WCI #73: Raising Exceptionally Talented Children

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. This is White Coat Investor podcast number 73 raising exceptionally talented children interview with Dr. Champeau Splash Financial is a leader in student loan refinancing for doctors offering fixed rates as low as 3.25% APR. Hundreds of you check your rate with Splash each month and it only takes minutes to do so. They're one of the few companies that offers a great resident and fellow product as well, offering low rates and deferred payments for up to 84 months. They also don't charge any application or origination fees and have no prepayment penalties meaning you maintain your payment flexibility. Splashes new lower rates can save doctors tens of thousands of dollars over the life of their loans. Go to www.whitecoatinvestor.com Splash Financial today to get your rate in minutes. Thank you so much for what you do. I'm reminded every time I go to the hospital that the work we do is important work. I had a 35 year old male with 18 hours of migratory right lower quadrant pain recently and it was interesting. You know it's pretty obvious within about 30 seconds what was going on with him, but I decided to take a past medical history anyway and the thing he said just CR me up. He said I'm usually awesome except in this moment right now. And you know, it's really funny some of the things patients say sometimes and we forget that there's more to our careers than just the technical aspects of diagnosing and treating illness. But really observing people and learning about people and how to motivate people sometimes is is the most difficult and the most challenging, but also the most rewarding part of our jobs. Make sure you're signed up for our newsletter. You get this great newsletter we send out once a month. It updates you on what's going on at the White Coat Investor. It gives you links to all the best physician finance stuff that's been published over the previous month. There's a market update in there and there's a super secret blog post in there that doesn't go out on the Internet. You actually have to sign up to the newsletter to get it. In addition to all that great free stuff, you also get the free Financial Boot Camp series. This is a 12 email series that will take you from zero to hero in just 12 weeks and catch you up. To all the people who have been listening to the White Coat Investor and reading the White Coat Investor for the last seven years, you can catch up in just a few weeks. All you have to do is give us your email address and sign up for that email newsletter. You can do that@whitecoatinvestor.com very easily. Our quote of the day today comes from Morgan Housel who said, the first rule of compounding is to never interrupt it unnecessarily. Now, we've got a great guest today. We're going to get into this podcast with Dr. Ann Champeau, and I hope you really enjoy it a lot. We'll be talking about some important information for those of you with exceptionally talented children. I mean, really talented, not just how we all think our kids are. Awesome. All right, today on the White Coat Investor podcast, we have a very special guest. We have Dr. Ann Champeau, who is a pathologist, in fact the Chair of pathology at the University of South Florida, who has agreed to be with us on the podcast today. Welcome to the podcast, Dr. Shampeau.

Oh, thanks, Jim, for having me. I'm glad to chat with you today.

This has been pretty interesting, actually. We recently put in a process. We had lots of people contacting us that wanted to be guests on the podcast. And so we said, you know what, most of these people are just coming on here to promote their business or whatever. And so we actually put this application process in place, and you are the first person we accepted through the application process. So we're excited to do it. And just to let people know, we actually will take people onto the podcast as guests if they apply. But at any rate, it's great to have you here. I know you're on the White Coat Investor forum as well. You go by Bean 1970 there.

Correct.

And you've had a fairly illustrious career. I mean, you're the chair of pathologists at a university and also, until very recently, the. The program director for the residency there.

Correct.

And you're also a veteran, I understand.

Correct.

And served as a program director in the military.

Correct.

So which branch were you in?

Army.

Army. And how did you end up. How did you end up in the Army? What happened?

I think, like most people, it comes to finances. I left. I'm from Wisconsin. I left to go to college at Michigan State University. And I have to give the army credit. After the first semester, they sent letters to everybody that made the Dean's list, basically touting you may be eligible for a scholarship. So my mother Sent it to me, like highlighted. And I had no prior experience with any of that. I was not military, like, for lack of a better classification of.

I think that applies to most of the medical.

I think so. You know, I just went through the process and applied and they gave me. I had a three and a half year scholarship because I was. Obviously, I'd already paid for my first semester. And I loved it. I loved rotc. You know, it was like my group of friends. It was my social life. Getting up for PT on Friday mornings wasn't the best when you're a college student. But looking back, those were some of my best times in college were with the ROTC group.

Let's go back even a little bit further. You mentioned your mother. Tell us a little bit about your family and your upbringing and your education.

So if people can't realize from my crazy accent, yes, I am from Wisconsin, and I grew up right outside Green Bay on Lake Michigan. Just kind of a normal family. My mother went to Marquette University. She's a dental hygienist now, retired. And my dad was the director of marketing for a large food service corporation that made stainless steel products. And I have a younger brother. And I was just always kind of a science geek. And I knew from very early on I wanted to be a physician. So I pretty much went my whole childhood, high school, college, knowing exactly what I wanted to do. And like I said, I went to Michigan State. I knew I pretty much wanted to land back in Wisconsin for medical school, so I wanted to venture out for four years rather than be at the same university for eight. So I left home those four years. I was in rotc. I loved it. So of course, when the time came along to look for money for medical school, I just kept going. So I had the HPSP scholarship. Looking back, my husband always says, why'd you do that? It was so cheap for you to go to medical school in your state. But, you know, I liked it. So my husband, who's also military, was hpsb. He went to Tufts. So of course, which was, and I think still is, like one of the most expensive medical schools in the country and had the army pay for it. So he's like, you should have raked them at least.

