#53: Interview With Physician on Fire Founder, Dr. Leif Dahleen

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Welcome to the Passive Income MD podcast where we talk about creating your ideal life through multiple streams of income. I'm your host, Peter Kim. If you enjoy hearing about this stuff, make sure to hit subscribe so I can bring it to you every week. Now let's get on with the show. Hey everyone. I feel like this man needs no introduction, but I will still introduce him properly as he deserves. This is Dr. Leif Dalin. He is an anesthesiologist. I don't know where in the world he is right now because he's all over the place at any given time. But he's probably well known to most of you as the founder, the CEO, the main author of Physician on Fire, the blog which is so well read by physicians and non physicians especially. It's important because he talks so much about finances and how to create the really create a life by design and how to use investments to help you get there. We're going to talk all about a story. I'm so excited to talk to him today. Hey, Leif, how are you doing?

I'm doing great, Peter. Good to see you. How are you?

I'm good. Nice shirt, man.

Thanks. Yeah, I thought that this would resonate with the leverage and growth audience and it's true. I am vaccinated and fun. So.

Okay. Yeah. Okay. Is that what it means? Okay.

Yeah. In my mind, I told my kids, okay, that's awesome.

Well, it's great to talk to you because I feel like your life is ever changing and evolving. But for those who don't know who you are or may not have heard your full story, can you tell us really quickly what Physician on Fire is?

Sure. So it's a website that I started five years ago in early 2016, after discovering the financial independence movement, discovering what that meant, which is that you can afford to live your desired lifestyle with or without, you know, earning income because you've saved enough and invested enough and have enough passive income or assets to cover what you normally would plan on spending. And I thought, wow, that's really crazy. And I did not expect that to happen about 10 years after I started my career. But there I was at 39 and I'm like, wow, we're financially independent. And I learned a lot more about it. Started the website maybe a year or so after I made this discovery and yeah, and so it's a website that teaches people about becoming financially independent. We talk about retiring early, although that's just one thing you can do with that wonderful thing called financial independence and talk about investing Talk about taxes, you know, all sorts of financial issues, personal finance issues, personal issues. What you want to do with your life, what do you want to do with your time. Like, you mentioned lifestyle design. I guess I haven't thought of it in those terms, but I do definitely put out there, like, how I'm living my life and, you know, the different habits that I'm developing and the things I prioritize, etc.

So, yeah, no, that's such a cool story. I mean, it is truly lifestyle design, or, you know, life by design, whatever you want to call it. We'll get into what that actually means for you. But you said that you somehow discovered it. Like, when was that? And actually how did you discover it? Like, what was it?

It was late 2014, and I read an article about this dude named Pete out in Colorado who had a website called Mr. Money Mustache. And he's kind of an eccentric guy. I've had the chance to meet him a few times since then, but it just talked about how if you saved up, let's say about 25 to 30 times what you normally spend in a year, or if you have truly passive income that exceeds your expenses, and then there's a very, very, very good chance that you won't run out of money if you don't make any major changes, even if you live 30 plus years, which that would be kind of a typical retirement type lifespan. Let's say you retired in your 60s, well, that should get you into your 90s. And in fact, using a very low withdrawal rate of 3 to 4%, which is where that 25 to 30 or 33x your typical spending comes from, that actually means you're more likely to have as much or more money 30 years later than you are to run out. Right? So, yeah, it's just putting yourself in a financial position where you can decide what you want your days to look like and what you want to include in there, and whether or not that includes paid or unpaid work. So for me, after a lot of discussion with my wife, and we had fairly young kids then, they're 10 and 12 now, we decided that the freedom of not having that anesthesiologist job would really let us do some things we could never do with the job. And when we realized money really wasn't much of an object, especially if I continued to work for what turned out to be another four or five years after realizing that we were, at least at that basic level, pretty much financially independent, that would really open up a lot of doors. And so summer of 2019, we. I should say I left my job. My wife has basically been a homemaker. She does have a couple of degrees, master's degree, and was a registered dietitian by trade, but was pregnant by the time she finished her internship. And we've been married before that. But, yeah, so she didn't really work in the field. So if anyone's wondering, like, oh, so how much did your wife's income, current or past, play a role? Not very much. She's played a huge role in all of our success, but not so much on the financial side. So, long story short, yeah, that's kind of where we're at. 2019, I left my job. We traveled for six or eight months, and then Covid hit. And then I talked to you about a year ago in the initial inaugural leverage and growth some about what had been up until then. And so now, I guess it's time to catch up.

