WCI #14: WCI Interviews the Physician on Fire

This is the White Coat Investor Podcast where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high income professionals stop doing dumb things with their money since 2011. Here's your host, Dr. Jim Dahli.

Welcome to podcast number 14 here at the White Coat Investor.

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This is a really exciting episode of the White Coat Investor podcast we have today. We're going to have the Physician on Fire today with, as far as I know, his first podcast interview. Our quote of the day before we get into that, however, comes from Robert Dorigozi, MD, who said, if you do wish to splurge a little bit to loosen up, do it after there is 1 million in the bank and after the mortgage has been paid. And that's a great lead in to Physician on Fire and his message of financial independence and early retirement, even for high income professionals. We're going to start with some questions for him. First of all, welcome to the podcast.

Thank you. Yes, this is an exciting day and like you said, this is my first podcast. My first time putting my voice out there. But I'm excited to have been invited and I did love that quote by the way. That is a good idea. Have some money in the bank first before you start splurging. Could be so many doctors do the splurge, I don't know, towards the end of residency or maybe when they first sign their contract. So I was one of them too.

Yeah, for sure. All right, well, let's start with some of the softball questions. What was it that. I mean, you're kind of unique in that you're a physician on fire and in the fire community, you're definitely the most prominent physician writer out there. But why did you end up going to medical school in the first place? Why did you Decide to be a physician.

You know, medicine was pretty much in the blood, or at least health care. My mother was a registered nurse, and her father was actually a physician and surgeon in a small town. So my father and his father were both dentists. And then I did well in high school, graduated top of my class, went off to our state's public university university and did well there also. And yeah, again, loved science. I did some volunteering in the hospitals and went ahead and applied for medical school, and it was a good fit.

So, like the rest of us, you love science and really wanted to help people.

Yes, that's. That's what it boils down to.

Yeah, it's kind of. It's kind of funny when you read a bunch of medical school admissions essays. That's basically what they all say. You also developed an interest in financial independence and retiring early. Where did that interest come from?

You know, I didn't know I had that interest. It wasn't really something that I strived for, really. I just was living my life and doing my job. And about a decade into my career, I was studying for the maintenance of certification exam, which I really didn't enjoy studying for. And I remembered reading this article about a guy named Mr. Money Mustache who had enough money to retire at 30. Of course, that's when we start our careers. But I, again, I hadn't really thought that that was the path for me. And I did decide to go back and Google something. I didn't remember exactly what I read, but something Pete Mustache. And I found it. And I found the article about the math behind early retirement and looked at my balances on my 401k and my taxable account, and I realized that I actually probably could retire any day if I wanted to. And that was an amazing revelation. I had no idea that that was a remote possibility based on the standard retirement calculators that say you need 70% or 80% of your income every year. And of course, that's not at all true. It depends on what you spend. And I guess I've just never been a really big spender. It wasn't necessarily something that I set out to do. It's just a position I found myself in after, like I said, about a decade into this career. I'm now about 11 years in and still going. But I know that I have options now.

I love that you stumbled into fire. That's such an unusual thing because most people who are interested in financial independence and retiring early start relatively early in their careers and study it and become experts in it and work toward it and check off their milestones as they move along. And you just kind of looked at it and realized, hey, I'm financially independent. I think that's pretty unique.

I'm glad. Yeah, I'm glad that that wasn't me. I've said it before that I feel bad for the people that are finding my site now as maybe a medical student or a resident and thinking, okay, if I can just do this for 15 years, as long as you enjoy your job and enjoy the path reasonably well, then it's maybe not so bad. But yeah, I think it was easier to kind of stumble into it for me, although I probably could have become financial independent maybe a year or two sooner if I had made a plan for it. Not knowing that this was going to happen actually made it easier.

Now, what was it that made you interested in blogging? I mean, lots of people strive for financial independence, but not nearly as many of them start writing about it and trying to teach it to other people. What inspired you to start blogging?