You know, I wonder if people will look back in 15 years and go, why did you get the HPSP scholarship? Medical school tuition was only $80,000 a year. You know, who knows what it's going to be in another couple of decades.

Oh, I know, I know. But, you know, being an HPSB wasn't bad either because, you know, you got some living expenses, obviously they covered all your books. I mean, it was, you know, quite advantageous from a financial standpoint to be on scholarship as well.

Well, take us through that now. When you came out of your training and owed the military some time, or rather when you came out of medical school, you probably ended up in a military residency, I would imagine. So tell us about your career through. Through that and up until this point.

So back then pathology was a five year program. So you started out generally in the military doing some sort of internship. So I did a kind of the vanilla transitional year internship. I was at Madigan Army Medical Center. I completed that and went right straight through then into pathology, which is four years. So I was there for four years. I met my husband while I was there. He had just finished his fellowship, so he was a brand new attending and I was in training. We did end up getting married and I had a child during residency. So like most residents, it can be a crazy time, that time in your life trying to train and accomplish a lot of other things. And then I stayed there as faculty. So this is kind of funny. When I left the service at 13 years, you know they tell you show up with all your orders and this, I came with one piece of paper because I was literally at the same place for 13 years.

Wow.

And I never left. I moved offices a few times, but I never left. So yeah, so I was there a long time. Obviously my husband was there with me the entire time, active duty. He retired and I had a couple years left. So what happened then? We'll kind of get to this I know of later in our discussion. But because of what was going on with my son, I decided to stay working there part time. So I continued to work at the army hospital on a part time basis. My husband was still there. He was retired, now working as a DoD civilian. And I did what's called. And I don't know if you've talked about this much on your blog or website or your podcast, but I did the military buyback. Have you talked about that?

I don't think I have. Why don't you tell the listeners about the military buyback? I'm sure some will find it very interesting.

So the military buyback is basically you pay them the government, you buy your years back and convert them to civilian time. So if you continue to work for the government, I. E. DoD or the VA, they do a calculation and tell you how much it's going to cost to basically buy your active duty time. And convert it to either VA or DOD time. What that does then? Because you could say, well, I left at 13 years and I had no time towards my retirement after I count my DoD time. Now I have 18 years towards retirement into the FERS system.

So you're much closer to a VA or a DoD retirement that way.

Right? Well, I get it. I'm vested because I paid for into the five years. So I invested and I have 18 years.

Cool. Cool. So that's a pretty nice little benefit you're looking forward to.

Yes. I can't collect it till later, but I mean, that's the risk, obviously, you pay into and you hope that you live long enough to collect, I guess. But yeah. So my active duty time wasn't lost.

Now we're. My last couple of podcast guests that I've had on here are much closer to the beginning of their career than you are. They're still struggling with student loans or just having gotten them paid off. And you're kind of a little further along in the career, but you're well known in physician financial circles. Not only are you on the white coat investor forum, but you're also pretty prominent in some of the women physician financial Facebook groups where you use your married name, Ann Schachter. But where are you at in your financial life and what are your goals from here going forward?

So this whole concept of being financially independent was never in my vocabulary until we left where we were out in the Pacific Northwest and moved to Florida. We'll talk about the tenants in a little bit. I know later, but we moved to Florida in 2013, and I had landed this job at the university as the residency program director. And my husband kind of followed along a little later and basically started a locums career at the time. And it was a little, you know, he was a little unsure of it. He had been used to working full time all the time. And we had met with financial advisor at the time just because we had a lot of, you know, big financial changes going on at the time. And they kind of looked at us and said, you know, you don't really need to work if you don't have to. And I was like, what? You know, and, you know, they showed us the numbers. And I thought it was a little crazy because it just never really dawned on me, you know, because we've just been going along doing what we always were used to doing, which was actually what I call living off of one income and stashing the rest. And so, you know, that's really what happened. And so when the Facebook group fired off, I don't know how I landed in the finance to start with, but I had always been financially savvy, as, you know, when, you know, you probably joined the military, obviously, a long time ago. Like, when I did, there was no option for retirement other than staying for 20. So right off the bat, you know, luckily, I just must have stumbled into a conversation. They're like, you need to put away your own money. And I was like, really? They're like, yeah, so. And my husband obviously had kind of knew what was happening, and so I started reading financial books when I was an intern and I had my own ira. And obviously, you know, I got married soon after my husband and I started stashing our money away together. And, you know, that's 20 years ago. And so you can imagine, you know, compound interest over 20 years.

And now at this point, you find yourself financially independent. Just, you know, 20 years out of 20 years out of training, which is actually pretty remarkable. That's actually a fairly quick path compared to most physicians and frankly, most Americans.

