MtoM #92 - Emergency Physician 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 92, emergency physician gets Back to broke. Welcome back to the podcast. If you'd like to come on the podcast, we would love to have you. You can sign up whitecoatinvestor.com okay. Whitecoatinvestor.com Milestones and you can apply to come on this podcast. We would love to share what you have accomplished with other White Coat investors and inspire them to do the same as you. 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 got a great guest on today. Let's get him on the line. All right, our guest today on the Milestones to Millionaire podcast is Zach. Welcome to the podcast.

Thank you. It's a pleasure to be on here. I've listened to a lot of these and so it's fun to finally get on.

Yeah, it'll be exciting to hear your own voice on there up until the point where all your, you know, med school and residency classmates start texting you saying they heard you. So that'll be good. Well, welcome. Tell us where you're at, what do you do, how far are you out of training, etc.

Yeah, so I'm in emergency medicine. I'm about one year or a little over one year out of residency training and currently living in Iowa. So kind of low cost of living in the Midwest.

Iowa. Funny you should mention that. I've been trying to buy a truck in Iowa from a dealership out there that was giving me a really good deal. And they just emailed me after 11 and a half months of ordering this truck that I'm not going to get a 2022. So it looks like they're going to roll my order over to a 2023. I may never get this truck. We'll see how it goes. Anyway, that's my only connection to Iowa. I thought it was going to be coming out there soon, but it might be a few more months before I make it out. All right, we are celebrating a milestone for you today. You have gotten back to broke.

Yeah.

Congratulations.

Thank you. Yeah. So back in June, so almost exactly a year after residency, I was able to get back to broke, and then I spent a couple months. So a little bit above that now, but it was a fun milestone to reach.

Yeah, that's pretty awesome. This is a big deal. For those of you who listen to this and aren't doctors, this is a huge deal for a doctor to get back to broke because so many of us come out of school owing 200, 300, 400, $500,000 in student loans and no assets to our name. So just getting back to broke is a big deal. Broke, of course, is a net worth of $0. So once you actually have positive net worth, you are officially back to broke. And you have accomplished that, Zach, and in relatively short order. So congratulations to you.

Thank you.

Let's jump into the details a little bit. Let's talk about your income for the first. At first, you're. You're a year out of training, approximately. What are you making?

So I've been doing pretty well, you know, living in the low cost of living area. They reimburse a little bit better for emergency medicine. And so so far this calendar year, I'm at about 435, and so should end up a little over 500 on the end of the year.

Yeah. You've taken this live like a resident thing seriously. You're not only probably saving like a resident, but you're working like a resident. You're working pretty hard to be making that money anywhere in the country.

Yeah. The paychecks look a lot nicer after residency, even working the same hours. So that's been nice.

Yeah, for sure. Are you married? Is there a working spouse in your life or.

No, I am married. My wife, since I became an attending is staying at home. We have a 10 month old son, so I got to and fortunate to have him this year, and so she's staying at home, hanging out with son and dog, and I'm going to work.

Okay. Is there anything else besides your clinical income? You got an inheritance or a trust that came in or you just sold a business or anything else? Or is this all this income is just from your clinical work?

That's just clinical work.

Okay. And let's talk about your net worth let's start with assets. What do you have on the asset side of the calculation?

So right now we're about 110,000 in cash, which is a little more cash heavy than I usually am. But my savings account is actually a higher interest rate than my student loans right now. So we're letting it sit there and build up.

Especially with student loans at 0% right now, huh?

Yeah, well, I refinanced actually last September, so right before they announced an extension of the 0%. And so I did refinance, but I got it to a low rate at 2.05 and it was as I was starting as an attending, so just kind of got in the habit of paying it rather than continuing to defer.

Yeah, that's pretty close to zero percent anyway, right? There's a lot of people that like to refinance now. They can't get anywhere near 2%. So there's some advantages there. All right, what else?