Well, I guess I thought I had a story worth sharing. And like you said, I just kind of stumbled into this. And so I wanted to reach out to other people that are maybe not in a place that they want to be in their career and help them find a way to reach financial independence. And then you can maybe do something a little bit different with your life. And as far as actually writing, that's something I didn't have much experience with in college. We were required to take one writing class for our major, and I took the one that most pre meds take, which was writing for the health sciences. So I might have been better off taking creative writing class or something a little out of the standard science realm, but at the time I was focused on science. So most of the writing that I had actually done in the last 15 years was either technical for research and residency, or maybe writing letters to administration or to my group to try to prove a point. But I just started writing a little bit before I decided to launch a blog, just to see how that would go. And I kind of like what I wrote. And so I thought I would start sharing this information with anyone who might find it.

You know, it's interesting. I think that's the only writing class I took in college as well was technical writing one semester. So it's probably pretty common among physicians right now. You're about my age. Your career essentially parallels mine. What effect, if any, did the White Coat Investor website have on your financial life and on your decision to start blogging.

Yes. I think we were born in the same year, 1975 for me anyway. Finished residency in 2006. So yes, we definitely have had a similar path as far as finding White Coat Investor. I found it shortly after I found Mr. Money Mustache, and it was probably when I was deciding whether or not I would be taking this maintenance certification exam again in 10 years. Of course, now they've changed the whole program, but I think I googled physician retire early, something like that. And I probably found your 14 reasons not to to retire early article, which probably made me think, well, I don't know if I agree with most of this. That might have had an influence on me writing a blog because, well, there was a really well written physician blog focused on personal finance. But he was basically saying, yeah, you shouldn't even really consider early retirement. At least in that post. I know you've written a number of others that tell people how they can do it if they want to. And then I would also say, I have to admit I did discover your state of the blog posts and I found out it's possible to earn a little bit of money. And it's not money that I need, per se. I mean, that's kind of the whole point of my whole financial independence website is that I've now have the money that I need and I can live the way I want. But to reconcile that or to make myself feel better, I've decided to donate half of my profits to charity. And so that kind of gives the whole website another mission beyond just me and telling my story.

Very cool. It's wonderful that you can inspire somebody who simply disagrees with you on something you wrote. Right, well, very cool. Let's move into some of the harder questions. Enough of these softball ones. What's the deal with the craft beer? You're always writing about craft beer and what you're brewing. Don't they have any decent breweries in the northern Midwest? Is the beer you brew yourself cheaper or does it taste better? Is it just more fun? What's the deal with it?

It's definitely fun to be a home brewer. And actually I didn't start home brewing until it was five or six years ago. And where I lived a couple states over, our hometown started a brewery and it was started by one of the two main guys was on our hospital board. And so I knew him and I met with him and decided to invest in this small microbrewery. And I really wanted to know exactly how the whole process worked. So I decided to pick up a home brewing kit and started brewing beer myself. And so, yeah, that allowed me to kind of get in good with the brewmaster and actually was able to brew on the big 15 barrel system one time, which was really fun and exciting for, for a homebrewer. But I would also say that home brewing is definitely a social activity. We have a lot of friends that like to stop by just to see what I've got now on tap. And there's a homebrew club that I go to meetings once a week. And you know, when I was new to town, that's how I met a lot of the friends that I have now.

Not connected to the curling. Although drinking and curling seem to go together well.

Yeah, there is a tradition in curling, which for people that don't know that's now an Olympic sport where you throw 20 kilogram stones, slide them across the ice, and it's maybe a little bit like shuffleboard. Some people call it chess on ice. But the tradition is that at the end of the game, the winning team buys a round of drinks for the winning team and losing team. You sit together and socialize. So, yep, that is another thing. There aren't that many things that beer can't go along with. But curling, maybe bowling is another good one.

Yeah, well, I play a lot of ice hockey and I'll tell you what, the teams never sit together and drink together after the game.

Yeah, they probably don't even like each other that much.

No, not by the end of the game, certainly. All right. Anyway, some of my readers say you're never actually going to quit practicing medicine. You're never actually going to retire. What do you say to them?