Yeah, I mean, you know, people find out about this stuff and, you know, there's a baseline worry that maybe those calculations won't really apply to me in my life and that sort of thing. I mean, you had a stable job as an anesthesiologist. What do you think it took for you to give that up? Because what did that job mean for you and that career mean for you still at that point?

You know, I. I mean, that was a big part of my life. I don't know if it was a huge part of my identity, but, you know, it's hard to separate that. But know, at the end of the day, it's. It's. It's what I did to make money. And that. That is. It's a very important part of any career. And when you took the money part out of it, would I do it for free? I mean, I went to Honduras and did a couple free weeks, you know, down there as a volunteer. Now I'm working for free at these vaccination clinics, which is how I got vaccinated. But. But no, it wasn't something that I wanted to be tied down to and so devoted to. I enjoyed most aspects of patient care. I wasn't, like, totally burnt out. I just decided if I could have the freedom to do anything I wanted, be wherever we want to be. I didn't really plan on being in Northern Michigan all winter. That's what happened. We were planning to travel. We actually had a cruise ship scheduled to take us from California to Hawaii, Guam, Japan, South Korea, ending in Shanghai. That was going to be last fall. And then we were going to hop around different parts of Asia, probably Australia and New Zealand. And then we had a planning to take us back from Japan to Vancouver in April into May. That was the plan for this whole 2020 into 2021 time frame.

Yeah, I mean, let's talk about the mechanics a little bit for people that are interested in this. You mentioned the 25 to 30 times what you spend in a year normally. Where do you put that cash for you? Where do you put that money in cash? And how does that continue to produce more income for you?

So it's based on a couple of studies. One done by a Ph.D. william Bengen, another by a few folks at Trinity College back in the 1990s. And they looked at people, not people, but portfolios that were invested in a mix of stocks and bonds, 50 to 75% stocks, 25 to 50% bonds. And they looked at all the range of different outcomes if someone retired at any point in the last, you know, maybe 80 years or so, going back to before the Great Depression, and they looked at how many of those instances would someone run out of money if 4% or 3% or 5%, varying percentage of withdrawal rates were taken out. And they found that there were very, very few failures even if you retired in, let's say, 1929, right before the stock market went, or if you retired in the late 60s when inflation took off and the stock market went sideways for a long time. And so it's kind of based on a worst case scenario, at least the worst we have seen as far as sequence of returns in stocks and bonds. And to address the income question, well, you know, historically the stock market has given 8 to 10% per year. Bonds, maybe 3 to 5%, we might see lower than that going forward. So it's not a bad idea to be conservative. That's one reason I worked on another four or five years. Right. Pretty much double their net worth in that time, which is incredible. So we're looking at about a 2% withdrawal rate when I actually left my job in 2019. And then by happenstance with this blog, I'm making income again. And so, yeah, I'm not worried about me and I'm really not too worried about anyone that retires early, let's say with a 4% or less withdrawal rate, especially if there's someone who, well, they've proven that they know how to make money, that they know how to save, that they can probably find a way to make more money if they were to choose to do that in the future. And if you're planning on let's say an above average kind of level of spending compared to maybe if you read a lot of fire blogs, they might retire on a million million five a year. I'm sorry, not a year altogether. Meaning spending 40 to 60,000 a year. Well that doesn't give you a ton of breathing room, especially if you have a family or if you live someplace really expensive like Southern California. Right. But if you're someone like me who plans on maybe a low six figure spend, well there's a lot of flexibility in that budget, especially when you are from the midwest and choose to live that close to home.