So then we've got 57,000 in Roth accounts between my wife and I, and so those are from residency. And then this year. And then 26,000 in a work non governmental 457 and 56,000 in the work 401k. And then 12,000 in an HSA, 10,000 in I bonds this year since they had a good rate. And then 13,000 in the brokerage account. And then I also have a. You know, we bought our house when we started as an attending. I don't usually include that in the net worth, but there's about 90 to 100,000 there that I didn't include in the net worth since I'm also not counting the mortgage.

Okay, all right, then let's talk about the other side of the equation. Let's talk about your liabilities.

So the biggest one is the student loans that are still out there. So right now I'm at about 132,000 in med school student loans. My wife still has $10,000 in student loans left, but those we did not refinance. So there's a chance they will get forgiven here in the coming months, which would be nice. And then about $42,000 in a family loan for I got a new car and wedding and some moving expenses right at the beginning of residen.

So when you add it all up, it's clearly on the positive side. Now when you first applied, you were just barely on the positive side, but you've continued to make pretty good progress over the last six months. What do you calculate your net worth as today?

So right now I think I'm about 100,000 again, not counting the primary residence.

Cool. Awesome. Well, congratulations to you. That's pretty awesome. All right, well, you've accomplished something that a lot of white coat investors would like to accomplish. Tell them how you did it.

So I think the first step that really helped was getting that education and just knowing how to add up the numbers and set a plan in place to be successful. And so I read the Write Code Investor book in medical school and really appreciate all the teaching that you do to help us along this pathway. And then subsequently, I read a lot of the recommended financial books on your website and just continued that financial education as I went through the medical education as well as. And that allowed us to really have a plan in place before we ever even started as an Attending, so that we knew what we were going to do with those first few paychecks. And so I think that education and then getting the plan in place and getting good habits is really the key to success here. I think one thing for residents, when you first start, you're starting halfway through the calendar year, and if you can get habits in place where you can maximize your retirement accounts and at your employer in those first six months as an Attending, that will set you up great to have good habits in the years coming and continue maximizing those retirement accounts over the entire course of the year, rather than just those first six months.

Awesome. That's pretty great. Do you remember when you were first applying to med school? You got into med school and you're like, okay, now I gotta figure out a way to pay for it. And you added up what you might have to borrow to pay for it. How scary was that for you?

It was a little bit scary. I, you know, I'm fortunate my mom is in finance and was able to kind of help walk me back from the ledge a little bit. But, you know, I was fortunate to be able to go straight from undergrad into med school, so didn't have the gap years and was going to be able to, you know, take that opportunity cost. It's been a little bit difficult, you know, seeing some of my college friends that have been working for, you know, four, five, six years, you know, and already starting to get Friday afternoons off and going on vacations and things. So I think that was the harder part is just seeing all of the friends that you're close with that didn't go to medical school, you know, kind of enjoying that lifestyle that you weren't quite at yet, but it's come back around now.

Well, There's a lot of people out there, you know, in med school, pre meds, residents, whatever, that are staring at, you know, these huge student loan amounts and wondering, am I ever going to be able to get ahead financially? And then they hear this story from you that you've not only, you know, your student loans aren't quite gone, but shoot, they're going fast and you're building wealth rapidly. You know, even just a year out of your training. What, what inspiration can you give to them about how easy, how hard this was for you to do what you've been doing over the last few years?

I think, you know, it's definitely doable. You know, there's some specialties that get paid higher, some get lower, but like you always mentioned, there's things you can do within your specialty to really increase what you, what you can get for your income. And so being aware of that and just getting the education and getting a plan in place so that you know what you will do for the loans, you know exactly what they're gonna be, and you can probably have a pretty good estimate of what your income is gonna be. So you just get the numbers lined up and figure out what works for you and your family. You know, in residency, my wife did work and so we had a little bit higher income than the average resident. And and we didn't put a big premium on trying to increase our net worth for those three years of emergency medicine residency because we knew afterwards we'd be able to live the same way we were in residency and use that extra income to really start attacking some of these loans and building the net worth then. And so it just kind of is personal for everybody. You know, find what works for you and your family and just add up the numbers and it works out usually.