I say they could be right. And if they are, that that might actually be a really good outcome. Right. I mean, you know, I've only been working for 10 or 12 years and if I spend a couple years writing about it, thinking about it, and then come to the realization that, yeah, I'd rather continue practicing medicine, well, that's not, not such a bad thing.

Well, it certainly isn't bad for our civilization. We need as many great doctors as we can get. Now, you either cut back or you're talking about cutting back here in the very near future. How's that changed your life and do you think that has decreased your desire to retire early?

That's true. I recently was able to negotiate a part time schedule as opposed to the one FTE that I work. Now I'll be working 0.6. So I'm going to cut 40% of my shifts and I should be able to arrange this schedule in a way that I can bunch those together and you know, work quite a bit over maybe a seven to 10 day stretch and then be off for the rest of the month. So that I haven't experienced yet. But that's coming this fall, October specifically, and I want to do that for at least a year or two and see how that goes. But that will definitely allow us to do some of the things that I've been talking about wanting to do as an early retiree. But I'll still be working enough, I think, to keep my skills fresh and of course keep the benefits, health insurance and all those important things. So it's possible that I may change my tune once I get comfortable in a schedule where I still have a whole bunch of time off. I guess the one thing I will say is that if I'm tied down to a place where I'm working a week or two every month, then we don't quite have the full amount of freedom that we've talked about doing crazy things like taking a motorhome or an RV around the country for a year or spending a few months in a place like New Zealand, Australia, Southeast Asia, South America, you name it. Of course, some of those places I could actually work too, particularly New Zealand, Australia. There are certainly jobs available for qualified anesthesiologists or emergency room doctors. But I also realized that, well, if I'm working over there and continuing the blog, well, I wouldn't really have the time to enjoy my surroundings, which is the whole point of going someplace exotic like that. So that's kind of a long answer. But yeah, it may change my perspective, but I won't know until we're there.

Yeah, I don't know. 0.6 FTE sounds pretty awesome to me. I'm at 0.75 right now and my wife's starting to talk about having me cut back to 0.5. So we'll see.

Yeah, you've been talking about that a lot. I've read several comments and I, I would be surprised if that doesn't come to fruition, you know, by about next year, I think is the time frame you mentioned.

Well, it turns out that cutting back to about three quarter time did give me all the time I wanted to practice medicine and to do the blog stuff and also to go on the trips I wanted to go on, but it didn't quite give me enough time to also have several days at home with the kids while my wife went on a trip that she Wanted to go on. And so that's probably going to be the main motivation if I cut back any further here.

Right? Yep. All about family. That's good.

Now, sometimes when I see somebody talking about financial independence or retiring early, I wonder, did they really pick the right career? Have you ever thought that maybe you picked the wrong career? And why or why not?

I don't think I have. And, you know, I enjoy anesthesia. I actually, for the most part, I like my job. There are certain aspects of it that I don't love. But it's been, as far as jobs go, a great job to have. And of course, the income is solid. So that has allowed me to reach financial independence relatively quickly. Although we certainly get a late start, you know, finishing residency at 30 if you go straight through, which I did. But at the same time, I can't imagine not having become a doctor. I guess, you know, you have this idea that you want to fulfill your potential, reach your full potential. I think becoming a physician for me did that. If I would have chosen a different career path, I might have always wondered, what if? And yeah, as far as, you know, a similar question people often ask is, would you want your kids to go into medicine? And I think it'd be a good choice for them if that's what they want to do. Of course, we'll see what the landscape looks like in 10 or 15 years when they have to start thinking about those kind of decisions. But, yeah, I think it was a good choice for me. It's certainly served me well, put me in a position, like you said, to be financially independent by age 40. And I also would say that if I hadn't gone down this path, I wouldn't have matched the particular residency that I did. I would not have met my wife, who was there in grad school at the time. And, yeah, I wouldn't have all the things I have today, including a whole lot of great friends I've met along the way, too. So I'm happy with my choice.

Do you feel like a large part of your identity is tied up in being a doctor or a small part or no part at all of your identity?