Right. And, you know, a lot of people will say, like, well, you were military and you didn't have the student loans, and I hear all that. But, you know, I had gone back and just kind of wanted to look at some numbers and kind of at the height of our military career when we were both active duty. So now you have a double income physician family. I'm a pathologist. My husband's an interventional cardiologist. You're making $250,000 combined.

Yeah, that sounds about right. You know. You know, it's funny, I get that a lot, too. Oh, you were in the military. That's why you're doing so well financially. And I'm like. Like that option wasn't available to you, number one. And number two, you know, it's really a contract more than a scholarship. You know, you're basically getting some money up front in exchange for less money later. That's what a lot of people don't understand about the HPSP scholarship. It's great. If you want to serve your country, that's probably the way you ought to pay for your medical school. But it's not like some financial boon. You know, scholarship is definitely not the right word for it, just because it's not. It's not free money. It's money that comes with strings attached. And those strings often mean living someplace you don't want to live. They often mean moving frequently. Obviously not in your case, and particularly in specialties like Emergency medicine. It means you're going to spend some time in the Middle East.

Right.

And it's, it's far from being free money.

The, you know, so I always think, well, if we were in private practice, even if we had loans, it would have easily been able to be put in our budget because we wouldn't have been making 250 combined.

Right. You would have been making 500 instead, or 800 or who knows how much more. Just because you can paid more outside of the military. I can certainly relate to that. You know, it's interesting. I think I probably could have gotten out of medical school with about $70,000 worth of debt, and I could have paid that off by December of my first year out of residency. You know, I actually ended up more time, I think owing more time than I would have ever owed money just because medical school is so cheap the year I went.

But I'd have to say though, you know, the one thing kind of, and I think you've alluded to this on some prior podcasts that the military did do for us, you know, you kind of get used to living somewhat more frugal, I think, because you just don't know if you're going to move. You're wearing a uniform. So I'm not at Nordstrom buying St. John's suits and pumps and, you know, flashy handbags to bring to work.

It's hard to spend a lot of money on BDU's, isn't it?

They're expensive, but you don't need that many. We used all the services available to us, so we always use the gym on post. You know, we didn't have gym memberships. We shopped at the commissary, we shopped at the px. My kid was in the daycare on the post, which of course is subsidized. We really tried to use every single thing that was available to us to help us financially all those years.

Yeah, it really is in a lot of ways part of your salary. When you look at all the benefits of being in the military and should take advantage of as much of it as you can, for sure.

Right? Plus free health care.

Yeah, that's a big one. Especially a lot of these people that are, you know, trying to retire early, they're always asking, well, what do you do about health care? Well, if you've got a military retirement, you've got that covered, correct?

Correct.

Okay, now you've actually published an article on financial wellness in the Archives of Pathology. Tell us a little bit about why you did that how it was received and especially how more of us can do it.

So I have to give credit to the other author, the other Ann, Dr. Mills. And she approached me. She had obviously we had met through our college at meeting and then obviously she's active in some of the groups as well. And you know, there's. It's definitely like a perfect storm right now. We have this whole in training now with the acgme. The wellness is a very huge topic. It's part of the common core program requirements now and specialty specific requirements, of course, the burnout press, physician suicide press. And then obviously at the same time we have this financial illiteracy of our physicians and higher earning income professionals. So it was like the perfect storm that you put a financial wellness topic into the medical literature. So we said let's just go for it. And we. You've probably read it obviously maybe or skimmed it. It has a little bit of a pathology twist with you know, we talk about grossing so specimens and things like that, comparing some of these things that we're trying to do. But you know, it's just basic stuff that, you know, it's kind of unfortunate that the young physicians go through all this education and training and at the end of the day no one's really told them what to do with their first paycheck. And it's been very well received. A lot of people have contacted us saying, you know, this is great. I wish they would teach us this stuff. Why don't they teach us this stuff? I mean this is your, you know, dog and pony show. I'm not telling you anything you don't know. And I think that's like I said, I think others can do it because the particularly the ACGME in training programs is really looking for how do we make residents well. And you know, residents are stressed enough with their time. They have other stressors family life and they're broke for the most part. So if we can do anything to help make their lives better, I mean we should try to do that. I find the most difficult thing with the residents is a lot of them don't even know what's happening to their money. They have no budget.

Right. No idea.

So it's very basic really, just how they take their paycheck and split it up and they need to know what's coming in, what's going out. Yeah.

It's amazing how much of a difference you can make just teaching the basics, isn't it?

Yes.

So let me read a quote from your article. You said the other Thing to bear in mind about the Joneses is that they may be making terrible financial decisions. Those poor decisions are easy to make in a culture that prioritizes material goods and that confuses can get a loan for with can't afford. One of the gifts of medicine is that we are reminded daily of what really matters in life. When pressured to buy into the consumerist culture, tap into that perspective and focus on the joys and privileges already available. Rather than buying frivolous or unneeded items, think about benefits of not spending that money or spending it more deliberately on items or experiences more likely to generate durable happiness. Financial reflection can be incredibly freeing exercise, particularly for the first years post training. When building financial stability. This practice also helps foster gratitude, a key element of position burnout prevention. Why do you think that was important for pathology trainees to know?

