#55: 3 Major Myths About Financial Freedom

Foreign. 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. Hope you've had an awesome week. This week on the podcast, we're gonna be talking about one of my favorite subjects again, financial freedom. Now, I think it's safe to say that it's something that everybody would love to achieve and nobody would turn it down if they had the possibility of achieving financial freedom. I mean, for many, they might think it's a pipe dream. I mean, I think for me, when I first learned about it, it seemed like it to me. I mean, it seemed pretty much unachievable or something to think about in the far distant future. However, it's funny, when I think back on it, when I started this whole journey, it's only been seven years for me, maybe not even a full seven years. But so much has happened in that time. So much has accelerated so quickly. And it's something that has been constantly on my mind. I mean, in some ways, I've kind of obsessed over it, but I'm so glad that I have because it's allowed me to do so many different things. And of course, so many things have changed in the world in the last year, two years, even in my job situation and for unfortunately, being in this position has totally helped shape the way I create my life. Right. And my schedule and this sort of thing. And it's funny because as I've learned more about it, I've also learned about some of the myths around it. Some of the things that I thought were true about it maybe, or that other people think are true about it, but it may not be absolutely true. And so I wonder if any of these myths are something that you hold onto when it comes to financial freedom. Let's talk about myth number one. Myth number one, this is a big one. It's that you need to be debt free to achieve financial freedom. Now, us, as physicians, we're definitely not strangers to debt. It's funny because I work in an academic institution. I talk to residents all the time who tell me that they have $300,000 in debt. Right? I mean, I've even heard people talk about 400, 450. I mean, it just sounds pretty crazy to me Now. I'm lucky that I went to a state school for my med school. My undergrad was quite a Bit. But for my state school, it was very, very affordable, you know, in relation to a lot of other medical schools. So I didn't come out with that kind of debt. Still six figures of debt, but nothing in the, in like to the magnitude of like 3 or 400. But let's say physicians. Now you add in a home mortgage, on top of that you have a few cars and now you're talking about debt well into the millions. And if you buy rental property and these kind of things, and your debt could easily cross the 2 million mark, 3 million mark, whatever it is, right? And if your goal is financial freedom, then you might have heard the only way to achieve that is to get rid of all your debt. Now do you think that's true? Personally, I found that's actually not the case at all. No matter what some other financial gurus might tell you, I don't know. But for me, financial freedom, it's not necessarily one number, right? It's the idea that you can do whatever you want, whenever you want with whomever you want. So let me ask you, if you have $10,000 in debt payment each month, but you have these other sources of income that bring in $20,000 each month, I mean, you're still making $10,000 per month, right? And if you can live your current lifestyle on that amount, then guess what I mean, you're financially free, right? I mean, there are those again who teach that all debt is bad. Personally, I believe that there is good debt and bad debt. I mean, I think it's just a tool, right? I think of good debt as an, like an investment, like an asset that helps increase your cash flow or net worth. And then there's bad debt, right? It's typically used to buy some sort of depreciating asset, like something that, you know, the value goes down over time, like, like a car, per se, right? Or things that you put on your credit card. Now what falls into each of those categories? I mentioned a few of those things. But you know, the debt that you took on, your education, for example, or your rental property, it's most likely good debt. It was an investment, whereas bad debt again, cars, luxury goods and that sort of thing. Now I'm not saying you shouldn't try to be debt free. Cause I mean, that can be a very powerful thing. And as I've gone through this whole journey, I'm starting to understand more and more the mental unloading that happens when you're debt free. So I totally get that there's a mental benefit to it. And for anybody who wants to achieve that, I think it's a great goal. However, personally, I like to go more of the balanced route. Right. I use debt as a tool, and I use it to achieve my ideal life. Now, it can totally help me get closer to that goal. And if it can, then I'm totally comfortable keeping the debt. Like that scenario where you have a debt amount, but that debt allows you to create a significant amount of income. Right? And overall, you're net positive by a significant amount each month. That allows you to live your life, make all the choices that you want, creates that financial freedom for you. And if that's the case, then being debt free for me is not the primary thing. And I'm not necessarily looking to try to get rid of the debt as soon as possible. For me, the end number. The end. The end amount that you have in your pocket, that is the most important thing to me. So let's talk about myth number two. Now, I'm too young to be thinking of financial freedom. Now, I've heard this one quite a bit. You know, there are people that I've talked to in med school or maybe even college or maybe early attendings, and I've heard this. I'm too young to be thinking about this now. Like, I'm just getting started in my career. Well, let me ask you, like, your path to your specialty, where you are right now, listening to this. It didn't happen overnight. I mean, you spent years preparing and pursuing it. You know, you set a lot of goals, you celebrated small wins along the way. It took a lot of hard work and perseverance to get where you're at. And I think the same can be said for financial freedom. It's not an overnight success type thing. I mean, even if somebody looks at you and thinks that it was an overnight success, you know that's not true, right? And becoming a physician, getting where you're at, it was never an overnight success. Anyone who tells you that this thing happens quickly, whether it comes to financial freedom or achieving your goals overnight, is probably trying to sell you something. I mean, I think the process