I think personally, for me, it feels like a small part. Maybe other people that know me might think it plays a larger part, but I don't think being physician's ever been a big ego thing for me. And I try to downplay that part of me and have a lot of other things that I do. Hobbies and. Yeah, no, I don't think it's something that I am going to have a really hard time separating from now.

Some doctors feel like they owe society or their state or their parents or their spouse or Medicare that paid for their residency or their medical school something for putting them through medical school and residency and that retiring early is morally wrong. What do you say to them?

Well, I would say that I certainly didn't sign any kind of indentured servitude contract. And I can understand that people might think that, well, you chose this path, you should take full advantage and do it for as long as you possibly can. But I mean, I do definitely have some answers for that. For example, yeah, I did go to public school. So there were government tax dollars helping pay for even my undergrad. Of course there were another 50,000 people there who also went to that school. And not all of them have done something that really served the population in any particular way. So if you got, you know, maybe a dozen years of anesthesia out of me, that's, that's maybe better than some other people that also took government tax dollars for their education. And if even if there were tens of thousands, you know, spent on my education while I've paid back, let's see, over 10 or 12 years, I think it's, I think I added up about 1.6, 1.7 million in taxes over that time. So I'm pretty sure that I have actually paid back any debt as far as tax money many times over.

That's a good point on the amount of taxes you've paid back to society.

But you mentioned the spouse thing. And what do I owe her? I think my wife would be thrilled if I retired tomorrow. She's been a single parent, basically one third or one fifth of our lives together. As I've been on call every third or fifth night most of my career. And I think she would love to have me around a lot more. Although she may regret that once I'm around a lot more, we'll find out.

That's an excellent point. Maybe you owe her more time than you do money, huh?

Right.

Do you see any parallels there between a doc who decides to work part time right out of the gate or even go be a stay at home parent for a long period of time.

Parallel is, yes, in the fact that I guess neither one of us will see a full 30 plus year career working full time. When you do make that choice, and for a lot of people might be the right choice, the best choice, but to work part time or be a stay at home parent for a while, you're not going to set yourself up for early financial independence. It's those early years that really did it for me. Working really more than full time and saving most of that money gave me the time for that money to grow compound interest to work its magic. There are some parallels, but of course if you don't make the money and set it aside right away, it will be a much longer path to have any options to retire early.

For sure, the early start is definitely key. Now that you're financially independent, do you feel that that has made you enjoy your work more or made you enjoy it less because now you realize you don't have to do it anymore?

You know, when I first started reading different blogs about financial independence, you know, one of the big selling points was that once you have enough money to make it optional, it's just so much more joyful the work is. And I have not found that to be true. I was hoping that would be the case once I adopted the mindset that yep, I don't need this. I'm choosing to do this. This is what I want to do, not what I have to do. But instead. It's the latter part of your question. Do I enjoy it less? Because I know I don't have to do it. And I do find that the small things that I used to just deal with, and by those things I mean the all the meetings you attend, the emails saying that we're changing this or that, the maintenance of certification exam, which I talked about briefly earlier, all those things seem to get to me more than they did when work was mandatory. Now that it's optional, when I get called in to place the second epidural of the night, I did one at 2am Now I'm doing one at 4am and I just, yeah, I can't help but wonder why I continue to make this choice. So sadly, I would have to say that I enjoy it a little bit less now. And that's not how it's supposed to work, but that seems to be how it works for me. I'm just being honest.

Yeah, brutal honesty is beneficial to those who are wondering what they're going to feel like when they get into your position. And some might feel differently and some might not, but it's nice to know where you stand on it, right? What do you say to those who feel living on less than $100,000 a year after spending more than a decade of work, sweat and tears to become a doctor just seems silly?