Well, it's not only pathology trainees, obviously, it's first of all, all trainees. And then you could say, this is really for all physicians. And you could even say this is really for everybody. You know, we just really, we live in this huge society of consumerism. And as you know, physicians have this stereotype of, you know, we're supposed to have the big house and the big car and go on the fancy trip and wear the nice clothes and have all this, you know, excess cash. But the reality is, you know, the residents are broke, they're a negative net worth. Like I said, they don't know where their money's going. And, you know, we see a lot of sad things every day. And I think at the end of the day, you really have to reflect on what's important to you. And I give Dr. Mills credit. This is actually one of her well written paragraphs, but it's true. And I think, you know, there's this, of course, the delayed gratification that everybody talks about. You go through all this hard work of college and medical school and residency, you know, so of course at the end you want to run out and buy the most fancy car you can, but, you know, is it really that? Is that what's important to you? So. And I think if people learn to reflect early on, they're not going to make some of these financial mistakes because they won't get caught in the trap.

Now, we talked a little bit about your time in the military and what it was like to be a military physician. You've also had the opportunity to be an academic physician. What were the best and worst parts of doing that? Do you have any regrets as you close in on the end of your career.

So even though I was in the military, that was also academic because I was always at a tertiary care center with training programs. So I really transitioned from one, you know, pseudo academic setting, obviously, into a full fledged academic center. So I've always been, you know, very interested in resident education. You know, I tell the faculty, you know, this is the future of medicine. You know, these are the people that are going to take care of my family. And so, you know, it's really important that we have great educators out there and people training residents in all specialties. Some days, you know, it can be really tasking and rough to work with residents, but it's so rewarding when you see them later and what they've done with their careers, or you get the holiday card, or they call you up and tell you how fantastic they're doing and thank you for all you've done for their career. And I think that's what drives me anyways, because as you know, academics is not real fiscally rewarding for most physicians as well, generally lower pay than our private practice counterparts. So that said, you know, the kind of things that go on in academics at the end of the day are not much different than the military. And I tell a lot of my friends, I think it's worse just because there is the money involved when you're out. That was really the nice thing about being in the military, that it was just really this collegial environment that you didn't really worry about money or how much the procedure or the test is costing because the patients were covered. You didn't deal with insurance companies, you didn't have to deal with billing. You knew what everybody was making. It wasn't a big secret. So that was obviously very different in the military. And then of course, when you get out in the civil, you know, at the end of the day, there's very money driven. Almost sad some days, I kind of think, especially when I had a career so long where that wasn't the focus. But obviously that's the way it is.

Even. Even in the academic world. You're not shielded from that, are you?

Oh, no, definitely not. Definitely not.

Now you've been doing some lectures on financial wellness. How have you found them to be received and have you found that people are willing to pay you to come speak to them on that subject?

Well, once again, I think very well received. I think it's a niche that a lot of particularly training programs and medical schools haven't addressed, Even though we know there's been literature published in the Past that says that trainees need this kind of training and education. So it's been very well received. You know, I've been kind of keeping track since I've been involved in this wellness niche for a while. Even what's offered at our in university in terms of wellness, you know, by large the vast majority of wellness seminars and lectures are all and they're great but you know, a lot of it's like meditation and yoga and how do you know little tricks with the EMR to make your day better and those kinds of things. Very, very little on how do you manage your money to make your life less stressful because you're well aware the Medscape survey on compensation. When you look at physician burnout, the one question, the top one is increased compensation to reduce or avoid financial stress. That's number one. So and I think moving forward physicians having more compensation isn't really going to happen. It's going to be more like how do you manage with. Manage what you have.

Yeah, certainly there are worries in many specialties about compensation flattening or even decreasing. And that's happened in the past. If you go back and look and all of a sudden if you know 30% of your work is one procedure and that procedure gets cut and how much it reimburses, it can really affect you pretty quickly on the bottom line.

Right. So I think this is really a niche and like I said, it's been very well received. Now I don't really get paid to do this. Obviously in academics not much is paid for but. But that's okay. It's been good.

Yeah. That's kind of what I've found as well is that it's incredibly needed, it's incredibly desired. I think I could speak four times a week if I was willing to come out just for expenses, you know. And the truth of the matter is most physicians time is they're just not willing to pay what most physicians time is worth to teach that material. And I think that's unfortunate. But that's just the name of the game I've discovered, you know, as the White Coat Investor LLC has gotten bigger over the years that, that speaking fees become a smaller and smaller part of our, of our income here. And I think that's just natural. People, people want the information but they also want it for free. So it's, it's good that people are doing it and I hope more academicians get into that niche and really find it as a way to become academ academically successful. Because I'm not sure that need is going to be met if people actually have to pay for it.

No, but like I said, with the push from the ACGME anyways, in residency training and ensuring wellness, I think there's going to be, you're going to start to see more of it because it's going to be tied into some of the things that programs are doing.

Yeah, well, I'm certainly happy to see it. Now, I can't get into the women physicians Facebook groups, but I understand that you're big in there. You're a big proponent not only of being in there and promoting financial literacy, for which I thank you very heartily, but also that you're kind of behind a big idea of living on one income and saving the other. Tell us about that and why you advocate for that approach, particularly with these, you know, two professional couples.