starts with free. Figuring out your outcome, right? What you're trying to get. And then ultimately, you gotta figure out why you want it. Cause ultimately. Cause the process is gonna be hard. There's gonna be bumps along the way. The journey's not gonna always be straight. And you really have to have this focus to understand what your goal is and why you're trying to get there. Then you gotta figure out what are the actionable steps to make that happen. And obviously, the sooner you start thinking about it, the sooner you'll reach that goal. I mean, do you really want to wait until you're forced to think about financial freedom? Many people were forced in that situation this year. Unfortunately, with everything that happened with pandemic times, cut incomes, cut, you know, a lot of that uncertainty, people began to think about, all right, what if my job isn't that stable? What if medicine isn't as secure as I thought it'd be? So I would say don't wait until your job becomes less stable or life changes or you feel burnt out to think about financial freedom. If you want to think about having a long, sustainable career, in my opinion, it is worth thinking about in terms of financial freedom. It's worth thinking about from the very beginning. That way you can really integrate it into your life, into your practice, into your, you know, actions and mindset and all that stuff early on to help you totally create that career and life that you want. And then here's myth number three. You have to fully retire to reap the benefits of financial freedom. Now, we talked last week about the fire movement, financial independence. Retire early. I mean, for me, I mentioned that I never really wanted to just retire early. I mean, for me, I'm a big fan of something that I call gradual retirement. That means that as you create other income streams and supplement your income, you can basically buy your time back. You can decrease your time at your day job until you find that happy, sustainable balance. And where that point is, it changes over time. Maybe when you're early on in your career, you want to work more, a little more, you want to build your practice. It brings you a lot of satisfaction, and you just have a lot of fun doing it. You know, you're on fire for being your physician and building your practice and building your name, maybe even your academic standing, and you just enjoy that. But at some point, you know, spending all that time in the hospital, it may not be your thing anymore. I mean, I think I found that to be the case in my life. Like, if I think back at the number of nights and weekends that I worked in the beginning, yeah, I mean, I did it. I mean, it was like coming out of residency, it didn't seem too bad, and I enjoyed the cash flow from it. But things started to change over time, especially as I got a family and I started missing, you know, holiday events and this kind of thing. So what I found was that as, you know, income from my other streams of income started to grow, I was able to, you know, again, reduce my clinical time. So even though my clinical time was going down, my income was still staying the same or increasing. And what I was able to gain is that time and the choice to do whatever I wanted with it. Now, I totally believe, and I'm guessing that many of you think the same way, that life is way more than just working yourself for like 30 years just to retire and then try to live 30 years after that. Now I'm in the middle of the reading this book called Die with Zero. I think it's a fantastic book. I recommend it to everyone out there. You know, over time, if you think about your income, it's going to increase and grow over time and your net worth is going to increase. But what's going to happen is that your health is going to decrease over time. And the key is to maximize and optimize both and find that happy sweet spot. And the goal should be to optimize your time in your life at the intersection of where your health is at a good point and your income is at a good point as well. I mean, you know, for all of us when we get to, you know, 60 plus, you may have a good amount of income or get a good amount of cash in your pocket, but let's be honest, like, your health is not the same as it was when you were 40 years old. Right. And 45 years old. That's just nature and that's how things work. Doesn't mean you can't enjoy your life, but is life about just putting off everything until that point and retiring and then enjoying yourself? Now, if you're planning for financial freedom earlier on, you can start cutting back and enjoying your life a lot more earlier on. You can do that slow transition into retirement or whatever that might be. I mean, for many people, and you know, myself as well included, I hope I never really feel the need to retire. I mean, I look at some of those physicians who are still in the hospital because they just enjoy being there. And it's enjoy like the academic pursuit. It stimulates them mentally. They feel like they're contributing. And you know, I always said I wanted to be one of those people that just comes in there, shows up, teaches and has a good time. And that's what I want to be. And the way that I feel like I can have that long, sustainable career is to have the choice to work as much as I want. Right. Those people seem to be the happiest people in the hospital, the happiest physicians. Again, I saw many of those physicians early on. And it turns out that many of them had created other streams of income. And that's how I got into it, and that's what led me to where I am today. So the goal is to make medicine a hobby. I talk about that all the time. So this year has, you know, life starts to open back up again and we feel that we have a little bit more freedom to move around and get around. Let's not forget that, you know, life has had a lot of uncertainty over the last couple years. And it's up to us to create that certainty, to create that control, to create that financial freedom. And there's no better time to get started on that than now. You know, hopefully I can support you in some ways. Again, we have our Facebook group, Passive Income Docs. If you're a part of it and if you've already achieved financial freedom, congratulations. Take some time to celebrate. Enjoy it. Enjoy life. Spend time with who you want, doing what you love. Thanks for listening this week. I hope you have an awesome week and we'll talk again soon. Thanks. 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 to multiple streams of income. You can join us on our Facebook group Passive Income 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.