Category: Physicians

Never forget these two axioms:

 

Money frees us, but its pursuit may enslave us.

It’s not about how much you have at the end; it’s how much you could have made.

 

 

In our ongoing series of physician archetypes, we’ve now rounded third and are finally headed home (Sarcastic Reader: Thank God! When is this bozo finally going to teach us how to make some money rather than waxing rhapsodically like a damn philosopher…I’ll show you my Critique of Pure Reason*, you pompous jerk!)…and into the last archetype, one any of us could fall into at any point (like, say, 2009…just to pick a random year as an example).

 

Dr. Scared

 

There’s conservative and then there’s scared…

 

The line isn’t that fine between the two, but the ones so scared of losses that they lose by not investing appropriately rationalize it is so.

 

3.22.

 

3.22.

 

3.22%.

 

That’s a good number to remember.

 

As you may recall  (and shame on you if you don’t), 3.22% is the average annual rate of inflation over the past century (1913-2013). That’s the rate at which your money is being eaten away at. At this rate, products will cost twice as much in just over twenty years as they do today.

 

The simple way to think of inflation is thusly (using this word makes you seem smart…even if you’re not…especially if you’re not):

 

If something costs $100 on January 1 and the inflation rate is…say, 3.22% (Gee, what an odd number…Where did he get that from?)…then exactly one year later, that very same product will cost precisely $103.22.

 

 

So…it’s not only a matter of growing your money, but doing so at a rate that is not leveled by inflation since what you can buy and your cost of living will be quite different than as you start out in your career.

 

{RLE #8: A couple I knew from medical school—who will be the subject of many future posts and RLE’s (Hi guys!)—were absolutely terrified of any fluctuations in the stock market since any loss was destruction of money they earned the hard way. Therefore, their investing style became 100% bonds and cash. Investing in only bonds and nothing else for 25 years has left them a nice amount of over a million dollars. But without accounting for inflation, they just got all their gains largely wiped out. They had just over a 6% rate of return in the past quarter of century vs. 10.72% [or a compound annual growth rate of 9.15%—more on this in a later post] with the S&P 500. Ouch.}

 

Don’t get me wrong.

 

The million dollars is still there, but its purchasing power is greatly diminished. This is the entire reason you want to gain the highest SUSTAINABLE (this wasn’t in all caps by accident; sustainability is the key here, not chasing some crazy ass [sorry to lose you in the financial technical jargon] high rate that won’t last even six months) rate of return as possible.

 

It’s not happiness that money can’t buy; it’s time.

 

And once you spend 25 years underinvesting, you can’t get that time back.

 

Ever.

 

There’s absolutely nothing wrong with a cash and bond only investing style…for a few…but not most everyone…and you need to know all the upsides and downsides of doing so. (Much, much more on this in a later post.)

 

 

Like I said multiple times before (and asked you to never forget—come on people, get it together!)…

 

“It’s not about how much you have at the end; it’s how much you could have made.”

 

You’re investing in the US and likely broader global economy. It’s been a great bet for centuries. That won’t change any time soon.

 

So get out there and make sure your money is working at least as hard as you are, if not harder.

 

I’d love to hear from any and all of you about your thoughts, so we can all learn from one another.

 

Talk to you soon.

 

 

 

*Critique of Pure Reason (1781) by Immanuel Kant is one of the foundational works of philosophy dealing with the limits of human knowledge and how/what we perceive and can truly learn. (*Whispers* Whoa, that’s not even a money thing. I’m going to be so smart reading this blog that I’ll read it forever and ever and recommend it to all my friends and all their friends…and…OK, this has gone from trivia to subliminal suggestion to outright begging…enough…my apologies.)

 

Never forget these two axioms:

 

Money frees us, but its pursuit may enslave us.

It’s not about how much you have at the end; it’s how much you could have made.

 

 

 

In our ongoing series of physician archetypes, we’re now heading into third…and into an archetype uncomfortably just like all of us from time to time…

 

 

Dr. Unwise

 

 

Most of us aren’t blindly arrogant or wasteful spendthrifts like the last two archetype posts. However, often, we fall into mistakes that we did not even see coming, but somehow unfolded in front of us and we then get trapped by.

 

 

{RLE # 7: A casual physician friend of mine at my hospital who is professionally successful, but a hot mess (as the cool kids say) in his personal life is a never-ending example of this. In fact, he is the reductio ad absurdum [you can look this up at your convenience] of this problem.

