Financial Freedom for Physicians

More than ever I want to insist on the importance of finance freedom for physicians. FF is a term I first came across from a personal finance guru by the name of Joshua Sheats. Time and time again, financial freedom is what’s allowed me to have more career options in medicine.

I always assumed that I needed to be financially independent before even considering a change in my employment position. It looked like something in the high 7-figure net worth. Not impossible for a physician. But it would take most physicians 3-4 decades to achieve.

These thoughts are a 5 year evolution from my 2015 post regarding the same topic.

Approaching Financial Freedom

Now, after all the mistakes I have made and all the great lessons I have learned, I don’t regret what I have achieve financially, nor from a career aspect.

But I would have approached it differently, knowing what I know now. I didn’t need an impressive net worth, I needed reprieve from debt and spending.

#1. Debt

Getting rid of debt was the best thing that I ever did. From student loans to a mortgage to a car loan.

Debt makes you feel like you have to keep working and the money isn’t yours. Debt is like a to-do list on which you can’t cross anything off.

When you’re debt free every dollar that comes in is yours. You can decide what you want to do with it. I think that’s why doctors start saving and investing so late in their careers. It’s because that’s when they become debt-free and that’s when their savings really start meaning something.

#2. Spending

Want to know how much you’ve spent over the past few years? Calculate your total gross income by adding up every year’s income from residency until now. Next, subtract your net worth from that total number. You’ll be left with how much you’ve spent over the past few years.

Spending is a net worth killer. And every multimillion dollar marketing agency is coming up with strategies to make you part with your money.

One of my friends makes $15 million a year with his marketing firm helping online retailers sell shit to consumers.

If you can cut your spending down to its essence – housing, food, and health – you’ll be standards of deviation above your cohort in terms of wealth. And once that wealth is accumulated or the financial freedom is reached, you can ignore your spending.

#3. Cash Cushion

The cash cushion is the emergency fund. It’s the money you need to give you a runway to start a new business or change a career. Or just to make it through a market crash.

The cash cushion gives you a lot of confidence. It probably has more intangible value than any real utility when it comes financial freedom for physicians.

With $100k sitting in cash you’ll enjoy the kind of financial freedom that maybe 0.01% of Americans can enjoy.

#4. Investing

Investing has been made to look really easy; buy an index fund and keep it. That’s what I thought, until I actually put it to the test. Even a single-fund investing strategy takes practice and you have to understand the nuances of it before you can master it – and before you can profit from it.

Doesn’t matter what you invest in, really. As long as you’re consistent about it and you constantly improve at it.

I am no professional investor but I’ll guarantee you that I’ve had better consistent real returns than anyone who’s boasted about their portfolio returns at a dinner table.

I welcome mistakes. I’m going to keep investing and I’m going to keep learning. That’s how wealth grows.

#5. Savings

What you don’t spend is what you save. The money you didn’t pay for that new car or laptop you saved. And when you’re a physician who’s earning $100-150/hr, that’s a lot o savings.

Back to the financial freedom part – if you transition to a new job, something you love, the kind of work you really enjoy doing, and you keep saving $1,500/month, every month, for decades, you’ll be a very rich person.

Your consistent savings mean that you’ll need less money to live off of. If you can find the right work then you’ll always have disposable income.

#6. Earning

Never stop earning money. Earn money seeing patients, earn money renting out homes, earn money flipping cars, earn money selling digital products, earn money consulting, earn money online teaching, earn money in-person tutoring.

It’s hard not to make money with an MD/DO degree. Even with a busted medical license you can earn your way towards financial freedom.

The financial freedom comes from not worrying about where the next paycheck will come from. That’s especially the case when you can diversify your income streams.

Recipe for Financial Freedom

May I be so pushy as to push my idea of financial freedom on you? I just want to share how realistic it is to fastrack yourself towards being financially free.

Spending only on housing & food
Pay off the student loans
Buy a cheap house in cash
Save $100k in cash

You can buy a beautiful condo in Portland, Oregon for $129,000. I know this because there are 2 such units available in my building.

You’ll just need to pay the HOA dues and pay for food. You’ll probably get health insurance and your cell phone from your employer.

Transportation isn’t hard with the public transportation grid here. Or you can always use Uber which is 100% write-off-able.

Next, you can quite your full-time gig and work on JustAnswer making $7,000/month. Or earn $10k/month on Teladoc. Or start your own Telemedicine Clinic and make $8-10k/month.

You can do all of that with less than 15 hours of work a week. That, to me, is financial freedom.

Career Satisfaction in Medicine

I am happier now than I ever was before. Maybe it’s because I’m less burnt out than I was back in 2016. But it’s also because I’m working exactly how much I want to work.

My career satisfaction also stems from doing the work I enjoy. Not feeling forced to be a drone in a clinic, seeing back to back patients 5-6 days a week.

Now I do healthcare consulting, teaching, online course creating, coaching, telemedicine, and working on my own business. These are the things I’ve always wanted to pursue. And now that I’m a financially free physician I’m able to pursue them.

And if one day I decide to go back to a full-time career, that door will likely always be open for me. I just find more career satisfaction pursuing what I genuinely enjoy, in hopes of one of these pursuits resulting in my eventual lifelong passion.

The Ideal Medical Practice

Because of CV19 so many doctors got the taste of what their lives could be like as digital nomad physicians; as location-independent doctors who can spend more time with their family and more time traveling.

Some got to work less after years of busting their ass. Others dabbled in telemedicine and maybe enjoyed it.

Your ideal medical practice is a real possibility. You wouldn’t be the first physician to build that kind of practice and you won’t be the last. The difference is whether you’ll seize the opportunity to do so.