what we save every year. Now if we get any money from, let's say my parents give us, you know, us some money for Christmas or for birthdays or anything. We always save 10% of whatever extra money we get. So it ends up, you know, even on gift money, we'll end up saving a little bit more or if we get a tax refund or something. 10% of it always goes towards saving.

Awesome. That's a really good habit to have to just go ahead and save even all, all the presents. I can't say that we always do that, but that's a good habit to build for you and your kids.

Yeah, I mean, we don't say not if it's like a hundred bucks. We'll, we'll spend it. But if it's a larger gift or something like that, we'll Definitely apply our 10% rule where we give 10% and then we save 10% for ourselves.

Wonderful. And you mentioned earlier that a written financial plan was a big part of how you have been able to save and allocate funds towards your emergency fund and your retirement while during, while in residency on one income. So tell us a little bit about your financial plan.

Yeah, so we split it into three parts. Giving, saving and spending. And our giving. We always give 10% of our, of our income towards a tithe in our church and then also a little bit more to another fund that helps people who don't have enough to pay for groceries and things. And then for our saving savings. The first goal is to get an emergency fund, which we did. And I'm very conservative and so I wanted a fully funded and not just a small emergency fund, which is appropriate obviously, but I just wanted a little bit bigger one. And then for the after savings, I know exactly what retirement accounts and what funds I want. Right now we have, I don't have any bonds right now, but we invest primarily in the Total stock market index. We have the small Cap value index fund and we have Total International also through Vanguard. So those are the three funds that we use in that we don't do any bonds right now since we have a lot of debt. And then we know that we'll have a solo 401k when I become a partner at the practice that'll be at. And we know that we're going to keep the same exact funds. We're just going to distribute them differently. Once we have that extra space to save and then for spending, we know that debt is the thing that we want to get out of as soon as possible. Since I don't have a retirement account aside from my Roth IRA coming out of residency, we're going to use what additional money we have from our, our saving goals. We're going to put that towards our student loans and we have a plan to have them paid off in about 18 to 20 months out of residency.

Wow, that would be awesome if you could do that.

Yeah, that's the plan and we really hope to get it done because it'll set us up for a really nice. Especially when you have a big family, it's kind of nice to feel more secure in your financial well being.

Yeah. And remind us how much student loan you have as a family. Student loan debt.

Yeah. So my wife had $16,000 from a master's degree that she got in business. And then I have 200 including interest, $237,000 in medical school debt. And that's. We don't have any other debt. We rent and all of our cars. Everything else paid off.

So with the new, the forgiveness that's going to hopefully happen, that's going to basically wipe out your, your wife's debt then.

Yeah, to wipe out my wife's debt. It'll also bring our chunk down enough to where I'm kind of a forward thinker. So I've already calculated how much for taxes and what we'll be able to spend as a family. And, and it's just nice to know that on an attending salary we'll be able to even live will be very comfortable despite, despite being on an 18 month plan to pay off our loans. So we're, we're very, we're looking forward to it.

Yeah, it's absolutely doable. I mean in fact your debt burden is very close to mine. Mine was 238,000. Yeah. And we wiped it out in 17 months. So you can totally do that.

Yeah. That's awesome.

Well, yes we do. We did have the benefit of my husband having income too. But you know, like, like you said there plenty of room as an attending physician to live a good life and to achieve your financial goals. And you're showing us how you are able to do that as a resident and it's going to be even easier as an attending. And the biggest part is having a written financial plan. I mean it sounds like you have a very solid plan going forward.

Yeah, we work really hard on it and I kind of like Mr. Money Mustache. I'm not nearly that way but. Well, he kind of put some thoughts in my mind like if you can find something, how can you get something that nice but for a little bit cheaper kind of an idea. I also did that, you know, geographic arbitrage, going to a more rural area. My income as an OB GYN compared to my peers who are signing jobs is significantly more. Just because some people are big city people, some people are not. And that's, that's, that's fair. It's just that, thankfully, where I'll be practicing pays a significant amount of money, more than if I were to stay in a big city like Houston.

So if you don't mind, for clarity, how much are you signing for? What is going to be your compensation?

Yeah, I got a $90,000 signing bonus, and then my first year salary is $325,000. My second year is $325,000. And then after your second year, the contract has. I had it worded so that if they don't offer me partnership, then they have to pay for my tail insurance and they have to pay my signing bonus back and all that stuff. But if I don't accept. If I don't accept partnership, then I have to pay for those things. So we have awarded in a mutually, just a good way for both of us. And so once you become partner, though, the income range at the job and the private practice has ranged anywhere from just over $400,000 a year to just under $600,000 a year in that specific private practice. So it's. There's a good earning potential in private practice in a more rural area.

Yeah, yeah, absolutely. That seems like well above average from what I've heard for OB gyn. So congratulations. Yeah, absolutely. Well, Bradley, thank you so much for coming and sharing your life, your journey, all your wisdom. Thank you so much for sharing all of that with us.

Thank you for having me. I really appreciate it.

All right, have a good day and I hope you get some rest. I know you've been up all night working.

You as well. Thank you.

All right. What an exciting story. I feel so inspired by Bradley's story. They were able to save up an emergency fund. They were able to fund Roth IRAs and live and feed multiple children at home on one resident's salary. Wow. I mean, seriously. I know I was lucky to get out of residency without taking on more debt. I was certainly not trying to kill it financially. And these guys, not only did they write down their goals, they wrote down exactly what they were going to be investing in. They wrote down an entire written financial plan, and then they executed. They got it done. And, you know, despite all the odds, despite a much lower income than he's going to have for the rest of his career, they were able to meet all of their financial goals in residency. What an inspiring story. I know I'm going to be trying to be a little bit more thrifty and more resourceful like Bradley and his family were. So thank you so much for listening today. I hope there's something from here that you can take and apply to your own life.

No more wading through dozens of books at the library, scrolling through hundreds of blog posts on dozens of blogs, or checking in daily with online forums trying to gain a financial education the way the hobbyists do for a fraction of the price of hiring a professional financial planner, the Fire your financial advisor online course will take you from feeling anxious and having no plan to having a written financial plan. You can follow the rest of your investing career as a professional and a retiree. This course is the material that should have been taught to you in college, medical school or residency, but never was. Fire your financial advisor also has a version eligible for CME credit. Get your financial life in order today. Go to whitecoatinvestor.com courses to sign up. You can do this and the White Coat Investor can help.

Thanks so much for listening and thank you for all that you do. Keep your head up, shoulders back. You've got this and we can help at the White Coat Investor the hosts of the White Code 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.