He and his wife hurriedly decided to upgrade their home and then before the end of summer (i.e., before their kids’ school started again), they purchased a terrific new house in a great part of town…without yet selling their first home. So, thirty-three (yes, 33!) months and counting along two downward revisions of their original selling price, they are the not-so-proud owners of two homes they are struggling to fit in their budget. In addition, two kids in two different private schools [don’t ask] with now driving each kid separately each morning and picking them up at the end of each school day [I said don’t ask!].

This has now translated into his non-physician wife having to go early for school runs each morning and not to her work early. These are all choices and sacrifices millions of us make, but for them it’s worse than that. Her early morning schedule prevents her from being at her work place by 7:30 AM which is what her dream job requires her to do with absolute rigidity. In turn, this has then prevented her from earning a higher income…which could be used to pay for that first home…or second home…or something…or anything. Forget the money being lost here. Think of the many invisible taxes penalizing this couple or even the entire family.}

 

The above may be an extreme example. It may not be either. I know way worse. Regardless, not any of these events happened simultaneously nor were they planned out in advance with the pros and cons of each decision weighed with an eye towards how each would impact other decisions or the family’s lifestyle. (Admittedly, buying a house before even preparing to sell the one you live in currently is essentially their fault and caused much of this cascade…but still…no need to be a hater.)

 

We all do this. We make the best decisions we can with the knowledge we have at the time we need to make the decision and hopefully not under duress. Inevitably, because the facts on the ground change and…well, life is messy…we are put in a fiscally disadvantageous situation that “2013 you” would have slapped “2017 you” for being in.

 

However, it’s your job to turn the ship around when you steered into choppy waters. Sell the house, get both kids in the same school, and figure out how your wife gets her dream job.

Get it together out there, people!!

 

WE ALL MAKE MISTAKES!

 

We don’t all have to continue them in perpetuity.

 

Fix the messes in your life. And don’t do it just for your financial security. Do it for your (and your family’s) wellbeing.

 

That’s your job.

 

I’d love to hear from any and all of you about your thoughts, so we can all learn from one another.

 

Talk to you soon.

 

Never forget these two axioms:

 

Money frees us, but its pursuit may enslave us.

It’s not about how much you have at the end; it’s how much you could have made.

 

 

In our ongoing series of physician archetypes, I submit to you the guy/gal sadly we all know…and likely loathe…

 

Dr. Spend It All

 

“It’s not about how much you have at the end; it’s how much you could have made.”

 

An axiom I never forget.

 

The “Physician, Wealth Thyself” (henceforth PWT) Corollary to the above axiom is the following:

 

“It’s not how much you make, it’s how much you spend.” AKA RULE # 2

 

Another axiom I never forget.

 

Pro athletes who are fortunate enough to play for multiple years, particularly those who beat all the odds and play beyond their league’s average, still have a bankruptcy rate up to 80% five years after last paycheck as a professional athlete.

 

Think about this phenomenon for a second.

 

In the extreme worst cases,  you have guys that made over $100 million that had to declare personal bankruptcy only a few short years after playing.

 

The pattern repeats itself often with lottery winners. That bankruptcy rate is nearly 70%!

 

How in the world does this happen?

 

RULE # 2 is how it happens.

 

“It’s not how much you make, it’s how much you spend.”

 

Win $20 million? Hey, now, I can spend $10,000 a day and never run out!

 

Uh…no.

 

You can’t even make it six years at that rate.

 

At the physician level, we probably all know people who live very well—beautiful home, great cars, private school for the kids, amazing vacations, second/vacation home (Ugh!), maybe even a boat, etc.  We may wonder how they’re doing it. Maybe their practice is doing extremely well. Maybe they are an extremely shrewd investor. Maybe they have another revenue stream. Maybe they have “come from money.”

 

Lots of maybes, no definites.

 

Maybe…just maybe…

 

They’re massively in debt or living from paycheck to paycheck.

 

We associate that situation with poorer people and the uninformed. Well, I hate to break it to you, but that’s physicians to a large extent.

 

We are debt ridden from school loans as we start off in training and then unavoidably add to that debt burden with a house and cars (and hopefully nothing else).

