Reminiscing Back To March 2013
I am writing this post from that past. It’s neat to be able to look back and see what I was trying to accomplish and see where I am now.
I tried to piece together my life and plans based on my journal, previous posts on my blog and online posts on various websites. So, here we go, this post is about Dr. Mo, circa March 2013.
What City
I was living in San Diego and was nearly 5 months into a marriage that was going to end in 3 more months. I owned a condo and was still spending a good deal of money on my race car.
I had moved to San Diego officially in 2009 after I found a high paying job with Kaiser Permanente there.
I had bought a condo in SD in 2007 when I was still a resident at UCLA. I was spending my money faster than MC Hammer so I needed a place to invest in. I bought a tore up condo and would commute back and forth from LA to SD to work on it, when I had free time.
My Job
I was earning all of my income from Kaiser Permanente in SoCal. I was a partner so I had to pay estimated taxes. At that time I still had a CPA filing my taxes for me because I wasn’t comfortable handling that myself.
The work was good with plenty of opportunities to pick up extra shifts. Looking back at this, it’s really valuable to have the ability to work extra.
Though, it’s also important to recognize when one is stretched too thin. I was working a lot and spending a lot. At least I had reached the stage where I was feeling guilty about my excess spending, which forced me to work extra to make up for it.
I will write a post on this later but always make sure that you are working for an organization where you can advance your career. This is that much more important for an employed physician. Again, we’ll chat about this later.
How Much?
I had a net worth of -$35k.
I had no emergency fund.
I had around $40k in credit card debt from buying a $50k engagement ring.
What?! Okay, I know, stupid. I’ve done worse… there were the Russian mafia guys… The gangbanger who caught me messing with his girl… oh and the racecar thing with the cops…
Don’t act like you’re a saint!
Investing
Shit, totally forgot about this, but I was a Betterment baby. That’s how I got into investing. It was really intuitive and it was fun to adjust your asset allocation with that nifty slider button.
The little money I had invested was in Betterment and I had a few dollars invested with Lending Club as well.
My financial advisor, Andrew, is gonna cringe but just a couple of month before March 2013, I had raided my 403b from UCLA because I needed cash. I had just $3,500 in my Kaiser 401k account.
Taxes
Damn you, estimated taxes! I had made partner in May of 2011 and was still trying to get the hang of this “estimated taxes” thing.
Previously I was a W2 employee. After making partner, my income transitioned to a K1 distribution. When you’re getting a 1099 or K1 income, you have to send in quarterly estimated taxes.
According to my journal, I had a large $35k tax bill coming up for my April estimated taxes. Naturally, I was behind on saving for it.
I was paying $400 to do my personal taxes and $900 to do my corporate taxes with my business through my CPA.
Later, in 2015 and again in 2016, I would get audit letters from the IRS. One of them was a stupid one where they were miscalculating my K1. How in the world does an IRS employee not know what a K1 is?! So, that got solved quickly with a phone call from me.
The second audit letter I got was regarding my Head of Household status which I couldn’t claim because I was still legally married (though separated) which precluded me from claiming my mom as a dependent.
Debt
According to my journal, I had a negative net worth which included $40k in credit card debt and $125k+ of student loans.
I was leasing my Hummer at the time, so I had another $20k left for the lease term. I eventually ended the lease early which ended in my favor.
I still owed money on my condo but a woman had made me an offer on my place so I was entering escrow. I owed $218k and she was offering me $245k.
After paying for realtor fees and moving costs, I wasn’t gonna be left with much.
I also had decided to pay off my ex-wife’s car debt, another $6k of debt responsibility.
Auto Mechanic Shop
Always the entrepreneur, I was knee-deep into my auto mechanic shop.
In February of 2013, I had proposed to my ex-business partner that I wasn’t okay with the financial arrangement.
At that time, he was the main mechanic doing the work on the job, we were equal partners in the business. I had hired a shop manager who was really helpful in marketing the shop. But we didn’t have enough income coming in to cover all the new equipment we needed to buy.
I had just bought nearly $15k in equipment over the previous few months. Bryant believed that he should be getting paid for his services regardless of how the business was doing.
I had written a business plan before starting the business but never spent any meaningful time going over it with Bryant. Don’t worry, we’re still wonderful friends but at that time we completely didn’t see eye to eye.
A few months later, I sold my share of the business to him and walked away. To this day, the shop is successful and running because Bryant is the most brilliant mechanic I know.
My Work Hours
I was a beast back then, not this softy you read about now.
I was spending 4-5 days a week flying over to the shop from 8 am-noon, then from the shop, I would drive to Kaiser to work a primary care clinic from 1-5 pm and an urgent care shift from 6 pm-10 pm.
I never felt so alive, though. When you’re doing something you love you’re invincible. I learned then that no matter in what phase of my life, I had to always try different things until I found something that meshed with me.
Unfortunately, I wasn’t very active so I wasn’t in the best health shape. I was eating on the go, which means, I was eating like shit.
In 2013 I put in an average of 55 hours per week. I was working in the peds department during cold and flu season and I was doing primary care as well as urgent care.
I grossed $368k that year, shit! Seriously, what’s wrong with the medical system when a primary care doctor is making nearly $400k??
My income shows $383k but on a K1 they actually include whatever they paid on your behalf. This is how a large company can write off major expenses.
Nearly $10k for health plan dues?! For that kind of money, I could have had my gallbladder taken out by Scarlett Johansson before she lost all that weight.
Work/Life Balance
According to my journal, I was spending quite a few nights binge eating and I was in terrible shape because I was barely exercising.
I have one of those “trick-you” bodies, I look fit no matter what the fuck I do. Even my weight doesn’t change much when I’m “out of shape”, I just convert my muscle to fat, taking up slightly more volume.
I was still surfing with my wonderful San Diego friends on the weekends but that was the extent of my exercise.
Monthly Expenses
Even though I had started to turn my financial life around in December 2012, I was spending somewhere around $11k-13k/month. Obscene.
I was driving the Hummer and I had my condo in San Diego, I had the auto mechanic shop and I was shopping and dining out like a rapper, still.
I had just found YNAB. I couldn’t find the records of that because in 2013 it used to be software based, now it’s web-based.
It wasn’t until the end of 2013 when I got my shit together and start saving. By 12/2013 I got my net worth to $40,165.
In Summary
I was able to get my net worth from a -$35k to the $700k+ it is now.
More importantly, I learned incredibly valuable skills which will withstand any net worth fluctuations.
You see, wealth is created through much more than just adding zero’s to your net worth.
The skill which helped me overcome my financial mess were:
- paying off debt
- not adding new debt
- spending less to live a better lifestyle
- replacing costly entertainment with cheaper ones
- looking at money as a tool and not a ticket to happiness
- going against the norm
- learning how to wield the money hammer