Well, I think just looking back, you know, people say, like, how did you do what you did? You know, and I look back and really that's what we did. And I think for dual high earnings professionals, particularly dual physicians, there really isn't a whole lot of reason you need to spend away two incomes. You know, you're generally living lavishly then. And for the most part, I think that really just gets couples in trouble with the lifestyle creep. They really start to spend out of their means because things just get more expensive over time and things come up. For instance, you know, my parents are retired now, but when they retired they didn't really account for like cell phone costs and all these electronic costs and, you know, things that like, weren't around in the 70s when they were saving for retirement. So I always think like, who knows what we'll be saving for 20 years down the road and what things are going to cost. So I think having a buffer is not a bad idea, number one. Number two, my husband and I have always been of the philosophy never trust anybody. So we've always like not counted on Social Security, security or other things that, you know, to bail you out down the road. You know, take care of yourself first. No one else is going to take care of you. And third, you know, we'll talk about my son in a little bit. I know, but the you just don't know what's going to hit you and what kind of expenses you may run into and having the ability to just say, I can do this for you or we can go on this trip and you don't have to think twice. It's left feeling like you can't describe and I just run into so Many physicians that are just strapped because. And you're like, how can you be strapped? You have two physician incomes coming in. So I think having the buffer, what I call it, so not only saving 20% of your income to catch up with other people who have been working right out of college, but then save the rest as like your play money buffer. And you'd be surprised what it can do because first of all, it's going to grow over time, so you don't even have to do it that long and you'll have a nice pot of money.

Yeah. Well, let's get into the main reason we brought you on today. I'm, I'm titling this podcast raising exceptionally talented children, and you have a fairly exceptional child, a high performance athlete, tennis. In this case, we're talking about your son. And let's have you talk about the first finances behind that and similar pursuits such as the arts.

So just like, you know, obviously a lot of people, we talk about, you know, saving for retirement and the other thing that most people will save for, obviously is their children, their education, which is fine. And people have different philosophies, how much to save and how to save for it and whatnot. But the nice thing about that is you have 18 years to save. You know, what we ran into with having a high performance athlete, which comes with a lot of expenses, is, you know, by the time my son was seven, you know, money is just bleeding out at an alarming rate and some activities are more expensive than others. So the individual sports, so things like tennis, equestrian skating, figure skating, and then obviously special art talents so you can get into the very talented pianist and some of the string instruments where you're talking lots of lessons and traveling to recitals and putting them in special schools. So a lot of these things aren't uncommon and they're not cheap. And so having the fact that we did live off of one income and had this significant buffer, we really could afford to provide what my son needed.

Let's give some idea to people that may not have a child like this. I mean, how much can you spend on a kid playing tennis? I mean, how much does a tennis racket and a few balls cost?

Right, right. So that's kind of. So, yeah. So it's generally if you go to the store and buy a racket and can of balls and go to a public court, you're like, how expensive can this be? So he goes through like, well, I'll just tell you, if you had to pay for everything. He goes through like five rackets a year, they're like $200 a pop. He breaks a string every day. So you have to buy string, it's like $20. And then if you pay somebody to string it, that's another, you know, 10. So you're like $30 a day on stringing. He runs through a pair of shoes a week, which are like $100 for a size 13 shoe. And then you're paying for coaching fees and travel. And before you know, it's like, cha ching, cha ching, cha Ching. It all adds up. And I sent you an article that was written several years ago. You know, they say it's at least $200,000 to raise a professional tennis player. I would say that's on the low end because generally you also need to accommodate their education, which means for most of the kids playing tennis at my son's level, they're either in private schools that accommodate their travel schedule or they pay for private homeschooling, which is also very expensive.

So this could easily be 20, 50, $75,000 a year.

Oh, yes, easy.

So how do you afford to spend that much on one child's recreational pursuits? I mean, I just imagine this. I'm thinking about these parents that aren't two physician couples trying to afford this. What I mean, what do you think about the parents who sacrifice their own financial stability to chase a dream like that?

So I could tell you, for the most part, when we do travel with our son, you know, the kids playing tennis, generally one parent will be some sort of high income earning professional because, you know, how else are you going to pay for this? You'll run into the few who don't. And we've seen all kinds of things. We've seen people who have sold their homes and all their possessions, working extra jobs, obviously moving to various locations because to lessen the travel load. So, like where we were living before in the Pacific Northwest, it was very expensive because we had to travel out of the area to play these big national tournaments because they're all outside in warm weather. So we're in Florida now, which is essentially the Mecca of tennis. We don't have to go very far to play a national tournament, so travel expenses could be curbed. That way we do get some help. So my son, he was the youngest kid at the time to ever sign a full Wilson sponsorship. He was like nine at the time. So we don't pay for racket strings and bags and grips. And he also has a clothing contract that started around the same time. So there have been some Things that have been offset, but still it can be quite expensive.

So let's talk a little bit about earnings from a child's pursuit. What have you learned that's interesting about tax aspects and those sorts of things from these earnings?