I would say that $100,000 is actually a lot of money to live on particularly once you've paid off your mortgage, once you have financial independence and you're no longer paying for disability or term life insurance. Not that term life costs much, but again, the whole point of being financially independent is that you are no longer reliant on your income, so you don't have those expenses anymore. And there are certainly places in the country where, yeah, maybe 100,000 a year would be tight, but I would say in 90 to 95% of the country, you can actually live very well on that amount of money. I never really tracked our spending closely before I started blogging, but I knew what the credit card bills were, and I kind of had a rough idea of what we were spending. And then I actually started tracking it using mint.com just to see, okay, if I'm telling the world that I'm financially independent, I better make sure that I'm not lying about that. And we, we found that in the first year that we tracked it, we spent 60 to 70,000 a year, and we do some international travel. We have a little second home. We, we have a lot. We have everything we need and then some. Everything we want. If we wanted to spend more money, we certainly would, and we certainly could. So I would say that, yeah, 100,000 or under 100,000 can be a pretty, pretty darn good life, actually. And if we wanted more, I'd be happy to work longer just to get to whatever number we decide is necessary. But as it is, I'll. If I do actually wind down this career like I talk about doing in the next couple years, we should have enough to spend a little more than 100,000 based on a 4% withdrawal rate, which is kind of a standard number that's thrown out there. Some people, like me, would rather spend 3% of their nest egg per year, and we'll still be pretty close to at least 80,000 plus at a 3% withdrawal rate. I, again, if they think it's silly to retire, then just work a few more years. I mean, every year that I work, if I were working full time, I'm adding something like 200,000 to our bottom line, and that's another 8,000 a year. We could spend every year indefinitely, based on the 4% rule. So you just got to figure out what enough is for you and then use that as a starting point. Figure out how much you need.

It's amazing how little you can live on when you don't have any payments, isn't it?

Right? I mean, now it's food and it's travel. Those are where the top two spending choices, not choices, but spending categories last year. And, you know, housing, there's property taxes and there's some home maintenance, but when you don't have the mortgage payment, well, that. That frees up a whole lot of money.

Yeah. You don't seem to be living a miserly life. I mean, you just came back from a trip to Paris with your whole family a couple of weeks ago, didn't you?

We did. That was a great trip. And we didn't. We could have easily dropped 10, 15, 20,000. And I tracked it again, mainly for purposes of the blog, but we spent a little more than four grand. We stayed in the central district, real close to everything. We had an Airbnb place that was two bedrooms, kitchen, two bathrooms. We actually went to Paris because the flights were so cheap. I got an email on a one day last fall and it said, Paris for 400 bucks, round trip. And I said, honey, you want to go to Paris? And she said, yeah. Said, it's over the kids, spring break. Well, they can come too. That was that. Yeah. So the whole trip we spent, like I said, 4300, went to Disneyland. We had a great time.

Sounds like a great trip. I think I spent that much just flying around in helicopters in Canada in January by myself.

Wow. Yeah. The helliskiing. Yeah. You saved a life up there, too.

Yeah. So I guess it's good I went up there.

Yeah.

There were so many doctors in that chalet, I'm not sure they actually needed me. At any rate, do you feel guilty that you're going to accumulate far less wealth for your heirs or your favorite charities than you could if you continued to work full time for another 20 or 30 years?

I really do, and I definitely struggled with that. Not so much the heirs. I think our boys will hopefully, with any luck, also be retired by the time I kick the bucket, you know, even if it's not an early retirement, I'm only 30, 33 years older than them, something like that. But as far as charities, I do think, yeah, I could work another decade and all that money would compound. And someday I could put my name on a building, you know, at the college or something like that. But I guess the way that I reconciled that and alleviated those concerns is by starting this donor advised fund, which is a fund that you can donate money to while you're earning good money, take the tax deduction, and then you can give from that fund over a lifetime. So you still control the money, although you've already given it away, you can't take it back. It does need to be sent to charities, but one of my early retirement goals is. Well, it's more than a goal really. I've decided that this is going to happen, but to have 10% of my nest egg already donated. So if I need, let's say $2.5 million to retire, I want to have $250,000 in the donor advised fund. And I've been giving from it ever since I started this a few years ago. So it goes up and down. But I do plan to hit that number later this year. We'll make one more big donation and then we should have enough in there to satisfy that 10% goal or 10% need that I set to make myself feel better about walking away from this salary.

Very cool. Interesting process you've gone through to make sure that you can also give to those who are less fortunate than you.

Yeah.