I mean, why was it so important for you to make all those changes now instead of just continuing to work for another five, 10 years and really create, I mean that tons of security have all that. Why was it important for you to make that lifestyle change now?

That's a great question. You know, like I mentioned, our kids are 10 and 12 right now and we figured they might want, and we might want for them a kind of a traditional high school experience. So at the time we figured, gosh, we got three or four year window right now where they're you know, old enough to be pretty independent, right. They don't take naps, they don't have diapers, they, they can dress and feed themselves, they're not so like tied in to their friends at school and everything that, that they, you know, didn't feel like, oh no, I have to be in school, I can't, I can't travel. And they were excited to travel. So we kind of presented this to them as hey, here's an opportunity. These are all these amazing places we want to go. We plan to take you and you know, we'll never have that opportunity again, at least not while we're young and you know, have our youth and have our health. And so it was, it was more of a, basically based on the family dynamic and the opportunities that we would have now that we wouldn't have maybe when they're high school age, definitely not when they're college aged and beyond now maybe they'll be like us and find a way to find financial independence while we're still relatively youthful. But you know, at 10 and 12 they're still probably 30 plus years away from that. And that would put me in my 70s, so about my parents age.

I mean that's so cool. If anybody hasn't seen his blog, if you go on there, you'll see posts about his trips, you'll see pictures of his kids and doing stuff there And I think that's just a cool example of people who are, um. I mean, there's so many people who don't do those things. They want to do it, but there's a lot of fear behind it. Oh, what if I, you know, can't make enough income, won't have enough to retire? I can't do all these things. But I think what you are a great example of someone who has thought about those things, but then also decides to take action to really create the life that you want. Now, you talk all about that on your blog. When you started that blog and you talked about additional income from there, was that a goal of yours when you started that?

I guess I knew it was possible because at the time, the White Coat investor was about four or five years into his blog, which is where I am now, and he used to publish an annual income report, and I think he published one about the time I started that showed he had made six figures for the first time from all his different advertising and referral relationships. So I knew it was possible. But then again, I knew I would have to build it up to be like the next White Coat Investor for that to happen. And I think even today, you know, of course, I'm not necessarily where he's at, and he's really growing his business. I'm sure he'll be talking with him as part of this summit. And he's got 10 to 12, I think, people working for the White Coat investor now, which is. Which is really amazing. So did I have it as a goal? I guess so. Did I expect that to happen? No, not really. I mean, I would have been happy with. With making hundreds of dollars and not the kind of income that I am making now, which I no longer publish my numbers either. But they're at least approaching what I was making as an anesthesiologist.

Wow.

And I feel really, really blessed by that. And, you know, and I try to make sure that I'm only offering, you know, I'm only advertising people that do good things with positions. And, you know, I'd hate to, you know, steer anybody wrong to make a buck, because I don't need a buck. You know, that's why I donate a lot of money from the website. Like, this is great. I enjoy making money. It's fun, it's exciting, but it doesn't change my life a whole lot at this point.

Why did you choose a blog versus I mean, there's so many other things you probably could have done. In particular, there are people thinking about blogs Podcasts, you know, these kind of things. As a starting point, why did you choose a blog? I mean, did you have some sort of writing background? I think for people, they're, they're pretty, they're wondering whether you did or not.

