The best time for a physician to design their inexpensive lifestyle is in residency. Some, like myself, will need to get a little spending out of their system to feel normal. Looking back, I was spending on expensive things because I thought that they would increase the quality if my life.
The Value of Your Income
It’s hard to grasp how potent your income will be as an attending until you get that first $15,000 paycheck. Hold one of those babies in your hands and you’ll realize immediately that you’re no longer a resident.
Few residents whom I’ve spoken to fully understand what a $300k salary looks like on a paycheck.
No doubt, $10,000-$15,000 of net income in your checking account every month is a very powerful experience.
Too often young attendings will overestimate how much they can spend probably because this sum seems so large.
Others will not realize how much potential this income has and what it can do for their futures.
Size of the Paycheck
The Family Medicine resident who takes an Urgent Care job right out of residency could easily hit $300k/year. If they are maxing out their retirement accounts to a tune of $50k/year then they’ll take home somewhere around $130k on top of their retirement.
That’s a biweekly paycheck of over $5,000. With some overtime the paychecks could easily be $8,000.
Spending The Money
The higher a person’s income the more they will spend. This is the general rule of consumer spending. This has somehow become the norm for many high earners.
The spending is rarely anything creative, unfortunately. It’s often the same trifecta: bigger house, fancier car, more hectic traveling.
5 Things To Avoid
This is my list of things to avoid if you want to design an inexpensive lifestyle. A lifestyle which will afford you the kind of freedom which is hard to put into words.
1. Buying a House
Avoid buying a house out of residency not just because of the mortgage payments and the cost of maintaining a home but also because most of what you’re told about real estate is false.
Real estate doesn’t outperform passive index funds. Real estate doesn’t protect you against inflation. Real estate won’t make you rich.
Owning your primary residence is a luxury proposition. It’s almost never a wise investment despite what everyone tells you.
There is a time for you to buy your house but it isn’t as a young attending. And when you’re ready to do it, you can buy it cash.
2. Getting Married
Physicians have higher divorce rates than the average population.
Marriage is a contract that’s quite easy to get into but hard to get out of. I’m not referring to relationships – I’m talking about a legal marriage contract.
Tending to your finances is imperative after residency because you’re starting with a handicap which includes your debt, a 10-year lag, and a lack of personal finance experience. This doesn’t mix well with a marriage and dealing with someone else’s personal finances.
3. Moving to an Expensive City
Some physicians are savvy enough to live in NY or SF and still live quite inexpensively. That requires quite a bit of planning and an incredible amount of self-control.
Why torture yourself? Move to an inexpensive city.
A place where people spend their time enjoying life doing inexpensive nerdy or outdoorsy things.
4. Depending on a Car
Don’t buy a car. If you have a car then sell it.
Yes, it’s possible to live in the US without a car and I’ve been doing it for 3 years now.
You’ll enjoy more free time, better health, and more wealth by forgoing a vehicle.
As Americans we don’t travel well. We waste a ton of money and fossil fuels to get to a beautiful destination just to fill our days up with stressful things to check off.
Live in the kind of city which you love exploring and if you are going to travel then travel slowly – move to another country or city and actually live there.
An Inexpensive Lifestyle
I already mentioned that housing, transportation, and vacationing will consume the majority of your income. That’s why those industries are some of the heaviest hitters in the marketing and advertising space.
Go against the grain and designs your own unique lifestyle and I promise you that you’ll live a better quality life and you’ll never worry about money ever again.
Medicine can be an amazing career but it can also wear you down. You won’t know on which side of that table you’ll be at as a young attending so it’s better to plan for the latter.
It’s wonderful to have the option to practice medicine any way you want – however much you want – seeing only the kind of patients you want.
Live close to the following things:
- grocery store
- public transportation
- a park
You don’t need a 1-bedroom at this stage in the game. A studio apartment can offer you all the necessary luxuries.
Get the cheapest rent in the best neighborhood. Ideally rent directly from the owner instead of a management company. Large companies don’t give a fuck about loyalty or that you take good care of the place.
Learn to fix things around your apartment. It’s a great skill to master for when you’re ready to purchase your own home one day – in cash.
Start saving for your future home purchase which you’ll do in cash. The best place to stash your money is a broad US index fund such as VTSAX.
Avoid debt. Avoid credit cards, mortgages, and auto loans.
Pay down your student loans. Ignore those who tell you that you’re better off investing the money instead of accelerating your debt payoff.
Debt is a far bigger problem for physicians than the traditional consumer.
If you already got a hefty mortgage then sell the house and rent. It’s never too late and if you take a loss then don’t worry, it will be worth it.
Rely on your feet, a bicycle, public transportation, or use a car-sharing service.
Owning a car is a headache and a financially burdensome decision.
Since you won’t own a car you can pay lower rent for an apartment which doesn’t have parking spaces.
You won’t have to worry about parking or traffic tickets. You don’t have to maintain a vehicle nor take on its annual depreciation.
Hopefully all you’ll need is a laptop, a cell phone, and maybe a bluetooth headset.
Avoid batteries and electronic gadgets. There will always be something newer out there, advertised to improve the quality of your life or make you more productive – the opposite is often true.
Look at all the technology introduced into our society and even in the medical field. Work has only gotten harder and more complicated. People are more stressed and working the same hours as they did pre-tech.
Don’t get a TV. Don’t buy an A/C for your place. Don’t get a home entertainment system. Don’t buy anything made by Amazon.
You don’t need a Kindle, a FireTV, an Echo, or an Alexa.
Don’t buy a printer, a fax machine, a copier, or a desktop computer.
You don’t need any kitchen gadgets other than a blender and it doesn’t need to cost $600.
Cook at home. Prep your meals for work and avoid eating out.
Buy your own coffee beans and make your own coffee.
There is something very enjoyable about cooking your own food and it helps you feel less dependent.
Ideally adopt a plant-based diet and avoid animal products which will save you a lot of money and make preparing meals much simpler.
Entertain your friends at your place or hang out with them at theirs. Dining out and drinks make for a socially awkward situation where people spend more than they intended to spend.
It’s easy to develop expensive hobbies like collecting DVD sets, traveling, skiing, golf, or fixing up your car.
A great book, an instrument, some paint brushes, and a library card could provide you with a ton of entertainment.
You’ll make great friends if you frequent your local library.
The Wealth You Can Have
Imagine living on $2,000/month which covers all your housing, food, and transportation expenses.
With this low overhead you will be able to max out your retirement accounts, pay down your debt, and save a lot of money to buy your home in cash.
If you work some overtime right after residency then you can easily earn $350,000/year as an Urgent Care doctor.
Your take-home paychecks could be $15,000/month which doesn’t include the $4,000/month you’re putting in your retirement accounts.
If you’re spending only $2,000/month and taking home $15,000, that’s $13,000/month that you’ll never have to earn, ever again in your life.
$1.2 Million in 5 Years
Every month you could be setting aside $13,000 + $4,000 = $17,000.
This is the money that your physician colleagues are letting slip through their hands every month – month after month. Not only are they losing this money but they are adding to their debt burden by mortgaging homes and leasing cars.
That $1,000/month can grow to be a conservative $1.2 million as early as 5 years after residency.