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18 Reasons California is a Great Place For Doctors to Build Wealth

California might be an expensive state in general. But you can leave very cheaply in California as a physician, if you’re willing. You can earn a ton of money during a short period of time.

I’m totally biting off of the Godfather here but his post deserved a reply post. So let’s talk about why California is the ideal place for doctors who want to build massive wealth. With the caveat that it’s not the kind of place one would want to live long-term.

As physicians we are comfortable moving for medical school and even residency. Therefore, moving for a high income shouldn’t be anything foreign to us.

Dr. D wrote his post comparing California to Utah. I don’t know where Utah is on the map, I figure somewhere between Cali and NY, so I don’t have a whole lot of context there. But I have practiced in WA and OR and CA. I am writing from a very different perspective than other physician bloggers, I am focused on the freedom plan in medicine, not the millions of dollars supposedly needed to retire securely.

But in all fairness, I might be wrong. Catch me in a few decades and let’s see if I’m broke as a joke or doing fine. That’s really the main purpose of this blog. Ain’t got no advice to give you, just leaving some breadcrumbs for younger doctors so that they can decide if a similar path would be worthwhile or a big bust.

Let’s get down to it.

#1 Tons of Cheap Housing Options

This one is easy. Don’t listen to the news like a sucker, look it up for yourself. Information is now free and a quick search on Craigslist will reveal numerous, gorgeous studios and 1-br for under $1,200/month in a crazy-ass expensive city like San Diego.

My favorite are the studios or granny flats for <$1,000 in neighborhoods such as Banker’s Hill or Hillcrest in San Diego. You’ll be able to walk everywhere and there are decent public transportation options as well.

Don’t like downtown? How about a nice 1-br in the Carmel Valley area. It doesn’t get more gorgeous than Carmel Valley – at least compared to the rest of the US.

#2 Business Friendly State

I agree with the Godfather that Cali taxes are terrible, topping out at 13%. But you also earn a lot for being in California. Meaning, your income potential is a lot more than Utah.

Also, if you want to start your own Urgent Care, Walk-In clinic, Primary Care, or DPC clinic, California is very friendly towards those who start businesses and you’ll get plenty of resources, such as SBDC.

And of course, if you start your own business, you can write off all of these high expenses which you’ll have in California. There is a reason why a medical office building rents for more in Cali than Utah – you make more money from one than the other.

#3 Lots of Wealthy People

One of the best things of living cheaply in a wealthy state is that there is an abundance of luxury which you can passively enjoy. The standards are so high that even the homeless live better than medical students.

You can enjoy lavish parks, free museum passes, libraries which will put the entire state of Utah to shame (jk Utah, we love you). Restaurants and cafes which make so much money that they don’t give a shit if you spend the entire day there buying 1 cup of coffee and seeing 100 telemedicine patients.

#4 MediCAL Factories

How can I be politically correct about this? Oh, wait, wrong blog, we aren’t PC on this blog and enjoy the low Google ranking due to the rogue F-bombs (fuck) and S-dumps (shit) and references to non-clinical genitalia. Medicaid isn’t a very lucrative options but when such a high population in your state depend on it, you make up for it in volume.

A crazy busy state like California is the perfect place for a MediCAL factory. Everyone is very busy and very important. They want their lattes yesterday and can’t be bothered with having to wait for their appointments.

MediCALites are often upset that you don’t speak their language and upset that they cannot see the specialist of their choice. There is a hefty dose of entitlement going on on Cali. This can make it the ideal place to have the kind of clinics many of my colleagues own or have owned.

#5 High Transportation Costs

Because transportation costs are so high, and because California is so poverty friendly, you can get public transportation for fairly cheap. You can Uber Pool Express for less than you’ll pay driving your own car.

If you are working as an Urgent Care doctor or someone who is willing to work their ass off for the time they live in California, you can avoid traffic because you’ll be at work and off of work when nobody else is on the roads.

There are tons and tons of cheap and used cars available in Cali which you cannot find in Utah or Oregon. The Medical patient just upgraded to a C-Class Benz, they would be fucking embarrassed to drive around in a 2001 Corolla.

I bought a $1,000 1991 Honda CRX and not only commuted with it to work but also rented it out on Turo for income.

Earned good money renting this $1,000 Honda CRX out on Turo in 2013.