 

As physicians, we are the very antithesis of the instant gratification society (i.e., the good ol’ US). We go to college/medical school for nearly a decade (or longer), then go into relatively lower salary years of training for three-nine years (or more if you’re a masochist), and only then start earning an income finally commensurate with the level of debt accrued.

 

This is not a path that you fall into, chance into, luck into, try for lack of anything better to do, or is one for the faint of heart. It’s hard—on purpose. There is a lot of stress, doubts, recriminations, sacrifices, and even guilt long the way.

 

So, inevitably, when you make it to the exalted status of being an attending, it’s natural to want to enjoy the finer things in life. You’ve worked extremely hard for likely decades, sacrificing many things along the way, and feel like it’s time to FINALLY enjoy yourself.

 

It especially holds true when everyone around you is seemingly buying BMW’s, Mercedes, and the like to drive, living in fabulous homes in the poshest neighborhoods, and are traveling in high style at a frequent rate.

 

I firmly believe Facebook, AKA everyone’s personal life highlight reel, has only worsened this situation. Now, you don’t even have to see people to know they went to Hawaii or bought teak furniture. They humble brag about it on social media. Hell, for some of these idiots, it’s half of the reason they did it anyway. And you’re now getting it shoved in your face constantly making it seem as if everyone around you is living the high life…except for seemingly…you and your family.

 

Add the above to the urge of finally tasting a little bit of the sweet life after decades of a spartan existence…and then you may have the perfect storm to spend unwisely.

 

As I often remind people, “the easiest way to appear rich is to be poor.”

 

In other words, finance everything, own nothing, be leveraged to the hilt, and be massively in debt.

 

Just make sure you smile and tell everyone how great your life is.because as we all know it’s stuff like Maseratis and Viking ranges that make life worth living.

 

Ultimately, no one knows anyone else’s debt structure unless you have seen their statements yourself. Everyone else who isn’t close family or true friend could just be a liar who is closer to bankruptcy than a net worth of ten million dollars (which is, by the way, the US Census Bureau definition of rich—the other criteria fulfilling this is making $1 million/year).

 

It’s OK to spend money and enjoy yourself. Do it. It’s the journey, not the destination.

Just two simple things to remember.

 

1.) Pay yourself/your family first. In other words, don’t let your spending (i.e., paying others) interfere with your investing (i.e., paying yourself/your family).

 

2.) Get value for the money you spend. WE ALL MAKE MISTAKES. But, once you realize you’ve made a mistake, don’t continue it out of pride (“I never make stupid mistakes…and admitting this would be just that”), self-rationalization (“Yeah, it looks like I’m wasting money, but you don’t get it…), or simply because of lack of analysis.

 

{RLE # 6:  An acquaintance from training bought an overpriced lot in a great area of town to build a gorgeous home that is arguably too expensive and large for their small family. Surprise: That’s all fine in my opinion. The problem ensued after the house was built…and then renovated…twice…in seven years…and then completely refurnished…three times in less than a decade. That’s not value; that’s reno hell.}

 

Early in my career, I heard conversations all the time from nurses about being anxious for their next paycheck and couldn’t believe it. Now, I feel that I hear these conversations more and more often among physicians (though I still hear it even more often among nurses).

 

I can’t imagine how terrifying it must be to be living from paycheck to paycheck knowing that half of the next one is already spent and that much of your waking hours is wasted on plotting how to make more (rather than spending less) to meet your expenses. I’d have an ulcer and never be able to sleep at night.

 

I’ve never been that person and never will be.

 

Do the same.

 

You’ll be much happier in the long run.

 

I’d love to hear from any and all of you about your thoughts, so we can all learn from one another.

 

Talk to you soon.

Never forget these two axioms:

 

Money frees us, but its pursuit may enslave us.

It’s not about how much you have at the end; it’s how much you could have made.

 

 

The next few posts will highlight physician archetypes we all know and often dread, especially the next guy who we all have to deal with in the hospital…

 

​Dr. Know It All

 

I’m always amazed at what is tracked, especially in the US.

Did you know federal regulatory agencies track small plane crashes by pilot occupation?

They do.

What a great country.

And physicians are number one.

Congratulations, doctors!

When researched, it was thought that doctors are so confident of their skills that they would assume things rather than go through the checklist that all pilots are trained to do. They were found to be over confident in their skills as well, particularly in bad weather. (Sadly, this is precisely killed JFK Jr, his wife, and sister-in-law when he flew as a non-instrument tested pilot in weather that should have grounded him otherwise.)