So for the most part, junior tennis and a lot of other things, you know, is not an income producing entity until they go professional. So my son's going to play collegiate tennis, but they have some exceptions. So he could still play professionally, take a certain percentage of earnings up to a certain point, plus expenses, and not violate the professional amateur rules. So the interesting thing we learned is, you know, these are all considered prize earnings. So from a tax standpoint, they're taxed as prize earnings and you can't put them in, for instance, into a Roth. So I was thinking like, oh, wouldn't that be great? I could open my kid a Roth IRA and he could shove in all these earnings into there and let them grow. But because it's technically not earned income, even though as a professional tennis player, that's how you would earn your living, you can't use an ira. Kind of interesting, huh? So like, so like, yeah, so when Tiger woods wins the golf tournament, he can't put those winnings into a retirement account.

I imagine you also don't pay payroll taxes then if it's not earned income, Is that correct?

Correct.

So pluses and minuses both ways there, I suppose.

Right. The other thing that makes it complicated is, you know, tennis is an international sport and so a lot of these earnings, like for instance, this summer, we're in different countries, so there's that standpoint too. You know, he's earning income in different countries and you have to deal with the foreign taxes, but that's why we have an accountant.

So did the, I mean, did the tournaments withhold some of the money for taxes or you're just kind of on your own? Go hire an international accountant to sort it out.

No, it's interesting that though. This is kind of interesting. All the prize moneys for, for the ATP are all paid in US dollars, no matter what country you're in. But then it's just reported what country you were in when you earned them is my understanding.

So sounds like a mess of a tax return.

I know, I know. But obviously what comes later for professional athletes and how they do get wages is when they have sponsorships and are obviously paid wages by companies for their promotional activities.

So how much has this affected how much you saved for college? Is spending money on competitive sports equivalent to saving money in a 529.

Well so when our son was born, 529 plans had just come out. So before that people saved either via their own savings or in a UTMA account. So when he was born we decided well let's just kind of do both because we'll just see, you know. And I wasn't putting very much money in. I mean this is obviously before he started playing tennis. And then we just happened to live near a very expensive private school. And so he had gone to a very expensive private school for elementary school, you know. And I was just thinking geez, you know, I'm just paying for this out of pocket, you know, why would I ever need to save all this money for college down the road to. So I really never upped my contributions into his 529. I just kind of had this like low level monthly contribution into his 529 and his UTMA. And then obviously when the tennis came along I said well I'm not going to up it now either. But at the end of the day, you know, it still is a nice tech sheltered asset protected in our state pot of money. We will have some exception expenses. You know, there's, he might need a computer, he's living off campus. So the housing I'm going to pay for. So there's just a, you know that's.

Just basically yeah some additional expenses there even above and beyond it.

I just didn't go crazy with the 529 because we were cash flowing the public school. And so I think like, you know, we've seen on the forum, it's a very private personal decision how people are going to save and how much they're going to save. A lot of it depends how many kids you have. We only have the one child. So you know, overfunding of 529 is at some risk because if there's money left over it's not going to be used for any other sibling. The other thing is, you know, people say well did you know he'll get a scholarship? The individual sports in collegiate, in the ncaa it's pretty difficult to get full rides mostly due to title nine. So for instance, I'll just give you an example. So like a football team may have 80 full ride scholarships per year to divvy out. Tennis gets four and a half across the board. Every single Division 1 school in the country, they get four and a half scholarships to divvy out between their 10 to 12 players.

Yeah, that's obviously a pretty dramatic difference. Difference. I assume they justify it Based on the fact that there aren't tennis stadiums on, on most college campuses that seat 80,000.

Correct, correct. So, you know, and there's always different, you know, even over the years, saving, you have to worry, you know, well, what if he quits? He could just wake up one day and say, I'm not going to play anymore. So then obviously we'd still have a pot of money to pay for education. He could get injured. Right. That's probably more realistic that he would get injured and not be able to play. So. So we still saved, like, but we didn't go crazy putting in, you know, three, $400,000 into a five to nine.

Now, it's interesting, there's a fair amount of a gamble here. You don't know when your kid's 9 or 11 just how good they're going to be. And do you think a lot of people don't have a realistic assessment of how talented their child is and maybe they've overestimated their talent and are profoundly disappointed down the road when not only do they not become a professional, but they don't even get a college scholarship?

Yeah, I think, you know, I've run into people and when you start to tell them the reality, how difficult it is, and there's the statistics out there, like 1% of people will successfully play, you know, professional sports. You know, I guess the definition is what's successful. You know, my kid's playing already and has earned prize money on the ATP Tour. I mean, he's not making millions, but, you know, I mean, he achieved one of his goals and so you could argue he's been successful. Yeah, it's just hard to know. I mean, obviously there's a lot of professional athletes that literally didn't reach their potential till later. You know, I'm from Wisconsin, so the perfect example is Aaron Rodgers. As you know, when he was being recruited out of high school, no one would take him. And he has all his rejection letters from the various Division 1 schools and he went to community college and, you know, we can go from there.

Yeah. Kind of reminds me of Michael Jordan getting cut from his high school basketball team.