#6 Stealth IRA’s and Backdoor IRA’s

I don’t do the whole Stealth IRA (HSA) or Backdoor IRA thing. I know that I’m potentially leaving $10k/year on the table which could translate to hundreds of thousands of dollars in retirement. But if your savings rate is 75% and you’re a sole proprietor who is moonlighting his ass off, it’s a less important fact.

Doctors have successfully retired and become disgustingly wealthy without an IRA, even without a 401k.

#7 529….

I don’t have kids so I definitely shouldn’t comment on this topic but… words are free and since I only have 4 readers – 5, counting the California Medical Board, I don’t believe in 529’s.

I believe in buying your kiddo some real estate as an investment. I believe in setting up your kids to have very healthy retirement accounts. But I don’t believe in putting money aside in a 529.

#8 Deduction

I’m sure the readers of this blog don’t make a real estate purchase because of the tax write-off alone. Furthermore, taxes are perpetually changing and physicians, as high income salaried earners, will always be big targets.

SALT, as a percentage, may have affected those living in expensive and high tax states more than others. But usually there is some correlation somewhere. The income I can earn in California is unparalleled to earning opportunities in other places.

Doctors are savvy. If the IRS tightens the tax noose on one front, we find another method of tax strategizing. Guess what, California has some of the best tax lawyers because rich people like decreasing all expenses, including taxes. Dr. D has a great list of tax strategists on his website.

#9 Sole Proprietor Has No Fees

Sole proprietor seems like a decent way to go when it comes to moonlighting. And if your lawyer suggests otherwise, I would ask for reasons why you would need to be anything but a SP. Ask for some proof using case studies.

#10 All Asset Protection Laws Are Weak

California is the ideal state to accumulate wealth in and not a state to hold your wealth in. That’s said, many states are terrible at asset protection. Asset strategizing is an even more complex topic than tax strategizing and worth hiring an expert for.

Other than Florida, it’s hard to pinpoint a state which is favorable regarding asset protection. And who is to say that asset protection laws won’t change in the future?

#11 Affordable Disability Insurance

I paid $479 a month for my disability policy until I retired from medicine. I started the policy 5 years after starting work. Is that high? I’m not sure. But I was making nearly $400,000 a year as a Kaiser Permanente physician. Paying 2% of that money towards protecting my biggest asset at the time, seemed reasonable.

#12 Fair Laws…?

I’ve practiced medicine in WA and OR and CA and though I am rather naive when it comes to legislature, I can’t say that over my 13-year career I have noticed any major differences between the states.

#13 High Income Potential

I tell other doctors that I made $427,000 as a Family Medicine physician in 2014 at Kaiser Permanente and they don’t believe me. Even after showing my partnership K1, they think that it was an isolated incident and not repeatable.

I’m sure nobody will believe me that I earned $85,000 as a moonlighting 3rd year Family Medicine resident. Or $180,000 as a 4th year chief resident.

But there are a few like me out there, I know, I’ve met you. We hit the moonlighting circuit hard. We work the ER’s, Urgent Cares, Primary Care clinic, Aesthetic clinics, and anywhere else where physicians are needed.

And, shit, we didn’t even have telemedicine back in my day. I’ve earned $250/hour as a telemedicine doctor.

#14 Investment Opportunity

We give some doctors a hard time for buying excessively luxurious real estate. Like a GI doctor buying a $2M house in La Jolla – the gall!

What many don’t realize is that $2M is chump change for La Jolla. That little bungalow, however, will go up a ton in value. Real estate bubble or not, the wealthy don’t care. They’ll pay a premium for a property they want or they think has future value, often in cash.

California is an awesome state to house hack in as an investment, if you’re gonna buy. Otherwise you can rent for <$1,000 in San Diego while everyone will tell you that it’s impossible to rent for that low. They said the same thing about my $825 studio in Banker’s Hill which I was renting from 2013-2015.

The Barcelona. $825 studio apartment, Banker’s Hill, San Diego, 2014-2015

#14 Career Opportunity

A day might come when you’re tired of only seeing patients in the clinic. Maybe you want to do some medical director work. Maybe you want to be a healthcare consultant. Or you want to be an executive for a hospital.

California is one of the best places to get such experience. There is a huge need for such positions. Not only that, people are always busy moving up the ladder, freeing up a ton of new opportunities for the upcoming docs.