Now let's talk about doctors in general for a little bit. Most doctors don't become financially independent until their 60s and, and some never really do. Why do you think that is?

It's pretty easy to see what's happening out there. Recently I published a guest post from you that talked about doctors money mistakes and there are so many of them that it's four parts to that post. So there are lots and lots of ways that we can be parted with our money. And of course there's a marketing machine that tells us that we should have the finest cars and the biggest homes that we can afford and all of that. And there are certainly societal expectations on physicians to be the rich doctor and have those things. So if you buy into that, then it's easy to drive a Lexus and have a 6,000 square foot home. But I never really wanted to do those things, although I did build a very large home on the water when we first got our first real job. Yeah, there's definitely a lot of pressure out there to spend. And so you need to be able to decide to do what you want to do and maybe not what is expected of you. If you want to spend the money, that's fine. But just have to understand that if you don't have much of a savings rate, you're not going to become financially independent early, if ever. I think we all go into medicine with the assumption that we are going to want to do this for a lifetime. You start medical school, you want to be a doctor, you're thrilled to be there and you start making real money and you're even more excited. And I think A lot of people realize, you know, maybe five or 10 years in, that maybe they don't want to do this forever. Now you have a family and you're missing, you know, important milestones, and, you know, the job has changed. It's not what it was 10 years ago or 20 years ago. So, you know, I think it's a good idea to try to set yourself up, like I said, just to have options. Just becoming financially independent doesn't mean you have to retire early. It doesn't mean you have to change a thing if you're not unhappy with what's happening in your life. But I think it's a worthwhile goal to try to become financially independent so that you have those options. Like, for example, you now working a 0.75 and me working a 0.6. We were able to do those things because we saved diligently. And we also have had a pretty good stock market over these last 10 years. Early dip didn't really hurt us when we didn't have so much invested, and it's basically been on a tear ever since. 0809.

You allude to doctors making a lot of financial mistakes. What are the biggest financial mistakes you see doctors making?

There are the sort of atypical investments. The guy that can get you in early on some kind of a deal, and it's going to be huge. And it's okay to do that. Like I said, I invested in a microbrewery. Actually, I've done that twice now. But I try to limit that to, say, 5% of my portfolio, which a lot of people say you can treat a small portion of your portfolio as play money, maybe 5% or even 10% if you put most of your money into the next big thing. That doesn't always work out well. Then like I mentioned the last time, luxury automobiles may or may not be a financial mistake, depending on where you are in life. And it's easy to do, and a lot of us do it.

What's the biggest misconception that people have of you?

Of me as the physician on fire? I think we're talking about, and I don't really read a whole lot of. I guess I don't get a lot of negative feedback. So I'm kind of guessing here. But what I try to portray is that I think people's conceptions might be that I'm is really cheap or overly frugal. And the truth is I don't like to waste money, but I don't mind spending money. So I think spending intentionally or mindfully, is really my practice. And again, like we talked about earlier, living on less than $100,000 a year, once you've eliminated a lot of the typical ongoing expenses, it can be a pretty good life. So if people think, well, I could never live like he does, you might be surprised that you could. And I guess another one, and I believe I alluded to this earlier, is that I don't like my job, that I'm just hell bent on retiring early as soon as I can. And if that were the case, I wouldn't be working today. And as I've said several times now, financial independence just gives you the option of maybe finding a better fit job for you, maybe dropping those overnight shifts like you have done, or just working less like I'm about to do. So you don't have to dislike your job to make financial independence a goal. And yeah, for the most part, I like what I do and I think there are a number of things I'm really going to miss when I do decide to leave it. But it's just that I can think of a whole lot of different ways to spend my day than I do in a workday. That's where I'm at.

Well, I sure appreciate you being on the podcast today. This is probably our longest podcast that we've had, but I think people will really enjoy it. So I appreciate you taking the time out this morning to be on it and it should run here in just a few days.

Well, I'm honored that you asked me and I'm really excited to be, I think, your second live guest. Is that correct?

That's right. My first one was my wife and you're the second one, so you rank right up there. For sure.

Yep, quite an honor.

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