Right. So it's just hard. You know, everybody's individual. You know, you can make that same argument literally for physicians. You know, some people, it's late in their career when they decide to become a physician. Some of them have had even careers before and may not even have done that well in school because they didn't think they were going to be a physician and needed to get good grades to go to medical school. So, you know, it's never too late for anybody. But at the end you have to be realistic at some level.

Now lots of people think their child related expenses are going to go down after the kids are out of child care. And you made a comment earlier about, about that, that maybe that's not so true. Tell me why you think that that's the case.

Well, you know, child care is obviously very expensive. We had to do it. Luckily we were in the military, like I said. So we had nice subsidized childcare. It's still not cheap. You pay for it every day, you know, all year round. But you know, I started adding things up, even just forget the tennis, you know. So we have one son, teenage driver, for instance. You know, it's a huge expense. Not only just the gas, you know, you're paying for gas or they might have a job help pay for gas, it's fine. But our car insurance tripled. Your umbrella insurance goes on top of that, so that triples. So right there, I don't know when the last time you rented a tux, but I mean, I like almost fell off my chair when like you realize like how expensive a prom tux is. And then you do that for four years. They eat a lot. Kids eat a lot.

Especially teenage boys, huh?

Well, yeah, I had a boyfriend in high school who had. There's five boys in the family. And I still think to this day this is why I only have one kid, his mother. His mother one day showed me like her groceries and what they go through and I was like floored and it was like unbelievable. And yeah, what my kid can eat and put away. Now, granted he's an athlete and eats quite a bit. But it's expensive. It's very expensive. It's like having another adult in your house. And I think, you know, and they have all the electronics they're going to need, you know, some sort of, you know, computer for school and probably a phone at some point. When you travel with them, they can't sit on your lap as a free ticket. You know, these are all things that just start to add up and before you know it, it's far beyond what childcare was.

Yeah, you're preaching to the choir here. I've got four of them.

I just don't think people really just think about like how expensive they can get. And it is very expensive.

Now you've been amazingly successful both in your career. You've been able to do a lot of cool things. You also been very financially successful. You're financially independent at this point. What can you tell our listeners who want to have what you have? What do they need to do to go from where they are to where you are?

Well, I think the first thing is you have to be patient. So like you said, I'm at the tail end of my career and I'm not even that old, I'm in my 40s, but obviously I've done a lot and financially we've accomplished a lot, my husband and I. So you have to be patient. It doesn't happen overnight. But the reason it happens is literally what I call the eighth wonder of the world, which is compound interest. You have to start saving right away. And like I said, I was an intern putting what little I could. At the time, I think it was $2,000 you could put in your IRA. You know, I shoved it in, just shove it in, you know, let it sit. It's been sitting there for, you know, 20 years now. More so I think that's key, I think to be very aware of lifestyle creep and budgeting, knowing where your money's going. Always be careful to allow for that. And you know, I know, you know, I'm not your typical white coat investor follower and I think I've alluded to this others before. You know, I don't even have anything at Vanguard, I don't do backdoor Roth, I don't even have really any index funds. But that doesn't mean, you know, there's a lot of roads to Dublin, as they say. Right. But I think the key element is still the same, is regimented saving. And the way my husband and I did it is literally we set up auto, dollar cost averaging or periodic investment, whatever. Basically it was weekly money that we never saw. Weekly, weekly money right off the top, every single week. Never saw it went into our accounts. And then the other thing that we always did, and we're kind of old, like I said, when we had our first home, prime interest was 8%. And I think when we closed our house, we got a 7.8% or something. I know basically the interest was, you know, much, much higher than it is today. So we became pretty debt adverse and we always put extra money towards the mortgage every month, always, because you can imagine even that one extra mortgage payment, the savings on interest is astronomical. And with, obviously with the new tax changes in 2018, you know, saving on interest, you might as well now because for most people it's not going to make any difference in their taxes.

Yeah, that's absolutely right. You know, it's interesting. I talked to a lot of people that have been successful and there's this common theme that runs through it. They all tend to be debt averse. You know, they tend to have paid off their debts a lot sooner than they had to. Most of them not any sort of, you know, hardcore Dave Ramsey extreme pay everything off before you invest a single dollar, you know, etc. But there's a common theme there that people do seem to pay off their debts early. And I wonder if it's the same mindset that leads them to saving adequately also leads them to look at that debt and go, well, I ought to be taking care of that as well. Why do you think that is that so many people that are financially independent early in their lives didn't do it by borrowing a bunch of money and leveraging up their lives. They seem to get rid of their debt faster than average?

Well, because I think at the end of the day, debt is debt. You have to pay interest to somebody else. No matter what the interest rate is, there's a portion of that pie that's going to somebody else and not in your own pocket. So the more debt you have, no matter what the interest rate is, you are losing money. And so I think, you know, so that's number one. So, you know, once you're debt free, you know, every single paycheck you get comes to you other than taxes. So you have the ability then to basically save it as you want or spend it as you want. And I think a lot of people, like you said, that are of that mindset generally probably have some saving tendencies as well because they do understand, understand the math of compounding interest, which includes debt, interest.