If you want to manage a SNF or own you own, California is a great place to whet your whistle.

#15 Diversity

Ever worked in Portland as a doctor? That’s as close to the opposite of diversity as it gets. It’s actually hard to find Indian doctors there – yea, I know!

Why is diversity important? Because some fool at some point in your future will offer you a great job but ask if you speak medical Spanish. Whether you’ve worked with immigrant populations. If you’ve worked with homeless youth. If you have any experience with transgender sex workers – yes, you proclaim, and unlike in Utah, not just socially.

#16 Business Opportunity

Do you want to start an aesthetic practice? A DPC practice? A concierge medical group? Do you want to open a travel medicine clinic?

Where are people willing to spend more money than necessary? California! There is a lot of wealth there and people are willing to pay for access and convenience. If you know how to market then you can do really well for yourself in such a state.

Your target can be the rich surfer crowd or the wealthy geriatric population. And, of course, it can be a Medicaid factory which, shockingly, nobody bats an eye at.

#17 Unhealthier Population

There is a lot of sedentation and stress going on in California. That’s insulin resistance, that’s obesity, that’s high blood pressure, high cholesterol, prediabetes, and autoimmune diseases.

Sure, you can find even unhealthier people in the midwest but they don’t have the income of the rich California. Nor will they argue with you when you point out that their extra 45 lbs isn’t just due to bone volume.

This sense of superiority and unawareness, along with the deep pockets, makes for an incredible earning opportunity for the physician. Yes, I’m such an evil opportunist, I know. Making money off disease! Terrible.

#18 Higher Standards of Living

The reason that higher cost of living is advantageous to the frugal wealth-accumulating physician is that there are more opportunities to live far below the median income.

The logic might be a little odd to follow. But when everyone is trying to live bigger and in a more luxurious fashion, when they are trying to buy more shit and travel to more places and fight gravity with a scalpel, it leaves you with the opportunity to get nicer stuff for far less.

As I already mentioned, nicer used cars are cheaper in California. Second-hand clothes are usually name brand. You can rent a massive room in a massive house for next to nothing. You can rent out a granny flat on a huge parcel of land, totally separated from the main house, for cheap.

#19 Better Welfare

If someone decides to put you out of business, if you can’t practice medicine for some reason some day and are forced to go begging the gov’t for cheese, Cali is the best place to be.

You don’t want to live on welfare in Chicago, too cold. You don’t want to do it in Oregon, too rainy. You want to do it in either Florida or California. And since CA will offer you much more money, you can live well if you’re willing to live frugally.

19 replies on “18 Reasons California is a Great Place For Doctors to Build Wealth”

Hilarious! And true.
I would add the following:
20. Schools are actually free in California. In Utah, there are mandatory school fees for public school, and you pay even more if your kid does extracurriculars.
21. The UC system is a great deal. It’s not that hard to get into at least one, and the worst UC still kicks anything in Utah ranking and opportunity-wise.
22. If your kid can’t hack a UC, the Cal State system is pretty good and very cheap.
23. It’s insanely easy to transfer from a community college to a UC, getting a world-class education for very little.

Ah damn! Forgot about the cal state and UC systems – shit… I might steal that from you and add it to the list, that’s huge.

As one of your 5 readers this was a fun read.

I lived in California during my high school years. Weather was great and lot of stuff to do. Still I don’t think I would live there as traffic was a nightmare even back then and I’m sure worse now.

The 1 bedroom prices are fairly reasonable that you mentioned in those locales. Problem is most physicians will have family/kids that require larger space with resulting higher costs.

For me it’s a great place to visit, but not to live (the taxes I would be subject to at my income would just be too high).

I thank thee for ye patronage 🙂
I know it’s a dick thing to say but having children is a choice as any – wanting a big house, wanting to vacation, owning a vehicle, getting married. You can have kids in a condo, I know, I’ve lived next door to many in my college/med school/residency days. It’s all of these little choices. Once you have kids then the school district matters which is one of the biggest drivers of real estate prices. The math can still make sense unless you want to live in California like a Californian. But in all fairness, and as the the big D said, you are going to compete with families who earn $500k a month. I went to a private school in Palos Verdes, multiple families there owned 15-bedroom+ sized homes. Kids got Porsche’s, Vipers, and other exotic cars for birthdays. My best friend from high school’s family earns hundreds of thousands every month. My radiation oncologist buddies who live in Rancho Santa Fe can hang but barely.