I don't, I really didn't. No, I, I just figured I'd give it a shot. And I mentioned Mr. Money Mustache, I mentioned the white coat investor. I really respected what those guys were putting out there and I, I wanted to do something kind of along the lines of, of what they were doing. Podcasts, I guess, could have been an option. I don't think they were nearly as popular five years ago as they are today. Or maybe I just wasn't paying attention. But it's still something I could consider. I can consider different media. You know, one thing I'm doing right now is actually hiring some help. Something that you've done. That white coat investor, physician, philosopher, a lot of other people you'll be talking to have done. And maybe if I have a little more help on the back end doing things that don't really require the experience as a physician or investing knowledge that I have, that would free me up to do some of those things that might be more fun. I don't know if it would be a podcast. I still haven't created a course, written a book, et cetera, et cetera. You know, talk about setting goals. Those would be good goals to set at some point, once I find the time. But I also prioritize other things in my life. Right. I know this is the leveraging growth summit, so we're talking more about that. But there are things that I like to do. You know, kind of going back to the lifestyle design. Like every single day. I do push ups, sit ups, air squats before showering. That's like going back to last March. I haven't missed a day. I always walk at least a mile, like a dedicated walk. Not just getting the steps in, but going outside and walking that distance every day. Except for two in the last almost year. Spanish language. I'm doing duolingo lessons. I used to do five a day, like without fail. I'm getting to the end of it now. It gets a lot harder and more time consuming. So I'm doing two or three a day. But, you know, prioritizing all these things in my life and creating time for them. Time for family, time to travel when we're better able. We are going to be in Florida when this is published. My wife and I have Both put in 40 plus hours in the first month that we've, they've had these health department vaccine clinics available, we're doing all sorts of stuff with them. And by doing that, we got our vaccine. So we feel a little more comfortable traveling now, you know, and if kids can be in school, I think they can be outdoors at Universal Studios. So we're gonna go have some fun now.

How important do you think it was to be a physician in all of this and creating this? I mean, did you feel like, you know, this path, you know, being a physician allowed you to create this path that you have or this life that you have now?

The physician income certainly led to our ability to achieve financial independence. And as far as the blog's growth and resonating with a certain audience, I think the fact that I've walked that walk and can talk, that talk certainly helps. And so, you know, at the time when I discovered the first fire blogs, there were probably a half a dozen somewhat prominent ones. Once you got into the space and in the niche and you, oh, here's the mad scientist and Root of Good and a few others. But they were all talking about a fairly lower income, lower, lower spending lifestyle. And I discovered this. There are different flavors of fire. Lean fire being like rice and beans, fat fire being the opposite of that being the more like six figure type of spend. And I kind of latched onto that. And there aren't too many blogs talking about achieving fire and having kind of an above average type of lifestyle. So I found my niche.

Yeah, I mean, that's amazing. I think it's your right. It wouldn't have been possible unless you're a physician at least to talk to this particular person, I mean, talk to this particular audience. And I think you're a great example of finding your, your niche or niche or whatever you want to call it, and then really leveraging what you have and really speaking to that audience. And it's grown, you know, as a result. What are some of the biggest challenges for that you faced along this whole journey? Because people hearing your story, I'll be honest with you, from the outside, it seems pretty easy, right? I mean, it seems like it's been really smooth for you along the way. Oh, you just happened to find financial independence. You just decided to work for a couple more years and retire and go. But there have to have been some challenges that you face that you've had to overcome and deal with. What are some of those?