You know, you mentioned that you're toward the tail end of your career, in your 40s, so it sounds like you're aiming at an early retirement here. So when will you retire and what will you retire to?

Well, my plan, you know, it's funny how plans change. My plan was to actually retire this year because I always said when my son graduates from high school, I was going to hang it up and basically become a tennis mom. You know, part of my, you know, he's going to play collegiate tennis. It's going to be a short career, right? You know, college is only four years and then he's going to play on the tour. You know, it's just hard because you don't know how long he'll be able to play on the tour. You know, either one. You know, you would hope that he doesn't get injured but you know, careers do end up abruptly short. But I just want to be there for it. I just feel like since I've had this administrative position at the university, you know, I don't have a lot of free time anymore and I feel like the last few years I've kind of missed out.

No, no free time as the department chair and the program director. I'm surprised.

No. So, right. Someone has to work to pay for all this. Right. And so, and then like I said, my husband has been doing this locums lately and he's on a two week, on two week off schedule. So when he's off and I'm at work, you know, that's no fun. Right. So I've always said like, well, I should probably hang it up. So then when he's home because he travels for his locums, at least that we can do something together. So I'm on target maybe for the end of next summer. My husband toys with, you know, why don't you stay and maybe just do some. We have positions in the school like career coaching and advising and basically non, you know, things I could do, non clinical, just like a half a day a week or something. I don't know. But we'll see. I'm just trying to make some plans here in the next six months or so. I think it is hard for us to hang it up. You know, a lot of us are type A and we've always been used to being busy or being in school or in training so long but you know, so that's one thing. And then obviously I have some other things that I was looking forward to. So because I'm military, I have the post 911 GI bill to use. It does expire eventually. So I was like, geez, I'd like to use it before it's gone. And I, I think it'd be really fun, especially going on these college visits with my son to just go back and get some degree and study something, you know, that just something. And I don't even need to get good grades. It's not like I'm going to go to medical school or something. Right.

Be nice to go to college and not be pre med, huh?

Right. So you know, there's just so many things that are interesting. So it's like, you know, I just go back, you know, get another degree, use that up. Obviously there's a lot of things on my bucket list for travel because we're retired military and we live in a town with a air force base. You know, we have Access to space. A. So, you know, we have a lot of things we can do if we're not working, obviously, but.

It'S pretty exciting to have the freedom to have those options, isn't it?

Definite, definitely. And I think in the age of where healthcare is going, I think the faster that physicians can achieve that sense of job security, in the sense where they're not job dependent is what I'm, you know, alluding that the better because, you know, being strapped to a job you don't like because you have to pay your mortgage is no fun.

Yeah, I can definitely agree with that. Well, our time's getting short, but I wanted to give you a chance to kind of ask. Anything else? You know, what are we. What are our listeners here on the White Coat Investor podcast not getting that you can provide to them today?

Well, I don't. I think you hit a lot of it all the time. I think it is important for people to be patient. Like I said, I think we see a lot of young people posting and they're all excited and they're trying and obviously they're taking the right steps initially. But I think they really need to understand this isn't going to happen overnight. So they need to have some patience. But by having the correct habits early on, it will happen sooner than they think. So I think that's really important because at least on the women's forum in the Facebook group, I think there's a lot that get very frustrated thinking like, this will never happen to me. They're throwing their hands in the air, I think, because they just don't realize it takes some time to get to that place. The other thing is I was listening to. I listened to C. Can I say it? Cnbc. I listen to a lot of business shows because obviously I'm interested in finance. And they had a great podcast from yesterday. And, you know, really to not be afraid to invest your money, you know, you could go to the, you know, no risk, no reward. But, you know, when you look historically, the only way to have your money work for you is it has to be in the stock market. You know, we just see. And you probably see this mistake, too. It's so sad to see people who are saving into their retirement accounts, but they put it in a money market.

Yeah. And that's especially the last five years. It's been so disappointing with those low yields.

Oh, yeah. And yeah, it's just very sad. And I know some people are afraid, but, you know, at the end of the day, you just have to not be afraid because it is going to be. It's a long haul. That money will sit there a long, long time and it'll be okay. So I think that's another thing too, that viewers need to realize that, you know, just don't be afraid, take a little risk. Especially when you're young. You have, you know, we've made mistakes too. My husband and I don't get it, you know, but you do it when you're young and you recover.

Yeah. It's helpful to make as many mistakes as you can with small dollar amounts early on, isn't it?

Oh, I know, I know. I mean, yeah. I don't know. It's funny looking back, sometimes some of the things you did or you think like, geez, if we would only have done this, or if we didn't do this, what we would have now. But it's okay.

Well, Dr. Ann Champeau, thank you so much for coming on to the White Coat Investor Podcast today.

Oh, thanks Jim. I'm glad I could help out and hopefully the listeners will learn a little bit.

Thank you very much.

Thanks.

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My dad, your host, Dr. Dahl, is a practicing emergency physician, blogger, author and podcaster. He is not a licensed accountant, attorney or financial advisor. So this podcast is for your entertainment and information only and should not be considered official personalized financial advice.