 

Unfortunately, we all know physicians that are so supremely confident in their skills that they have become blindly arrogant and assume that they are now great at everything they do.

 

Of course, I am. I’m one of the smartest people I know and I know a lot of really smart people.

 

No one can convince them they are wrong…ever…about anything.

They also rarely have an opinion left unspoken.

Why would you when you’re that smart?

Their greatest fear is dying with an opinion left unsaid and not shared with the world.

And that comes to investing as well.

Regardless of what type of investing they are in (spoiler alert: it’s never a mutual fund), that’s THE ONE to be in…and anyone who isn’t in it is a fool…which most people are in their perspective anyway. This is just further evidence confirming their suspicions.

 

{RLE #4: A physician I barely knew struck me up in conversation once and claimed—declared actually—that there was no money to be made in the stock market any longer (apparently we had all missed this halcyon era of easy riches) and the “real money” was only to be found in real estate. As he noted, “If you’re not in, you’re out. I’m warning you, boyo. Don’t ever be out.” Boy-o? What bad action movie did he learn his syntax from? Probably the same one that he learned his investing philosophy from. That absurd one where Arnold Schwarzenegger is a firefighter who somehow winds up fighting terrorism. Remember that one?*}

 

They aren’t always obnoxious or inflammatory. They may be popular, influential, or hold positions of authority in their respective groups, divisions, departments, or hospitals. And that’s the whole problem.

 

Even those of us skeptical of them as human beings gravitate towards their opinions as physicians. It naturally happens in the hospital, so it follows that it would in other spheres as well.

 

{RLE # 5: A well known braggart at a hospital I used to work at proclaimed how he sold all of his stocks and mutual funds and was pouring it all into real estate after holding it all in cash for 2 years, all because he didn’t “like how things look”…whatever that meant. He repeated multiple times how he sold all his stocks and mutual funds. He bragged loudly (it’s never softly, is it?) how proud he was that he owned not one share of one stock or one sliver of a mutual fund.

Forget the massive capital gains tax that would have to be paid for such a brash move.

Forget that real estate may have a much larger downside than the stock market.

Realize when all of this happened.

If you were to believe this narcissist, he sold out of the stock market in the summer of 2006 when it was high (but not nearly at its peak), held on for two years, and plunged “all in” into the residential real estate market in the summer of 2008… just before the crash months later.

But trust him, he’s a genius. Even he believes he is. And who can argue with him?

After all, he’s a genius.}

 

But think back to that physician pilot…

 

When you don’t do your job—a thorough evaluation—you’re risking your hard earned money to the whims and wishes of someone else who only remembers his successes.

 

Just because someone else doesn’t run through their checklist before a surgery, procedure, or flight doesn’t mean you should follow suit. In fact, that’s the point of time outs by OR teams. It eliminates all short circuiting by the physician. The thorough evaluation will be done no matter what.

 

In no way, shape, or form is money more valuable than a life. But there’s a lesson to be learned here.

 

Dr. Know It All is often arrogant and loud, not because he is great, but because he is insecure. He loves money not for the financial security like most of us, but for the perceived power, influence, and stature it provides him. Therefore, he doesn’t panic when things go sideways; he just amps up the volume on his braggadocio.

The only thing worse than not being rich for Dr. Know It All is having people know it.

 

Go ahead and feel free to listen to whoever you like or trust, even the idle chatter in Satan’s locus—i.e., the physician’s lounge in your local hospital.

 

Just evaluate what you’re being told. Don’t just blindly follow what others are doing.

 

No matter how smart, amazing, or trusted they are, do your job before any money is put at risk (and that’s exactly how you should think of it).

 

Invest smartly because you did your job, not just because someone told you to do so. They won’t reimburse you when you lose your money. They’re too busy trying to get out of their metaphorical plane crash to do so.

 

Remember RULE # 1: No one cares about your money more than you do.

 

 

I’d love to hear from any and all of you about your thoughts, so we can all learn from one another.

 

Talk to you soon.

 

 

*Collateral Damage, 2002.  (The film was actually delayed in its release from 10/2001 to 2002 because of the events of 9/11/01. Never forget.)

Give yourself a gold star for the day if you knew this without looking it up.

 

https://en.m.wikipedia.org/wiki/Collateral_Damage_(film)