The ridiculous traffic makes me iffy about CA.

Curious to know how you found cheap places to live. For example, that $825 studio in San Diego — how close were you to nightlife? how did it affect your dating life?

Not trying to take you down a peg — I’m just genuinely curious what the downsides were of such a fantastic living situation in CA.

I do have to admit, the great weather and diversity are major draws, but those taxes are just so frickin’ high, I think I’ll stick with Miami. Lack of diversity in Portland also scares me

This spot was in Banker’s hill so walking distance to Little Italy. A couple of fancy restaurants and bars nearby and near Hillcrest which is party central. Before that I bought a penthouse a couple blocks from Little Italy because I was a baller like that but it didn’t make any more financial sense.
I wouldn’t make a tax decision over a financial one though I’m sure you’re able to earn a good salary in Miami. I would rather earn $1M a year and pay 50% in taxes than earn $100k and pay only 10%. At least when I’m trying to grow the wealth.

The California welfare state is super excited to pay exorbitant amounts of money to fund people with kids, so that helps. You can rack up eleventy billion dollars of NICU costs and the state will write a check, no questions asked. If your kid has special needs, they will fund everything.

They are also super excited to spend insane amounts of money on useless government employees, so if you are interested in being a corrections doc or your spouse is interested in being a firefighter, you could both end up with ginormomous pensions, which you can make even more ginormous by claiming disability and working overtime while calling in sick. Seriously!

Hold up son! I gotta defend my alma mater here….Brigham Young University. Or university of white MoMo’s. It’s cheap ($2800/semester for mormon’s and $5600/semester for non mo’s) and is one of the best undergraduate educations in the country! The UC’s have become pricey ($18K/year for CA residents, and $42K/yr for non residents). Great schools, I agree but they’ve lost their value factor.

I enjoyed the post. I agree that the only way to gain wealth in Cali is live like Dr Mo while maximizing your income and savings. If you fall victim to the Cali lifestyle (live by the beach, spend like a beverly hills housewife) you are doomed! Having moved from SD to Phoenix, I am saving more, and making about the same as my friends still slaving away at SCPMG

Here’s some stats on BYU’s incoming class of 2018…

A bit of a tangent here but since this is a physician blog and we got on the topic of undergrad institutions, why not. I found this table on the AAMC website. Dr Mo’s alma mater is supplying the most applicants to US medical schools in the country! Someone please email the premed club at UCLA with a link to!!!

Hi Dr. Mo and whitest boy alive,

Based on your comments about wealth growth potential and pension availability, as well as the walkability of certain parts of San Diego, I think it might actually be a good fit for me.

Would you recommend a med student like me, who is looking to graduate with about ~130k in med school loans as well as ~30k in undergrad loans? the undergrad loans have an average interest rate of 4.3%, med school loans 6.6%. I am interested in doing forensic psychiatry in a correctional setting, and I am open to moonlighting during residency, probably as a 1099 Independent Contractor or Solo doc for the tax benefits.

Do you think San Diego would be a good fit for me? Definitely willing to take the risk if it means more wealth growth, and the point you make about prioritizing financial opportunities over tax strategies is an apt one.

I can’t make any individual recommendations – shit, I can’t make up my own mind about my own life. However, San Diego is a beautiful little city. If you wanna life rich San Diegans then it’s gonna be tough as a forensic psychiatrist. But if you’re willing to live for cheap then you can be a walking distance from a beach and still pay very little rent. You can surf for nearly free or run on the beach or bike the long bike trails or hike the many trails in SD.
Your income will be higher than many other places, and likely blow the tax factor out of the water. Lots of correctional facilities in SD and Cali. Quite a few doctors fly out for the weekend to nearby cities just to work a 24-hour shift.
Is it the right place for you? It’s one of many right places probably. There is no wrong or right. You could probably make a ton of money in Utah or Kansas or other states of which I know nothing. But even though the income will be absurdly high, what will your quality of life be? What will your connections be like?
Go where you’re happy, first. Go where the income is highest, second. Worry about taxes, last.

All right, I’m en route back home from my trip and ready to go toe to toe! I’ll use your numbers.

1) Not sure I even need to respond to this argument:

will reveal numerous, gorgeous studios and 1-br for under $1,200/month in a crazy-ass expensive city like San Diego.