So what's your lifestyle look like right now? What are you guys spending in a typical month? How much do you spend?

Yeah, so typical month we're usually between 10 and 15,000. I looked this year, we had moved into the new house and so we had some expenses getting those one time things of furniture and the birth of our son, and so setting up the nursery and all that stuff. And so over the year we're probably going to end up around 150 to 175 spending, which is a little bit higher than I expected because of some of those one time purchases. But moving forward, we're looking to be in that $100,000 to $150,000 range every year.

And given your income, that certainly still leaves plenty of money. With which to build wealth.

Absolutely.

Yeah. It's interesting. I tell lots of people, live like a resident, Live like a resident. But the truth is, most of the time, you can give yourself a pretty significant raise coming out of residency and still have money with which to build wealth. You just got to keep from quadrupling your spending. Right. You know, the lifestyle explosion that so many people have. What do you think when you saw how much you're paying in taxes now?

Yeah, so that was a little bit painful to see. The, you know, basically more than your monthly resident income. Going to taxes on every, you know, every two weeks on your paycheck was a little bit painful. But, you know, then you look at the other side of it, on how much still reaches to your bank account, and it. It makes it worth it. And, you know, try not to look too much at the taxes. That's just kind of part of being where we're at and living where we do.

All right, well, there's somebody out there that's like you were a few years ago. Maybe they're a PGY2 wondering, you know, if there's ever going to be light at the end of this tunnel. What advice can you give them?

I would say, you know, PGY2 or even PGY3, try to start just tracking your expenses. You know, we never really had a budget or said we can't spend more than this on groceries or entertainment in one given month, but what we did do was know about how much we spend every month and pay ourselves first moving forward. And so setting up your paycheck so that your retirement contributions come out before it reaches your bank account, setting up so that you know how much you want to save every month to reach your goals, and then, you know, spend the rest on what you need to. And lots of times there's extra left over at the end of the month that you can add to your savings or put in a vacation fund and be able to do fun things after that.

Awesome. Well, Zach, you've done a fantastic job both with your career and with maximizing your financial situation. So congratulations to you. Thank you so much for coming on the Milestones to Millionaire podcast and using your example to inspire others to do the same. I know there are people out there that would love to be doing what you have done, and we'll see. It is just a little bit more possible now that they've heard from you. So thank you very much.

Yeah, thanks for having me.

All right. I hope you enjoyed that interview as much as I did. I thought Zach has Done a fantastic job, but there's some lessons we can take from what he's doing. Right. He became financially literate early on. He developed a plan. Then he implemented and followed the plan. He was able to not only have his wife come home and stop working for pay and to be able to be with the family there, but they were able to live far better lives than they did as residents. You know, I'm always talking about living like a resident, but the truth is, if you're making a lot of money as an attending, you can give yourself a pretty significant raise, especially if you've taken care of your other financial things and still put lots of money toward paying down student loans and toward building wealth. They've already become, you know, just a year out of residency back to broken. Those student loans will soon be gone and they'll be well on their way to becoming millionaires. I would be very surprised if Zach and his wife didn't do this faster than Katie and I did. You know, it took us seven years to become millionaires. It's not going to take them seven years. They're going to get there a whole lot faster than we did. You know, mostly because he was making more money than I was in the military, but also because he's hitting the ground running just like we did and taking advantage of that high income in order to build wealth with it. 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. It was great having you on the podcast. Thanks for listening. We'd love to have you on if you want to join us, but otherwise, tune in next week when the next podcast drops. Till then, keep your head up, shoulders back. You've got this and we can help. See you next time. The hosts of the White Code Investor podcast are not licensed accountants and 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.