Well, I think just being somewhat resistant to the peer pressure, the keeping up with the Joneses, my wife and I just. We kind of spend intentionally. We've. We've never been one to budget. I didn't start tracking spending until I had a blog and wanted to prove to other people that we actually were financially independent. And prove it to myself, to be honest, because I never tracked it before, but I had a pretty good idea of what we were spending. But. But, yeah, I mean, it would have been. It would have been easy to spend most of my physician income. Instead, I saved half or more most years, and I didn't know what I was saving for. It was until I figured out that, oh, there's, there's the possibility of early retirement that I realized that's. That's what I was saving for. And, you know, other challenges. I think just coming to terms internally with the idea that I wouldn't be practicing medicine again, you know, worrying what other people would think about that, for deciding, deciding not to give a F about that, that's another thing that you have to overcome. Right. My parents were cool with it. I found out my dad actually contemplated retiring in his 50s, early mid-50s, and then the Great Recession happened and I better work part time a few more years. So he ended up with a fairly traditional length of a career. But, you know, when he, when we told him I could afford to retire early and I was probably going to do it, it was like, oh, that's awesome. Good for you, man. I'm like, okay. You know, that could have gone a lot of different ways. Yeah. So, you know, no major hurdles. But I think the biggest, most important thing, if it's. If financial independence is really, like, important to you, is growing, you know, minding the gap. Growing the gap between how much you earn and how much you spend. And, you know, you can do that one of two ways or both ways, but if your spending grows right along with your income and you have kind of a smaller margin, you're never really, unless you get really lucky, going to get to that spot of financial independence.

And what else do you wish you knew? Like, it sounds like you came to this a couple of years into your career, but what do you wish you knew, like, at the very beginning that might have changed? I mean, it sounds like you have an amazing life now. I mean, you've really kind of set it up intentionally. But what do you wish you had known even earlier than what you. And then when you found out everything.

Yeah. And I was almost 10 years into my career when I discovered this. And in a way, I think that was almost a blessing because if I had figured out really early on that, oh, all I have to do is save, you know, two or three or $4 million. Well, that would look very daunting, right early on. And I might be, like, focused on this goal of, well, if I can get there by 45, which I think was Jimmy Turner's goal, then I can have this good life. And, you know, you have this arrival fallacy, which is something he physician philosopher talks about. Once I have X, then life will be good. Once I finish this part of residency or medical school or hit this net worth, you know, goal, everything will be good again. And that's. That's certainly not necessarily the case, but early on, I think just realizing that it's a great idea to save for something, even if you don't know what that is. Set money aside, start building your passive income streams, and, you know, and someday it'll become clear why you did that. All right.

It's such a cool story. You can't hear us enough. So many great tips in there. Great pearls. Where can people find out more about you? And I know that it's more than a blog now. You've got other places that people can find you Facebook groups in this guy. Then can you let us know where that is?

Sure, yeah. The easiest way to find the blog is Type in po fire.com P O F I R E. That'll redirect you to physicianonfire.com, which people misspell all the time. I do, too, with fumble fingers. I'm on Twitter, pretty active there at PhysicianOnFire. And then on Facebook, as you mentioned, I've got two groups. One is called Fat Fire, and the other is Physicians on Fire. The physicians group is MD DO or foreign equivalent only, and we're strict about that. And the other group, fatfire, is for everyone that is interested in this higher, higher income kind of financial independence realm.

Okay, well, if this is something that appeals to you, definitely check out his blog. So many great resources there that you can find not only great content, but resources that you can use to achieve a lot of the same things that. That he's achieved. Also, the Facebook groups are an amazing community. I'm part of all of them. Just for people who are sharing knowledge. And it's so great that he set this culture and this community up. But before I let you go, can you let people know what is, like, your number one tip for someone who wants to fall in your footsteps?

Save your money, man. That's really what it comes down to. It's the gap. So earn more, spend less, or both be happy. Don't make too many sacrifices and try to try to disconnect your income from your spending.

All right. It's been an amazing interview.

Leif.

Thanks so much for your time. I'm sure the next time we talk, you'll be in some other place in the world.

Yeah.

I mean, hopefully when all this clears up. But again, thanks for everything that you do.

Yeah. Thank you. Good to see you.

All right, take care. We'll talk again soon. Enjoy the show. Let me know by dropping a review in the podcast app you're listening to us in. And if you haven't already, make sure to hit subscribe. Are you part of our community yet? Join thousands of physicians who are also on this journey to creating their ideal lives through multiple streams of income. You can join us on our Facebook group PassiveIncome Docs, and you can always learn more at our website, passiveincomemd.com thanks again for allowing me to be a part of your journey. See you next time.