My favorite are the studios or granny flats for <$1,000 in neighborhoods such as Banker’s Hill or Hillcrest in San Diego. You’ll be able to walk everywhere and there are decent public transportation options as well.Don’t like downtown? How about a nice 1-br

Okay. If your idea of a doctor house is a studio, granny flat, or "1-br", go for it. Seriously, they're both luxuries- live in California or live in style. You pick which one you want. Location is a luxury too.

# 2 Business friendly? Give me a break. I'm trying really hard not to go ad hominem on this one. I guess I'll post this:

The 10 best states in this year's Index are:
South Dakota.
New Hampshire.

If you're curious California was #49, where it should be.

# 3 You know we're talking about doctors right?

even the homeless live better than medical students.

That's not exactly a good argument.

# 4 Hmmm……just the kind of clinic I dreamed about having in medical school.

Medicaid isn’t a very lucrative options but when such a high population in your state depend on it, you make up for it in volume.

A crazy busy state like California is the perfect place for a MediCAL factory.

It reminds me of that joke about losing money on every customer but making it up on volume. There's a reason all these docs are going concierge. Because "making it up on volume" doesn't provide good care or good income and leads to rapid burnout.

# 5 Yes, there are used cars in California. Why doctors think they don't need to drive them when they owe $1.5M on a house and $300K in student loans is beyond me.

# 6 I agree that if you save 75% of your income it doesn't matter if you use an HSA or not. For the other 99.9% of the doctor population, best to learn the rules of the game if you want to win and take advantage of what is offered.

# 7 You have 6 readers now. Welcome to the physician financial blogosphere. I actually agree that real estate can be a good way to pay for college. BUT, if you're not into that, a 529 is a pretty good option.

# 8 If your income is unparalleled in other states, you're a rare doc. I had one post that she and her husband are making 5X what they were in California. So…an anecdote at the other end of the spectrum.

# 9 I agree.

# 10 There are lots of pretty favorable places. Texas for instance might be tops. California isn't the worst, but they're also nowhere near the best.

# 11 Yes, if you bought it while living in CA, it's high.

# 12 I agree. There is little difference between Northern California and California North. 🙂

# 13 Again, I think you might be surprised to learn that it is even easier to make a lot as a doctor in other locations.

# 14 Dunno. You could be right on this one. Certainly more opportunities in tech and start-ups.

# 15 Yup, tough to beat Cali on this one. Weather too.

# 16 Of course, many of those folks are just high earners and aren't actually wealthy. They're strapped with huge mortgages and student loans.

# 17 No response needed other than to invite you to visit Houston some time.

# 18 Disagree. All of that is also available elsewhere, and for cheaper. It's called "high cost of living" for a reason. If you want the same thing in California that can be had in the Midwest, it's usually going to cost more, apples to apples. Data is not the plural of anecdote.

# 19 I thought we were talking about doctors here. This one is irrelevant.

Glad you don't know where Utah is. I hope the rest of California doesn't find out either. I just enjoyed a week where I saw literally nobody except the group I was with. No one. Not a foot track. Not a building. Not a plane. Not a piece of trash. Not a rope groove. Not a cairn. If we got in trouble, there was no cavalry coming. Wilderness is wonderful. (There's some in California too, but you won't find it in a Medicaid factory.)

A repost to a repost. No arguments on your counterpoints, all valid. It was interesting to read your comment on the HSA/IRA when there is a high savings rate; didn’t think you’d agree with that but it might be reassuring for some doctors to read it. Though I think you may have mentioned it in one of your podcast episodes as well when replying to reader questions.

Dr Mo,
You’re in the big leagues now that you have WCI rebutting your rebuttal! I was really entertained by both yours and WCIs witty rebuttal points. You two both make great debating adversaries even while keeping it gentlemanly. Well done!

How could you make 400k+ as a family physician?
What was your weekly schedule ?
How many hours did you worked?
How many week a year?

Averaging 50-55 hours a week.
Took a lot of overtime shift which they still offer.
I worked every single week and didn’t take any time off.

If i work about 48 hours a week 48 weeks a year in CA as a urgent care specialist then what income should i expect at KAISER PERMANENTE?

Which KP region are you referring to? They reimburse at different rates.
KP in SD is paying around $140/hr. So, 48x48x140, that’s your number.

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